Car Payment Question

[minan]

What is the benefit of having the car payment in the plan versus out of the plan?

I'm trying to figure out why my monthly payment in the 13 is so high.

My monthly chapter 13 payment is comprised of the back taxes, car, student loan and obviously trustee fees and about 20% back to unsecured.

My DMI after income - expense came out to 567/mo.

I do not understand how the monthly payment is figured.

[Nicollette]

If your car payment is included in your plan, then you wouldn't have to worry about being late on it because the Trustee makes the payment for you. When I first filed, I was 2 months behind on my car payment that I had at that time, so it was automatically included in my plan. Ive since then, surrendered that car and got permission from the BK court to purchase a newer, more reliable car. So my new car payment is paid outside of my plan because its debt incurred after my filing.

[lrprn]

What is the benefit of having the car payment in the plan versus out of the plan?

The advantage of including the car payment in your plan is stretching what you owe on the car out over the life of your plan. Some Ch 13 lawyers do this to reduce your monthly debt load.

The disadvantage is that your trustee will get his/her administrative fee % on the car payment every month.

I do not understand how the monthly payment is figured.

Your payment is a reflection of the disposable income showing on your Means Test and Schedules. It's a very complicated cross-comparison of your secured assets, other secured and priority debts, unsecured debts, and living expenses.

This is why knowing how much someone else's Ch 13 payment is doesn't help you to estimate how much your payment is going to be. Everypne's financial situation is different. Then throw in all the differences between trustee and court practices across the country - that adds another deep layer of complexity to things as well.

Sit down with your lawyer and have him/her explain to you how your monthly Ch 13 payment was calculated. It's really the only reliable way you are going to know how your payment ended up what it did.

[SMinGA]

Another benefit - if you have a high rate - is the car loan is generally paid at a low rate of 3-7% in the plan.

Including the car in the plan can avoid having to modify the plan mid-way thru. Such as if you have a $350/mo car payment for 2 years, and have a 5 year plan... Your plan payment would need to change when your car payment ended.

Your plan payment should be net monthly income less all expenses/bills. By bills, I mean the ones you will pay directly. So if your car payment is to be included in the plan - then you would not count that in coming up with your DMI.

Your student loans will most likely be paid at the same rate as unsecured regular debt. Even though it cannot be discharged, its not priority. Meaning you'll resume payments once your plan is over.

[minan]

Another benefit - if you have a high rate - is the car loan is generally paid at a low rate of 3-7% in the plan..

The rate I got is 5.3%.

Including the car in the plan can avoid having to modify the plan mid-way thru. Such as if you have a $350/mo car payment for 2 years, and have a 5 year plan... Your plan payment would need to change when your car payment ended.

I also stretch out the payments to 72 months so I could get through the bk. i had bought the extended warranty to get me through the plan. I thought I was doing a good job of preparing for life under a possible bk, however now it seems I'm being penalized. What's the use of trying anything?

If I had known this would happen, I would have taken the offer of 385/mo for 60 months because in the plan it appears to be costing me 420/mo.

Your plan payment should be net monthly income less all expenses/bills. By bills, I mean the ones you will pay directly. So if your car payment is to be included in the plan - then you would not count that in coming up with your DMI

Your student loans will most likely be paid at the same rate as unsecured regular debt. Even though it cannot be discharged, its not priority. Meaning you'll resume payments once your plan is over.

Not too worried about these as it appears they don't start getting paid until towards the end of the 60 months. I'll resume once the 13 hell is over.

I thought 13 would at at least leave me enough money at the end of the monthallow me to have food on the table, gas in the car so I can get to work and electricity and phone, food for my 2 small dogs. Instead, I'm now wondering where I'm going to get the extra money for living expenses. I don't understand.

[SMinGA]

If you don't have enough for basic expenses, you need to sit down w/ your atty and figure out why not & make changes to your plan. Your atty should consider your actual living expenses. DMI = net income less expenses/bills. If your plan has undercut your expenses, you'll have a problem.

I thought 13 would at at least leave me enough money at the end of the monthallow me to have food on the table, gas in the car so I can get to work and electricity and phone, food for my 2 small dogs. Instead, I'm now wondering where I'm going to get the extra money for living expenses. I don't understand.

[minan]

SMinGA: That's what I think. Atty said we'll revisit, however my concern is that I'm already set up to fail. Thankfully I have a meeting with her tomorrow. I just can't make heads or tails of this.

My 341 is in Sept.

Will the Trustee even confirm a plan if it's obvious that there's no money left over for basic living, such as food, utilities, gas, etc...? I'm not asking for anything extra.