GREAT NEWS FOR CHAPTER 13 DEBTORS, U.S. Supreme Court

[justbroke]

Monica, yes that is what you are to do. However, some Attorneys may suggest filing with the current income and then filing a Modification of Confirmed Plan when the income actually changes. It is really dependent on what your District allows and/or whether the Trustee is okay with proposing a step-down plan.

[Monicak1971]

Am I correct in understanding that if there is a definite and provable change of income anticipated, that income is to be used ? For example through December 2012 my husband was assigned to an overseas tour and received additional pay. This ended when he returned and he is not on orders to leave again. This is about a 500 per month difference in our income.

Monica

[justbroke]

So...quick question:

Would this Supreme Court decision lead one to conclude, then, that if a Ch 13 filer won some money gambling in the six months prior to filing, but as part of turning a new leaf in line with filing BK is no longer gambling, that the wins would not be considered part of the calculations for disposable income / affect his or her payment plan?

Not in the sense you're thinking. The Means Test is an arbitrary calculation set as a so-called "bright-line" test of whether you qualify. When it comes to determining a Chapter 13 payment, it is almost always a "current view" with a slant towards the future.

[dougmanct]

So...quick question:

Would this Supreme Court decision lead one to conclude, then, that if a Ch 13 filer won some money gambling in the six months prior to filing, but as part of turning a new leaf in line with filing BK is no longer gambling, that the wins would not be considered part of the calculations for disposable income / affect his or her payment plan?

[LadyInTheRed]

In the original post.

I still don't understand your question then. A bonus that is a normal part of compensation is not a "1 time income event". The ruling didn't change what gets included in the 6 month look back. It changes how that may affect the calculation of your plan payment going forward. If you had a one time bonus during the 6 month look back, your schedule I would not have to include it if you weren't going to get the bonus every year. But, if there is a regular annual bonus that isn't included in the 6 month look back, it would have to be included in projected income on schedule I. The ruling isn't so good for somebody in that situation.

[spidge]

The US Supreme Court upheld the ruling out of the 10th circuit of In Re Lanning

http://www.supremecourt.gov/opinions/09pdf/08-998.pdf

Hamilton v. Lanning 08-998

The Supreme Court has adopted the Forward looking approach for determining disposable income for the chapter 13 plan payment. In a nutshell, no more stupid objections from Chapter 13 trustees if you have a bonus, severance, or other 1 time income event in your prior 6 month look back that eschews your monthly payment calculation. Chapter 13's are to be based on a common sense understanding of "projected" disposable income.

The annual bonus would not be included in the 6 month look back on the means test, but it should be included in income on Schedule I if it is expected to continue. I don't see where it is suggested that it wouldn't be.

In the original post.

[LadyInTheRed]

I don't see how an annual bonus could be left out of the calculations if it is a normal part of compensation, even though it only occurs once annually. This stinks a little if you ask me. If you are an hourly employee and your manager makes marginally more annually but only after bonus he/she will qualify for a lower Ch13 payment. Am I reading this wrong? There must be more to it. Now if there is a one time insurance payout or something that is not income related I can see how that may be left out of the calculation.

The annual bonus would not be included in the 6 month look back on the means test, but it should be included in income on Schedule I if it is expected to continue. I don't see where it is suggested that it wouldn't be.

[spidge]

I don't see how an annual bonus could be left out of the calculations if it is a normal part of compensation, even though it only occurs once annually. This stinks a little if you ask me. If you are an hourly employee and your manager makes marginally more annually but only after bonus he/she will qualify for a lower Ch13 payment. Am I reading this wrong? There must be more to it. Now if there is a one time insurance payout or something that is not income related I can see how that may be left out of the calculation.

[justbroke]

Wow! I'm new to the forum, considering BK and am just researching and taking mental notes. Can someone tell me why only 40% of bk13s only make it through the plan?

While the 60% failure rate includes those that end up converting to Chapter 7 (for one reason or another), the fact is that many people can't or refuse to budget and stay "in plan". It's that simple.

(For those that convert, it's usually because additional issues are affecting the ability to make Chapter 13 payments, such as job loss or less than "full" employment, illness, divorce, etc.)

[Salley906]

Wow! I'm new to the forum, considering BK and am just researching and taking mental notes. Can someone tell me why only 40% of bk13s only make it through the plan?

Well, I feel sorry for your clients, sorry to say. If you are pushing people into a chapter 13 to do a lien strip and can't get them qualified for a chapter 7, you have no creativity. FFS, have them file a chapter 7 and settle the 2nd mortgage for 5 or 10%, WTF are you putting these people into chapter 13 payment plans. How many of these token chapter 13's are actually making it to discharge, if its anything close to the nation average, (not many), then what have you really accomplished.

[newbie2]

So does this mean if I filed Not husband chapter 13 if he get bonus from work do I have to turn it into trustee. I am alittle confused about this have not even went to 341 meeting yet. But he might or might not get Christmas bonus. Sometimes he get Fall bonus and spring bonus but not all the time depends what owner of company wants to do at that time.

This would be a question for your attorney, as the non-filing spouses income can be treated differently from district to district. Note: If your trustee requires tax returns, then it may very well be that they want "all disposable income". Ask your attorney how this is is normally treated in your district.

[mikewindy]

So does this mean if I filed Not husband chapter 13 if he get bonus from work do I have to turn it into trustee. I am alittle confused about this have not even went to 341 meeting yet. But he might or might not get Christmas bonus. Sometimes he get Fall bonus and spring bonus but not all the time depends what owner of company wants to do at that time.

[Gigi1999]

I have a question on this:

I was in a wreck that totaled my car 01/21/11. We have a Motion to Sub. Collateral on the 3 of March. If they apply what the ins. company gave me for my car and pay off the loan thru the lender...will they adjust our bk so my payment is lower. If we have to lay all of our income papers on the table, do we submit any side work my husband has been doing on the side to make up for a 10% paycut that happened AFTER we filed? Origionally, they had taken a job that he did 4 months prior to our filing and added that as part of our income...so after that fell off and the 10%, well, you see what I am saying. It sort of left us in a bind and he had to start doing more. We are FINALLY feeling like we aren't stretched tightly!

[espo1357]

I think HHM is just saying... walk away. I'm in that position and I'm prepared to just walk. I converted my Chapter 13 to a Chapter 7 because I initially wanted to save property. Now, I'm post discharge and the Mortgage company modified my mortgage and dismissed their foreclosure action in the local court. I have no equity beyond the first, and about 5% upside down (when using the first only).

I could not see being in a Chapter 13 for the next 3 years (I did 2 years out of 5), just to strip the second. Just wasn't worth it for me.

JB,

I am in the same spot. Its been about 8 months of the BK 13 for me, and the payments combined with the underwater status of over 100k, combined with a job that is ending soon, make conversion to a 7 the smart move in the long run.

I am assuming your property was a primary?

Mine is. That is what is keeping me in the 13, the fact that this is my primary residence. I figure since I live in the home and get value out of it, that I should continue to pay. But, as you stated, the 13 for that long of a time is a joke.

And the home is looking at, at least 10 years before it gets any equity.

[dani]

For HHM:
Can u really settle a 2nd lien for 5-10% successfully? (Partial Equity as of now)
What about a 3rd? (no equity at all - as of now)