How miserable are we going to be in Ch13? :(

[mslaw]

We are over the median because of dh's bonuses to qualify for ch7. Which sucks. It seems we will have to file Ch13.

We owe approximately 75K in unsecured debt and we will file on our mortgage for a total of 130K.

We receive 2 bonuses per year which are not guaranteed but dh's monthly income is less than most in his field because those bonuses (while not guaranteed). His company is kind of crazy like that. They want to tell you well, you get bonuses when it is convenient but then will come back and say but they're not guaranteed. Anyway, our tax refunds are usually big because the bonuses are taxed heavily and we have 5 children.

Is the trustee going to take every bit of every refund and bonus? We depend on these for anything extra we have to buy. We've used them to buy braces, to replace tires, to replace broken appliances, etc.

Next thing, we will have to pay back on the secured portion we are filing on? The house we are not keeping?

I'm so discouraged at this point. We do not live lavishly and we never have money left over. We drive old cars. We have old clothes. We have no savings. BK was supposed to help us and now I feel like we are going to be even worse off because the things that did help us throughout the year will be taken (bonuses and tax refunds).

If I either quit my part time job or dh didn't get bonuses, we would qualify for Ch7 and that thought is sickening. It's like we are being punished just because I try to help our family out by working but chances are, every dime I make working will go to Ch13 repayments. While other families, where the mom doesn't work at all, will easily qualify for Ch7 and she is able to be home with the children with no repayment plan.

Sorry if I sound bitter.

[HHM]

You won't be miserable.

Success all depends on YOU.

[mslaw]

You won't be miserable.

Success all depends on YOU.

I understand what you are saying but if they are taking every bit of every bonus and tax refund, we will likely be as miserable financially as we are now. We have 5 kids. 5 kids who will need braces, one who will be driving within the 5 years we are in Ch13, a child to send to college, etc. No home as we are filing on it. I'm just confused. It seems crappy to think if we made 10K less a year, we would qualify for a CH7 and not have to deal with 5 years of hell. It isn't like we make 200K a year and have tons of disposable income. I work to help us and I miss being with my kids and now I will be working just to repay a Ch13. If I were a stay at home mom, it wouldn't even be an issue.

Sorry to complain but we have no one to talk to about this besides our attorney. I'm just beside myself with worry and stress.

[SMinGA2]

Secured debts that you're giving up don't get paid thru your plan - the assets are sold & proceeds go to the lender.

A ch. 13 is about analyzing your income and expenses to find the disposable monthly income. You need to consider those 'extras' like tires, car maintenance, braces, etc. in your average budget. If you tend to spend $1200 a year on car maintenance/repairs and $900 on home maintenance/repairs, that would be $100 and $75 a month on your budget. Regardless of the means test - you need an accurate budget to determine if you have DMI to fund a plan. If not, then going into a 13 is doomed to fail.

For taxes, if you normally get a big refund then you may need to adjust withholding to have less tax taken out (more net income) and less refund. Otherwise the trustee could see your refund as being more DMI.

[TheBajan]

We don't get bonuses that we count on but in regards to our income tax refund, our lawyer exempted part of it and included it in our budget as money we count on to pay our bills. Perhaps your lawyer could make the same argument regarding you income tax refund and your bonuses??? Also, it is possible to be in a 3 year chapter 13 [we are] depending on your situation. I can only tell you that 6 months ago I felt exactly what you are feeling and once we filed it was like being set free. Hang in there. Keep asking questions and don't give up. You'll make it through. BTW... welcome.
The Bajan

ps- the amount you pay back to unsecured creditors is entirely dependent on your dmi. It could be anywhere between zero and one hundred percent. At this juncture... don't sweat it.

[mslaw]

Secured debts that you're giving up don't get paid thru your plan - the assets are sold & proceeds go to the lender.

A ch. 13 is about analyzing your income and expenses to find the disposable monthly income. You need to consider those 'extras' like tires, car maintenance, braces, etc. in your average budget. If you tend to spend $1200 a year on car maintenance/repairs and $900 on home maintenance/repairs, that would be $100 and $75 a month on your budget. Regardless of the means test - you need an accurate budget to determine if you have DMI to fund a plan. If not, then going into a 13 is doomed to fail.

For taxes, if you normally get a big refund then you may need to adjust withholding to have less tax taken out (more net income) and less refund. Otherwise the trustee could see your refund as being more DMI.

That's the issue with taxes though, dh's company will NOT allow an adjustment on withholdings for the bonuses. That's what gets us. 20% of his income is given in bonuses. It sucks.

[mslaw]

We don't get bonuses that we count on but in regards to our income tax refund, our lawyer exempted part of it and included it in our budget as money we count on to pay our bills. Perhaps your lawyer could make the same argument regarding you income tax refund and your bonuses??? Also, it is possible to be in a 3 year chapter 13 [we are] depending on your situation. I can only tell you that 6 months ago I felt exactly what you are feeling and once we filed it was like being set free. Hang in there. Keep asking questions and don't give up. You'll make it through. BTW... welcome.
The Bajan

ps- the amount you pay back to unsecured creditors is entirely dependent on your dmi. It could be anywhere between zero and one hundred percent. At this juncture... don't sweat it.

Thank you. What are the guidelines for a 3 year vs 5 yr plan? We don't meet with our attorney again until Monday. I have a whole notepad of questions for her.

[TheBajan]

Thank you. What are the guidelines for a 3 year vs 5 yr plan? We don't meet with our attorney again until Monday. I have a whole notepad of questions for her.

