Filed chapter 13 8 months ago, plan not adding up.

[Clay3007]

Hello all,

we filed a joint chap 13 in may of 19. Everything has been going well until we had to submit tax returns to trustee. They informed us we had to turn over $3800 to them.

i sat down and tried to figure out my plan payments with and without the taxes and were over paying. Attorney put down 1% on our plan.

some back history

37,448 in secured
17,380 in unsecured
36,876 in student loans
=91,705.44

our plan was originally
5 years
$595 a month
turn over taxes minus $1500
=54,900

which over pays the plan by $11,418.85

but the trustee changed the plan to $685 a month 3 months in and we have never been told we are in anything more then a 1% plan.

so figuring out the new plan
5 years
$685 a month
turn over taxes minus $1500
= $60,300

which when i added everything up with our 10% trustee fees puts us at almost 100% plan.

i have a call in to mu trustee about the taxes and i understand we got ourselves in to this spot but its aggravating when we were told were in a 1% and it seems were more in a 100% for 5 years.

[justbroke]

Do you have secured debt in your plan, such as a car(s), a home, or other secured debt? Do you have attorney fees in the plan? Do you have federal and/or State taxes in the plan? Just because the payment is $685/month doesn't necessarily translate to a 100% plan. A 100% plan pays everyone, secured (car/home/other), attorney fees, the Trustee and then every single unsecured creditor their claim amount.

Also, a tax refund is not necessarily known, so you should not count the $1,500 in the monthly amount. If you are in a 100% plan and have no attorney, secured debt (car/home/other), then at $685/month that's only $685- $68 - $617 month (after Trustee fee). Multiply that out x 60 months and you $37,000.

Since you also have secured debt of $37K, you're also paying interest on that debt and it will be priority within the plan. That means that you are only going to pay 1% or less on the unsecured debt based on my math. (Remember, I'm not counting any "potential" tax refund. That is an unknown amount and can't be used in the calculation.)

Should you end up paying it off earlier due to contributions from non-exempt tax refunds, then you will just finish early.

[Clay3007]

Yes we have secured debt in the plan in the amount of $37,000 which included the attorney fees. no back taxes for state or federal.
our return this year was $5300 attorney said we can keep $1500 and turn over $3840.

the $685 i listed as our plan payment does not included the 10% trustee fees but i added that in to my figuring. Our plan paperwork says were in a 1%

[Clay3007]

Mabye im not understanding my own situation but here is the math i figured out

5 year plan
3 months @ $595
57 months @ $685

secured + Unsecured + Trustee fees
37,448.58 (54,256.86x .01) (40,830x .10)
$542.59 $4083

=plan debts
$42,074.17

40,830 plan payments (60 month plan)
- 42,074. Plan debts ( above calculation)
= -244.17

which i did see as of right now without any added money the plan is under funded by $244.17

[despritfreya]

I believe the problem is that you have a fundamental misunderstanding about Chapter 13. Your attny can, in the beginning, set up a Plan that pays basically nothing to the general unsecured creditors. However, that is not the end of the analysis. If, you can "afford" to pay more, then you will pay more, up to 100% of all allowed claims. Further, what your attny calculated as the minimum required could be mistaken. That is why the Plan you filed is a "proposal" subject to review and revision.

Based upon the info you have supplied we know your debt is, at least, the following:

Secured with interest over 60 months $42,597.00 (5% estimated - you may be paying a lower rate - also my math may be a bit off but it's pretty close.)
Unsecured $54,256.00 (all unsecured creditors including the student loan)

You are telling us that your Plan payments are now:

595 x 2 = $1,190
685 x 58 = $39,730
tax refund = $3,800

Total to be paid - $44,720.00

Personally, I do not see this as covering what needs to be paid which is the vehicle with interest, the Trustee’s fee and any additional fees to your attny. If it is sufficient, it still leaves little to nothing for the unsecured creditors - so, what am I missing?

Des.

[Clay3007]

Mabye so i have very little knowledge of chapter except for what i have picked up along the past 8 months of this journey. The car is included in the secured at a loan of 17k and the interest is 7.75 set by the bankruptcy. Paperwork from the chap 13 shows the interest and principle being paid at 21k. I guess i just thought that once it was confirmed at 1% thats what it was.

[justbroke]

Here's something that we like to say on BKForum; the percent payback does not matter. Unless you are in a 100% plan, the percentage of payback should not matter at all. What matters is your DMI and your payment. All else is a bunch of formulas which calculate your disposable monthly income (DMI) along with the other mandatory payments you must make (secured debt, attorney fees, Trustee fee). So, concentrating on the percentage payback is worthless. So much so, that the Districts in Florida no longer have the "percentage" payback on the model Chapter 13 plans. They now only have the total amount expected over the plan life.

[Clay3007]

I honestly have no clue what im expected to pay back except for the $685 a month and i guess all of my tax returns minus a $1500 exemption it seems.

[justbroke]

You can go to the National Data Center's site (ndc.org) and login there after you register. You can pull up your case and look at the "Base Plan" amount. The "Base Plan" is found by clock the new "Case Information" link on the left. The base plan will be on the right hand side of the screen after you click that. Divide that amount by 60 (if you're in a five year plan), and it should equal $685.

Otherwise, your recourse is to ask your attorney for the details. But, they'll probably just say... pay the $685/month and let them know if you have any tax refunds.

[Clay3007]

I have been following that. The base plan is blank.

[justbroke]

Has your plan been confirmed? If not, then many of the things on NDC will not make any sense.

[Clay3007]

Yep confirmed on 8-29-19

[Clay3007]

Just a follow update after many calls between me and my attorney. Our tax returns are exempt from the chap 13 due to ohio has a $1500 exemption and also my child tax credits are exempt. So no harm all funds recieved and continue on track. Attorney did go over plan with us.