New Job

[cz3ch]

I'm in the middle of a Chapter 13 payment plan and all is going well. I just landed a new job that I start in 2 weeks. It will pay me an extra 10k gross/year. Do I need to alert my lawyers of the job change and if so what can I expect to happen to my plan/case?

This is not a long term position (probably 6 months) but I couldn't pass up the opportunity.

How best to deal with it?

I also want to be able to put away some money in savings as well for an emergency fund. As it stands right now I can't put more than maybe 50$/mo in savings with my current plan. I really want this new job to help me get ahead financially but I realize that my plan payment may increase.

Thanks!

[justbroke]

Just inform your attorney. They will decide whether it needs to be disclosed to the Trustee. In many cases, Trustees are not interested in modifying the plan payments, so long as you are paying on time and the raise is not "significant". I can't define significant, but if it's more than 10%, the Trustee could seek to modify your payments.

[cz3ch]

Just inform your attorney. They will decide whether it needs to be disclosed to the Trustee. In many cases, Trustees are not interested in modifying the plan payments, so long as you are paying on time and the raise is not "significant". I can't define significant, but if it's more than 10%, the Trustee could seek to modify your payments.

I think the pay increase might be more than 10%, so I've alerted the attorney that I'm most likely taking this job and waiting to hear back. Thanks for your response as always, JB.

[cz3ch]

I'm so frustrated. I talked to the lawyer and he said it would indeed increase my plan. But by how much, he's not sure. He said all disposable income above my budget would be allocated to the plan. I calculated my new net pay and my income is an extra $900.00/mo net. So this means that I have to give an extra $900.00 towards the plan every month? What's the point of having the new job if you can't create a savings fund.

This new job is literally my dream job and the pay is really good but I'm so frustrated that I'm literally taking a job with no "net pay increase".

Now I'm not 100% sure but I looked at my claims register and there's only been $16,963.92 worth of claims made against me and the deadline for filing claims was 4/11/13. So does this mean that I'll only be paying against the $16,963.92 over 60 months(+trustee fees + lawyer fees)?

I'm really confused and frustrated. Any help or advice is appreciated.

I've spoken to my lawyers and they said I need to do a MOD and they can estimate what my new plan payment will be. I'm just hoping it's something reasonable to where I can create a savings.

[LadyInTheRed]

Your plan will end as soon as all claims are paid if that happens before the end of your 60 month plan. Are you looking at the claims register on PACER or on 13datacenter (or that other site that I can't think of the name of)? PACER is where you should be looking for an accurate record of claims.

So, if your plan payment increases, it could help you complete your plan early. If the job won't help your plan end early, but only increase the percentage of unsecured debt that gets paid, then you have a decision to make. It may be worth taking your dream job even if you don't receive an immediate financial benefit. Could the job lead to future dream jobs? Might it extend past the 6 months and become permanent? You need to look at the benefits other than immediate financial ones. Usually, one well paying job leads to others.

[cz3ch]

Your plan will end as soon as all claims are paid if that happens before the end of your 60 month plan. Are you looking at the claims register on PACER or on 13datacenter (or that other site that I can't think of the name of)? PACER is where you should be looking for an accurate record of claims.

So, if your plan payment increases, it could help you complete your plan early. If the job won't help your plan end early, but only increase the percentage of unsecured debt that gets paid, then you have a decision to make. It may be worth taking your dream job even if you don't receive an immediate financial benefit. Could the job lead to future dream jobs? Might it extend past the 6 months and become permanent? You need to look at the benefits other than immediate financial ones. Usually, one well paying job leads to others.

Thanks for chiming in, LITR.

I'm looking at Pacer. The claims period expired on 4/11/13 and my total unsecured debt is $16,963.92 not including trustee fees/lawyer fees rolled into the plan. From my understanding since the other $80,000 worth of creditors never made a claim, I'm only on the hook for the $16,963.92?

I'm trying to look at this as a positive thing. From what I've heard from the lawyer it will only increase the the percentage of unsecured debt that gets paid. As of right now the creditors are getting barely anything at all since I'm paying $100/mo for 60 months. It's basically covering the trustee/lawyer fees. You mentioned a decision to make, are you referring to dismissal? I originally converted from a Chapter 7 and from what I've read I cannot dismiss if I've converted. So I'm basically stuck in the plan.

I've talked to my new employer and they said the job will extend past 6 months and most likely become permanent if I do a good job. This job offers paid benefits/health insurance (which I don't have now). So I'm definitely taking it if nothing more than for that. And you're right, working with this company will lead to bigger and better things if it isn't permanent.

On the other side of the coin, my current employer wants me to stay on part-time which would gross an extra $1,500/mo. Seeing as though it might all go to the plan it feels like I'm working for free.

Bottom-line, I want to do the right thing and pay my plan but I'd also like to start a savings account even if it means only putting away $200-400/month. I'm thinking that if I max out my 401k contribution this would be a good way to save in the long term while keeping my plan payment at bay.

Thoughts and comments are appreciated as always

[murph996]

If you are already in a 100% plan, it would not affect your payment. It could be that initially you were in a plan less than 100% And the unfiled claims moved you to 100%

If you are in a plan that is less than 100% and this additional income would push you to a 100% plan, then you payment would only go up to satisfy the creditors that put in claims. The tricky part is that if your income drops after the 6 months, you would need to modify your payment again--and you may drop below a 100% plan at that point.

If the additional incremental income would still leave you in a plan less than 100%, then it would all go to the creditors.

