401k

[Kingxray]

OK, I'm confused again. In my opinion our lawyer did not negotiate hard enough. The initial plan we filed was to pay $400/mo. for 12 months then $750 for remaining 48 months. The trustee objected and we amended and she objected again went for dismissal etc. This went on for months and all the while we continued to pay the $400/mo. Our lawyer caved and without our knowledge amended it to $1500/mo. for the remaining 48 months. We were not prepared for that. We have only a few months left until the payment increases and I'm not sure what we are going to do. That payment along with our bills and mortgage leaves us negative for the month. We have to live on my hubby's bonuses, if he gets one. If I get a job, the trustee will take that as additional disposable income, so our 401K was an idea I had to get through the remaining 48 months. We can't dismiss the 13 because my dad is one of the creditors and has gone after my husband's wages in the past. He is the reason we filed. We moved and did not get the paperwork in time to fight his lawsuit, so he received a judgement against us. Sorry to go on. Hope that clears things up.

[momofthree]

Are you trying to hang on to non-exempt assets, or have a bunch of questionable expenses that the tt was objecting to? I don't understand how you went from a $400 payment to a $1500 payment...

[momofthree]

On second thought, you mentioned trying to live on your dh's bonuses. It sounds like the bonuses bump up your income substantially and they are including that as part of your monthly average pay. If that is the case, and he is continuing to get regular bonuses, then there is probably no getting away from the higher payment. You will have to learn to save those bonuses and withdraw a bit each month to supplement your actual salary, as if that bonus was paid monthly, kwim?

So, for example, if he gets a bonus of around $2000 every 3-4 months, you would stick it straight into savings and then withdraw $500-$750 a month and act as if that was part of your pay...because that's how the tt views it. It is up to you to save and allocate those bonuses effectively.

If this is not the case, then just ignore this post.

[kjrmom911]

I think more info is needed to help you. Such as how many people in your family. What are your secured assets that you are keeping? Are you including taxes in your repayment? What is your monthly income? What did you list on your schedules for your expenses? This info may help someone help you. I'm also confused as to how a 400 dollar payment became a 1500 dollar one.

[catleg]

Nice dad. What do you owe him for?

[Kingxray]

It's just me and hubby. The kids are grown and moved out. Read my earlier post and you will see why our payment goes up; it is part of the Chapter 13 plan. Yes they included most of his bonuses as income. These bonuses are based on sales and are not guaranteed. My dad sued us over a deal we made together on a summer home. Long story short, we paid him almost all of it back and had a dispute over the remaining money and his compounding interest. Funny thing (or sad) is that I'm an only child, my mom is dead and he hasn't seen his grandkids in 5 years. We are 48 and too young to withdraw from the 401K without incuring penalties unless we claim a "hardship". Hope that clears up any questions.

[catleg]

Normally when there's a step up, it's because a 401k loan or car loan gets paid off and that money becomes available for the greedy trustee for the greedy creditors.
You seem to be saying it was just negotiated that way. You can submit new schedules I/J and tell the attorney you want a modified plan if you think the payment is unbearable. You shouldn't have to tap your 401k. I'd sooner let the plan be dismissed and re-file with a new lawyer. How much debt do you have besides dear old dad. Any chance of a reconciliation once he gets paid? I am not speaking to my own mother and I'm 48 also so I know how that goes. (My dad was in hospital and she acted shamefully...long story, luckily we do not owe them money).

[keepsmiling]

Yikes, that's a huge jump. Any idea what the tt was objecting to in your original plan?

Sorry about the probs with your dad. Terribly sad but you hear about this kind of thing too often. Money issues have destroyed a few families I know, including some in my own.

Keep reading here. There is lots of good advice from people like catleg who have been there, done that. Don't ruin your fresh start! Either make it work or renegotiate. You have to be your own best advocate since your lawyer may have dropped the ball.

If you give specifics as to your I/J, you may get even more specific advice.

[catleg]

You can also propose a plan based on his base salary, and then if a bonus comes, they get some/all of it. You shouldn't have to average it out over 6 months and pray for the bonus for the plan to stay viable. That's just a lazy, unresponsive attorney. Since he is getting paid from the plan he should be providing you the representation you deserve. Sadly, I've found that most lawyers put their relationships with other lawyers ahead of their clients best interests.

[momofthree]

You can also propose a plan based on his base salary, and then if a bonus comes, they get some/all of it. You shouldn't have to average it out over 6 months and pray for the bonus for the plan to stay viable. That's just a lazy, unresponsive attorney. Since he is getting paid from the plan he should be providing you the representation you deserve. Sadly, I've found that most lawyers put their relationships with other lawyers ahead of their clients best interests.

Yes, this approach has worked for several others on this board, I'm not sure if you can change the way bonuses are treated at this point, or if you'd need to dismiss and re-file with a new attorney. Definitely worth asking your attorney about (surrendering bonuses when they are earned and basing the payment on his regular salary).

[Kingxray]

Thanks for your input. I'm not sure what to do at this point. According to our B22, we do have $1500/mo. in disposable income because of the bonuses and the fact that the trustee disallowed some payroll taxes (because we get money back in our tax return) and would not allow my car as an expense. That's ironic, it is a 10 year old car with 58K miles and we just paid $1100 to have fixed. Not an expense???? Also my dad should be considered a secured creditor because he had a lien on the house we surrendered in the BK and the fact his lawyer admitted to it at our first 341. When my dad didn't get any money out of the house the trustee allowed him to be unsecured. Our lawyer promised he would fight this and never did. I guess it's time to have a "come to Jesus" meeting with our attorney. Thanks again.

[catleg]

Yeah that is the upside down world of chapter 13. You are better off going into debt to buy a car (beforehand) rather than keep an old paid-off car alive with repairs. It sounds like dear old dad's situation was handled properly, a deficiency on a secured loan that is surrendered/foreclosed/repoed becomes an unsecured claim. You probably need to threaten that lawyer somehow to get a modified plan approved, and also get permission to incur debt to buy yourself a (new to you) used car. Meanwhile structure the plan so the bonus is treated separately, the trustee should, of course, only be able to claim the after tax payment from the bonus. Finally make sure you are making some 401k contributions, it's allowed in most districts to varying degrees.

Ideally, you dismiss the ch13, borrow from the 401k to pay back dad, then immediately re-file ch13 and have the trustee claw back the payment to dad as an insider preferential payment. That would really make him blow a gasket. Just kidding :-)