New Job

[chicagoed195]

Does your Chapter 13 plan require you to inform the trustee if your salary increase beyond a certain point? If the only requirement is that you provide the trustee with a copy of your tax return or new income and expense numbers, if requested, then I am not sure why your attorney would tell you you NEEDED to do a plan modification.

There is nothing in the bankruptcy code that requires a debtor to apply for a modification if the debtor's situation has changed. Your Chapter 13 plan is your plan unless and until it is modified. The "good faith" requirement of the bankruptcy code does not apply to modifications, at least at this time. I'm not a lawyer, but that is my understanding of the current status of modifications.

In your case, if you have no other reporting requirement than providing your tax returns, the likelihood that the trustee would make a motion to modify based on 2013 is minimal. Your new job starts in June, which means your increase for 2013 will reflect on your tax return at about 5.8%. If you file your return in April 2014, that would be the earliest the trustee would even see the increase. Carrying that out furthur. the first time he is likely to see the full 10% increase is in April of 2015.

In most cases where the trustee has identified an increase in DMI due to an increase in salary, and made a motion to modify, the courts have only dealt with that prospectively and changed the payments going forward.

So, I just don't understand why your attorney would propose that you voluntarily request a modification to increase your payment, unless there is something in your approved Chapter 13 plan that requires specific notification.

[freeme0215]

can you convert to a Ch 7 in this case..

[dmc-2008]

They would find out come tax season if you have to submit taxes I think. Congrats on the job! Take it and by the time this is over you will have that much more income. Good luck

[cz3ch]

I wouldn't do that. You will then have to deal with all of the creditors who didn't file claims as well as the ones who did. If you end up paying 100% of the filed claims, you'll be paying only about 21% of your unsecured debt plus trustee and attorney fees. You aren't going to get that kind of deal with all of your creditors outside of BK.

Good point, I'll stay on track. It's just frustrating. I'll find out more tomorrow from the attorney and will update the post.

[LadyInTheRed]

Off topic: What if I wanted to dismiss the case (or have it dismissed) and just deal with the creditors directly. Considering I converted from a Chapter 7 originally do I have any options? I know this is totally left-field but the bankruptcy has been more stressful than the creditors banging on my door.

I wouldn't do that. You will then have to deal with all of the creditors who didn't file claims as well as the ones who did. If you end up paying 100% of the filed claims, you'll be paying only about 21% of your unsecured debt plus trustee and attorney fees. You aren't going to get that kind of deal with all of your creditors outside of BK.

[cz3ch]

We're typing at the same time.

Do not just leave everything up to the attorney. Make sure you know what he is going to propose to the trustee before he proposes it. If it doesn't make sense to you, ask questions. You are your own best advocate.

If you do have to pay all of your DMI, look at the bright side. If the job becomes permenent and that excess DMI really is $900, you'll finish your plan in less than half the time you originally thought.

Lol, I noticed that.

Right now I'm waiting to hear what the proposed plan numbers would look like. We're in the discovery phase at this point. I won't let him do anything without my approval. And if he does take all my DMI then so be it, at least I'll be paid in full much more quickly

Off topic: What if I wanted to dismiss the case (or have it dismissed) and just deal with the creditors directly. Considering I converted from a Chapter 7 originally do I have any options? I know this is totally left-field but the bankruptcy has been more stressful than the creditors banging on my door.

[LadyInTheRed]

If the trustee objects to me having excess DMI that will be a sad thing indeed. I'm pretty sure this job will go permanent so hopefully he doesn't try to take all of my DMI. I'd really like to start a savings account.




I've told my attorney that this is a 6 month position that could turn permanent. I guess it's up to the attorney on how best to handle it from here.

We're typing at the same time.

Do not just leave everything up to the attorney. Make sure you know what he is going to propose to the trustee before he proposes it. If it doesn't make sense to you, ask questions. You are your own best advocate.

If you do have to pay all of your DMI, look at the bright side. If the job becomes permenent and that excess DMI really is $900, you'll finish your plan in less than half the time you originally thought.

[cz3ch]

Congrats on great news and crossing fingers that all works out. I'd at least wait til you have an actual paycheck in hand.

The attorney said that without paystubs they can only do an estimation of the mod. I'd probably have to wait until my first paystub to actually submit the mod. And thanks

[LadyInTheRed]

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.

If the job is only temporary with a only a possibility of becoming permanent, tell your attorney that. You have nothing to gain by witholding relevant facts from your attorney. No matter how opptomistic you are, it is not to your advantage to let the trustee think this is a guaranteed permanent increase in your income.

[cz3ch]

No. I meant whether to take the job. It sounds like you will take it anyway, which I think is a good decision.

Yes, I'm taking the job regardless. Even if it means that my pay increase will be eaten up by the Trustee. The job experience and opportunity (plus health insurance) is so worth it.

"Do things that scare you"

[cz3ch]

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.

If the trustee objects to me having excess DMI that will be a sad thing indeed. I'm pretty sure this job will go permanent so hopefully he doesn't try to take all of my DMI. I'd really like to start a savings account.

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.

I've told my attorney that this is a 6 month position that could turn permanent. I guess it's up to the attorney on how best to handle it from here.

[LadyInTheRed]

You mentioned a decision to make, are you referring to dismissal?

No. I meant whether to take the job. It sounds like you will take it anyway, which I think is a good decision.

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.

Unfortunately, that may not be an option. But, ask your attorney. It can't hurt to try.

[keepsmiling]

Congrats on great news and crossing fingers that all works out. I'd at least wait til you have an actual paycheck in hand.

[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?

[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.