Complicated question about our 13 Plan

[alorth]

Our confirmed Plan has listed specifically in it that I would be using some money to get a surgery that was technically elective, but thought to be necessary when the Plan was drawn up.

We are 14 months into our Plan.

The money for the surgery was supposed to come from a NEW 401k loan that we were to take out when we paid off the 2 outstanding 401k loans that existed when we filed BK.

The 2 loans were paid off in Dec. '12.

Our Plan then states that we would take out the new loan in Jan. '13 for the surgery.

The payment on the new loan would be approx. $400/month, which is roughly equal to the total of the payments of the 2 "paid off" loans, so the dollar amounts would be a wash.

As I said, this was a stipulation specifically spelled out on our CONFIRMED Plan.

However, circumstances have changed in 2 different ways.

1st....the surgery (which was not covered by insurance, and for which we would have to have paid for with cash)....the surgery no longer appears to be necessary....at least not right now...though it may still be needed in the future.

2nd....Our payroll taxes increased in January by $200/month as a result of the end of the Social Security tax holiday by the Federal Government.

So....this means that we actually do NOT have the ability to continue paying that $400/month that we were paying towards the original 401k loans that were paid off, AND this also means we do NOT have the $400/month that would be needed to pay on the new 401k loan for the surgery. We now only have $200/month.

Therefore, we have NOT taken out a new 401k loan yet, as it would not be able to cover the cost of the surgery at $200/month.

We have shelved the idea of the surgery for now.

Even though it is specifically stated IN THE PLAN that we would do this.

We are now roughly 5 months past the stipulated month of taking out the new loan for the surgery.

We also have now had a surplus of $200/month since we DID pay off the original 401k loans, and have had this surplus monthly since January '13.

We discussed this with our attorney, who suggested we should simply put the $200/month away, but not make any kind of modification right now.

THEN, he apparently suggests, IF the TT makes mention of the surgery, and comes to find out that it has not been done, we will have the money to turn over, EXCEPT the TT would be expecting $400/month, when in reality we have only $200/month because of the monthly tax increase.

I am confused by our attorney's advice, and worried the TT would move to dismiss if it is realized that the surgery was not done when it is actually listed as part of our confirmed Plan.

If that motion to dismiss were to happen, I wonder how the Judge might react if we were to state the circumstances as listed above.

Keep in mind our Judge has a very unique way of doing things, and in fact determined HIMSELF that our confirmed Plan should pay a set total amount to the unsecured creditors - and essentially ignored the "disposable income" caveat normally considered the method of determining how much a Plan would pay to those unsecured creditors.

We do not have the money to pay the attorney for a modification unless its included in the Plan somehow, and he doesn't seem inclined to do one at this time.

I don't want to hide anything as there is too much at stake.

Thoughts?

[keepsmiling]

Hey Alorth, I always wonder how it's going over there. I was just getting ready to congratulate on the good news of not having to have surgery.... and then I kept reading. Ugh. It's one thing after the next. At any rate, health is number one...so I am still going to say Congrats on that great news. Maybe you will never need the surgery. We can hope!!! After all this stupid plan you are in will be over in a few years... but your health is a lifetime concern.

Just throwing it out there as I'm not an expert, but seems to me that IF the tt gives you a hard time, you just tell him you followed the attorney's advice. And of course point out the fact that the numbers no longer lined up.

Good luck and stay well!

[kornellred]

I think you should do as your attorney suggests and put the $200 per month into a savings account. Then, if and when the trustee becomes aware of your situation, your plan can be modified as necessary.
Circumstances in life always change - that is why modifications to the plan are allowed. As long as you do not spend the newly available money, the trustee will not file a motion to dismiss your case. You can easily oppose such a motion if it were to happen. Trust your attorney.

[keepsmiling]

I'd keep an eye out for if you get a new judge too.... one who seems less of a hangin judge... and think about a modification at that time all the way around.

[alorth]

We definitely are NOT spending the surplus, but of course my fear is that if it is discovered at some point the TT will say we acted in "bad faith" with the confirmed Plan by not following it to its specified letter and not coming forward ourselves about not needing the new 401k loan in Jan. and the possible permanent delay in needing the surgery. I also wonder if the Judge would feel the same.

On the other hand, I would think that both the TT and the Judge would have some interest in the successful completion of the Plan if at all possible. Maybe I'm wrong about that, and maybe they don't really care one way or the other if a case gets dismissed.

Thanks for the responses.


My other concern is that our current payment is where it will be for the remaining 4 years of the BK, and we have a livable budget with the payment as is. It is somewhat restrictive, but we can work with it. I fear that if a mod is needed, we have a 50/50 chance of our situation actually getting WORSE as it relates to our monthly budget. I don't like the idea of giving the TT and the Judge 2 bites of the apple.

[LadyInTheRed]

Follow your attorney's advice and try not to worry too much about what may or may not happen. You and your attorney will deal with what happens when it happens. You may just end up with a nice savings built up when you get your discharge.