Disposable income after being confirmed

[Pumpkin729]

We filed in Aug 2004 and plan was comfirmed in Aug 2005. I don't know why it took so long but anyway here's my story and I'm sticking to it.....lol. We have made 21/60 payments already but according to the trustees website we've made 17/60. That's because we went from paying 275.00 to 425.00 to 575.00 and to made up for the difference in the amounts, I am guessing thats why he has 17/60. After making number 11th payment into the CH 13 plan hubby's car was paid off, after number 14th payment my car was paid off (both paid outside the plan), then two other small bills last month (secured outside the plan) was paid off. Are we supposed to be giving this money to the trustee??? We are saving it and plan on paying the BK off after 37th mark but afraid the trustee is going to dismiss our case for not giving it to him sooner. We are not in a 100% plan. I believe it's like 73% plan. We mentioned this to our lawyer when we were in court for an objection from the trustee and he said "NO" the plan is now confirmed. He said "once the cars are paid off take that money and put it into a CD and draw interest on it.... thats it you're done here". We don't wanna get to the 37th payment and then have our case dismissed by the trustee. Can someone please enlighten us on this matter.

[bkbiker]

[Peevee]

He's under the old law and there's a big difference.

[Pumpkin729]

Peevee, yes we are under the OLD law. Anyone with infor on my story above please put your two cents in. Thanks

[aa06a47]

Unless you lied or something in your BK petition, I see no problem in what is going on here. Look on your petition and see if it showed your car payments as ending on a certain date. If so, your in the clear, your payment plan is set and that was all in consideration when they came to the last sum of $575.00 (In my opinion). You might ask the attorney that filed for you if you can.

Given the fact that your not in a 100% plan, it will be hard to pay off early, especially with "saved" money. If you "borrowed" the money, that might be different. I would be careful about that one. You definatly don't want to start building up a large nest egg in a bank account while in a Chapter 13. I am not a proponent of burying money in the back yard, (don't live in that great of neighborhood) but you should try and find somewhere safe to park the money...perhaps a kids bank account.

I will have the same issue about month 24 in my plan. One of my debts being paid off outside my plan will be done. My attorney asked me how many months were left on it, I told her, and she said good, that is long enough...whatever that meant???

Disposable income is so dang hard to really define. One month, you might have 600 in disposible income, the next month you might have 20 dollars. In a Chapter 13, the best way I can see it is you have to save money in the good months, and take it back out in the bad months, only way to make it work.

[SinkingFast]

I think the only way you could pay out early on a Ch 13 plan is if you were in a 100% payback situation originally. At least that's my understanding.

If you try to pay off early, and you're less than 100% payback level, the Court will want the full 100%.

That may be a New Law thing too, as opposed to Old Law may allow you to pay off early regardless.

[Pumpkin729]

Our petition doesn't have the dates of when everything will be paid off. All it has is the balance owed on both cars at the time of filing. We are looking to paid off the BK once we reach the 37th payment. Why can't we pay off the bk early? I am not hiding the money from the two car payments, I want to save it up until we reach the 37th payment and then pay the balance of what we owe on the BK. To my understanding once you reach the 36th payment you can then pay off early if you want and not have to pay back 100% of the plan. Ours pay back is 73%. Can I do this without the trustee saying anything about not turning over the car payments earlier??

[SinkingFast]

Well I think I found an answer!!

http://www.doney.net/faq_changes.htm

There's a section that explains about paying off Ch 13 plan early. When and how you can do it. And you don't have to be at 100% payback level, according to this website, to pay off your plan balance early.

[Pumpkin729]

Thanks SinkingFast.... for that web site. Read it but I am still a little confused. So is it saying I should be giving the car payments to the trustee? What happens if one of our cars bites the dust?

[aa06a47]

Pumpkin729, if it were me, I would simply leave well enough alone. If the trustee want's your money, he will ask for it. If you cause him to look things over, you may be paying for it for sure.