Here I don't think I can help much. I know it varies from state to state and I know it has to do with your means test along with some other calculations regarding expenses. Perhaps someone else here with better legal understanding can help answer this question for you. It sounds like you are just starting this process. PLEASE make sure to consult with several attorneys before making any decisions regarding who you will retain. That was crucial in our case!

Cheers!

[SMinGA2]

If you're over median & file ch. 13, its a 5 year plan. Unless you can pay all unsecured claims in less time.

Under median has the option of 3 years.

[SMinGA2]

Even if they won't change policy on taxes from the bonuses, you can adjust standard withholding rates - which will take out less from each regular check. Also if for tax year 2011 your federal refund was equal to or more than all that you had deducted during the year, then you can claim exempt. (With 5 kids, that may be the case. I have 3 and am legally able to claim exempt on federal.)

[andy158]

Is your part time job making the $10,000 that is keeping you from filing bk7? How much are you spending on day care/babysitters having 5 children. Weight the difference and see if it is worthwhile keeping the part time job at all.

I would consider losing the part time job for 6 months and retaking the means test for your state and see if you qualify for the 7. Being that close to the median is a bummer. We felt the same way being from WV. The neighboring states of OH and PA have a very much higher median than WV. We would have qualified for a 7 in either state.

In my opinion a 13 would be difficult with your family size and a variable income. If you rely on bonuses and tax returns for essentials, it would be difficult to set up a usable budget. As far as tax refunds our district takes anything over $1,500. Not all districts take your entire return or bonuses. Your attorney needs to clarify that. Bonuses should be just that - extra money outside a livable budget. Getting a livable plan in a 13 is essential for completion.

[BKinNJ]

We are over the median because of dh's bonuses to qualify for ch7. Which sucks. It seems we will have to file Ch13.

We owe approximately 75K in unsecured debt and we will file on our mortgage for a total of 130K.

We receive 2 bonuses per year which are not guaranteed but dh's monthly income is less than most in his field because those bonuses (while not guaranteed). His company is kind of crazy like that. They want to tell you well, you get bonuses when it is convenient but then will come back and say but they're not guaranteed. Anyway, our tax refunds are usually big because the bonuses are taxed heavily and we have 5 children.

Is the trustee going to take every bit of every refund and bonus? We depend on these for anything extra we have to buy. We've used them to buy braces, to replace tires, to replace broken appliances, etc.

Next thing, we will have to pay back on the secured portion we are filing on? The house we are not keeping?

I'm so discouraged at this point. We do not live lavishly and we never have money left over. We drive old cars. We have old clothes. We have no savings. BK was supposed to help us and now I feel like we are going to be even worse off because the things that did help us throughout the year will be taken (bonuses and tax refunds).

If I either quit my part time job or dh didn't get bonuses, we would qualify for Ch7 and that thought is sickening. It's like we are being punished just because I try to help our family out by working but chances are, every dime I make working will go to Ch13 repayments. While other families, where the mom doesn't work at all, will easily qualify for Ch7 and she is able to be home with the children with no repayment plan.

Sorry if I sound bitter.

Sorry to hear about your troubles.

It seems our scenario was very similar, but not once out of the 5 years in our plan did the trustee ever take our tax refunds and my quarterly(at the time, now yearly) bonuses. My bonuses also make up 15-20% of my annual salary. Also our combined income increased 30% in the 5 year span and never got any type of increase in payments. We just always made sure we paid the trustee on time and never miss a payment. Never give them a reason to audit your case.

I say make sure your lawyer is legit and very good one. Make sure everything you mention gets taken into account especially having 5 children.

We are in NJ so I am sure each state/district have different rules and regulations on how strict they are with disposable income.

And to be honest as bad as it may sound, filing for chapter 13 was probably the best thing we've done. We learned ALOT about ourselves and how we look at money

Best of luck to you.

[mslaw]

Is your part time job making the $10,000 that is keeping you from filing bk7? How much are you spending on day care/babysitters having 5 children. Weight the difference and see if it is worthwhile keeping the part time job at all.

I would consider losing the part time job for 6 months and retaking the means test for your state and see if you qualify for the 7. Being that close to the median is a bummer. We felt the same way being from WV. The neighboring states of OH and PA have a very much higher median than WV. We would have qualified for a 7 in either state.

In my opinion a 13 would be difficult with your family size and a variable income. If you rely on bonuses and tax returns for essentials, it would be difficult to set up a usable budget. As far as tax refunds our district takes anything over $1,500. Not all districts take your entire return or bonuses. Your attorney needs to clarify that. Bonuses should be just that - extra money outside a livable budget. Getting a livable plan in a 13 is essential for completion.

We considered this. I am just not sure we can hold off 6 months without other repercussions.

[SMinGA2]

mslaw, what events are pushing you to file now? Are you facing a foreclosure in the coming months, or a repossession or has a creditor filed for a judgment? If not - then waiting may be best. Make sure you move forward when you're ready, and on terms that work for you.

[mslaw]

mslaw, what events are pushing you to file now? Are you facing a foreclosure in the coming months, or a repossession or has a creditor filed for a judgment? If not - then waiting may be best. Make sure you move forward when you're ready, and on terms that work for you.

I know our mortgage is getting ready to be turned over to the mortgage company's attorneys. No one has filed for a judgment but our CC's will be 2 months behind this month. We have some other small bills that are in collection and some large medical bills that have went to collection a few months ago.