Regardless if this will now push you into a 100% plan, the payment should be based on the actual claims. In my 100% 13, we modified payment to include my 2nd mortage, and the new payment amount was based on the actual claims not the claims we initially budgeted.

[murph996]

They cannot take that full amount. 17k/60 months is just under $300 monthly payment. Add in fees and make up for the time you were paying $100 a month, and your payment may be a bit more than that.

I'm thinking out loud here..but if you stipulate that this is temporary and your earnings will decrease after this is over, you may have to pay a higher percentage of your increase since bumping your income for 6 months and then having it drop down may not get you to a 100% plan.

But if you just go in saying you had an increase in income, they will assume that income for 60 months and your payment will go to somewhere around that $300 mark. If your income decreases, you would modify again to drop the payment.

[cz3ch]

If you are already in a 100% plan, it would not affect your payment. It could be that initially you were in a plan less than 100% And the unfiled claims moved you to 100%

If you are in a plan that is less than 100% and this additional income would push you to a 100% plan, then you payment would only go up to satisfy the creditors that put in claims. The tricky part is that if your income drops after the 6 months, you would need to modify your payment again--and you may drop below a 100% plan at that point.

If the additional incremental income would still leave you in a plan less than 100%, then it would all go to the creditors.

Regardless if this will now push you into a 100% plan, the payment should be based on the actual claims. In my 100% 13, we modified payment to include my 2nd mortage, and the new payment amount was based on the actual claims not the claims we initially budgeted.

Could you elaborate on the definition of 100% plan? Initially my unsecured debt was in the 90k range but the creditors have only filed $16,963.92. My plan was based on paying back all unsecured creditors as much disposable income that I could (at the time with my budget it was calculated at $100/mo). So I'm assuming that's the definition of a 100% plan? Since I only owe $16,963.92 I guess that's what I'm paying towards. I guess this should be good news for me considering I started out with 90k+ of unsecured debt, right?

[cz3ch]

They cannot take that full amount. 17k/60 months is just under $300 monthly payment. Add in fees and make up for the time you were paying $100 a month, and your payment may be a bit more than that.

I'm thinking out loud here..but if you stipulate that this is temporary and your earnings will decrease after this is over, you may have to pay a higher percentage of your increase since bumping your income for 6 months and then having it drop down may not get you to a 100% plan.

But if you just go in saying you had an increase in income, they will assume that income for 60 months and your payment will go to somewhere around that $300 mark. If your income decreases, you would modify again to drop the payment.

I calculated it as well and it's around $300/mo + trustee/lawyer fees. That's not so bad. So just to make sure I'm on the same page, I'm only paying the unsecured creditors that filed a claim before the expiration? The ones that failed to file don't get paid through the plan, correct? If that's the case, then my net income increase should still leave me with money leftover to create a savings account which will be good.

I'm just going into this letting the lawyers know this is a new job and here's my new pay rate/earnings. More than likely I will be at this job for a good while as it seems pretty solid.

Sorry for all the questions but BK still confuses me and my lawyers aren't really giving me much information to work with.

[murph996]

It would be a 100% plan if your disposable income is such that you would be able to pay off everyone that made a claim. This is the only time that your payback % is relevant because your payments cant be more than what you owe (+ fees).

If everyone filed a claim, you would likely have to pay all your additional income to the plan. But, since so much of your unsecured debt went unclaimed, your payment should be much less than that - So yes its very good news that 63k of your unsecured debt went unclaimed.

[cz3ch]

It would be a 100% plan if your disposable income is such that you would be able to pay off everyone that made a claim. This is the only time that your payback % is relevant because your payments cant be more than what you owe (+ fees).

If everyone filed a claim, you would likely have to pay all your additional income to the plan. But, since so much of your unsecured debt went unclaimed, your payment should be much less than that - So yes its very good news that 63k of your unsecured debt went unclaimed.

Ok, now I understand it. Thanks for the explanation and yes that is great news. Looks like I'll be able to save up after all. Now I need to wait to hear from my attorneys to do the mod.

[keepsmiling]

But what will you do when 6 months is up?
I wonder if you shouldn't wait to see what happens.

[LadyInTheRed]

If you are already in a 100% plan, it would not affect your payment. It could be that initially you were in a plan less than 100% And the unfiled claims moved you to 100%

If you are in a plan that is less than 100% and this additional income would push you to a 100% plan, then you payment would only go up to satisfy the creditors that put in claims.

This is not necessarily true. A trustee could insist that a debtor pay 100% of their DMI to the plan until all claims are paid off rather than have it spread over the entire 60 months. That way, if the debtor's income decreases and the payment lowered again (as very well may happen in this case), then the creditors will have gotten the increased DMI while it existed. Oftentimes, in a 100% plan, the trustee does not object to the fact that the debtor has excess DMI not going to the plan. But, sometimes they do. In this case, with the length of the job in questions, I bet the trustee will insist that all DMI go to the plan.

Originally Posted by murph996

The tricky part is that if your income drops after the 6 months, you would need to modify your payment again--and you may drop below a 100% plan at that point.

Its important that cz3ch make sure his attorney understands that the job is not permananet. The modification could be only for a defined period of time so that a second modification isn't needed.

[cz3ch]

But what will you do when 6 months is up?
I wonder if you shouldn't wait to see what happens.

If the job doesn't last past 6 months then I'll request another modification I guess. Not informing the trustee that I'm making more money is a bad thing right?