question about increase in salary under a ch 13

[yankeemom2]

We are going to our first meeting with the trustee on Thursday and have our court date in January. My question is what happens when every year my husband gets a bonus and raise in salary and what about our tax checks?

Will they take that away from us or will they leave it alone?

[FloridaGirl]

I believe that when you are under a ch.13 plan, the trustee will review your pay stubs every so often. If they see an increase in salary, then that means there is probably an increase in disposable income too. If your husband gets bonuses and tax refunds while in a 13, the trustee might ask for that money. In fact, I do believe tax refunds are automatically the property of the court while in a 13.

[yankeemom2]

Thank you for your response. I am really freaking out because we have to pay back 350 per month for 5 years and we really can't afford the 350 per month and we were hoping to fall back on the taxes and bonus to pay for it. I just don't know how people make it through this.

[FloridaGirl]

Are you actually going to have 350 left after all your expenses each month? The court can only take what you have left. If you find that you can't make the 350 payment, maybe you can convert to a chapter 7. Did you try to file a ch.7 first?

[hhou812hh]

I don't have the answer, but it's just my 2 cents that maybe you can use the additional income for basic repairs for your home or car. Obviously you can't purchase a vacation with it, but if you put it towards an item you will need to survive the plan they may understand. Again it's my opinion and I'm not sure what they will do. I'll find out soon enough. I will have to go into a ch13 under new law and calculated my plan for $557 per month with the means test for FIVE years

What keeps me smiling is the 5 years of torture is better then 25 years of it since that's probably how long I will be in debt under the original agreement with my creditors.

Try to look at you situation that way and you may feel better about it. It will also be a valuable lesson to never be in this situation again. I've been brown bagging lunch since this situation as a start.

Good luck!

[hhou812hh]

Are you actually going to have 350 left after all your expenses each month? The court can only take what you have left. If you find that you can't make the 350 payment, maybe you can convert to a chapter 7. Did you try to file a ch.7 first?

I'm assuming that yankeemom2 either has some non exempt equity in a car or house or late payments on either that's preventing her from filing a ch7 and that's probably why it's a 60 month plan.

[yankeemom2]

Well the reason for us having to do the chapter 13 is because my husbands salary is too high and the equity in my house is to high. The market in my area has been sky rocketing for some reason we only bought our house 4 years ago and the value has more than doubled in value. We thought about selling the house and using the equity to pay off the debt ($60 in cc bills) but that would leave us will nothing (between what we still owe and home equity loans and the debt). We had a truck that was financed but the lawyer told us to down size the payments so we are now leasing a truck for 480 per month(we were paying 700 before). that is our only vehicle. But like I said we have two children and money just flies out the window. We have also had to take loans from his 401k for things that have come up so that is also coming out of his paycheck.

If it weren't for all the things being pulled out of his paycheck we would be fine but unfortunately it is what it is.

I thank you all for your advice. I know that there is light at the end of the tunnel and I know that I would probably never get rid of all this debt without the ch 13 but it is just hard when all your life you look for that little bit of extra money and to know that is being taken away is just hard.

[Lightning]

Did you have the trustee's authorization before taking out those loans on your 401k? Loans against a 401k should only be done under extreme circumstances. If you can't meet your monthly obligations without taking such a loan, you have serious financial problems, and doing so while in bankruptcy spells serious trouble.

[concerned]

Thank you for your response. I am really freaking out because we have to pay back 350 per month for 5 years and we really can't afford the 350 per month and we were hoping to fall back on the taxes and bonus to pay for it. I just don't know how people make it through this.

How do they determine how much you have to pay back each month? I am new to all of this and I am scared we are doing the wrong thing! Do they look at your income & expenses before you file, after, or both? Are you basically required to turn over all your money to them for 3 years?