Your creditors and mainly the trustee looked over this payment plan very well prior to it getting approved, and if they didn't, that's not your fault. They should have realized your disposable income would change in the 2nd or 3rd year of your plan. That said, IMO, unless you have a new source of income, you or your spouse got a big raise that would show up on your tax returns, I wouldn't mention it. Feel very fortunate that you are one of the few that has the ability to complete your plan without a big hardship. You should call your lawyer, if you used one and if not, call one that is a bankruptcy attorney that will know the particular trustee in your area. If the attorney you talk to is worth a hill of beans, he/she will know how the trustee in your area feels about early pay off.

I am sure people on this thread have some good advice and some personal experience with early pay offs. But from what I have read, it varies from trustee to trustee and how they interpret the bk law. Please, see an attorney. Even if you have to pay 150 bucks to see one, it could save you a ton of money if you make the wrong move with your trustee in your area of the country.

[aa06a47]

Another thing on the consult, I wouldn't come right out and tell him you have extra disposable income, simply ask about early pay off. If it comes up, which it might, let him ask you.

[SinkingFast]

I was thinking that could be the answer to Aa's curiosity about when Aa was asked about different payments. Aa responded 2 years, and the Trustee said that's enough.

Maybe that meant, 2 years was enough time to go ahead and confirm the plan at the current payment level based on current income and expenses.

I wouldn't rock the boat about those debts that get paid and free up income. You disclosed all the info up front. They know when things end. If they want the money, let them come after it. Until then, sock it away, like you'd planned.

I pointed out the link because I thought you had to be a 100% payoff to buy out early. And you don't. You can buyout early just by paying the full amount due in the plan after 36 months.

[aa06a47]

SF, it wasn't the trustee, it was the lawyer that asked me. I haven't seen the trustee yet. Hope he isn't as nosey as my attorney!! LOL!!!!

[SinkingFast]

I think the attnys ask those pointed questions to see how you'll respond.

We got grilled on the same subjects. Very similar questions even, by all the attnys.

Possibly, those are the same kinds of questions a Trustee may ask??!! Dunno. Not sure.

[Pumpkin729]

Aao6 & SF

When the trustee objected to the plan for the second time, each time with the payment going higher. Our lawyer said thats it...lets go to court and let the judge decide. At the courthouse our laywer took us in a room and was going back and forth from us to someone that was working for our trustee (he was not there) trying to work out a plan so we didn't have to wait to go in front of the judge. Finally, we came to an agreement and that was to turn over the income tax return each year. This is went I mentioned to our lawyer about the two car payment being paid off in a 11 months. I asked him, can we save that money and pay the BK off early or is the trustee going to want that money as soon as its paid off. Our lawyer replied "NO, the plan is now confirmed, once the cars are paid off take that money and put it into a CD and draw interest on it". Lawyer said if you want to pay off early "DO NOT DO IT BEFORE THE 3 YEARS IS UP. Our BK petition schedule D list of creditors holding secured claims, it list our to cars and the amount owed, hubbys was 3336.00, mine was 3000.00 at the time of filing.

Here's what we are afraid of....
We save these cars payments in the bank until we get to the 37th payment. Call the lawyer tell him we've saved the money from the car payments and we want to now pay off early (37th mark). He sends in the paper work and the trustee looks at it and decides to dismiss our case for holding onto disposal income for all those months. Now what do we do? The creditors will come after us.

I look at it like this...
We save the money to pay off early, which will be less then 100%, remember now we will be at the 37th payment when this happens. Had we given that payment as soon as the cars were paid off, the pay back % would be higher. I am thinking the trustee is going to have a problem with us for not turning the money over right away and dismiss our case. Then again...why would our lawyer tell us to put the money into a CD if there was a chance of us getting our case thrown out. Can our lawyer be wrong? We just don't wanna get so far into the plan to be thrown out. We filed under the old law. Thanks