Ch 13 While Salary Is Lowered

[Lawrence21]

Hello'
I hope everyone is staying safe with all of this craziness out there.
I'm finally going to file my CH 13 since it appears as of today, one of my creditors filed for a request for summons, which I guess means I'm being sued.
One of my biggest questions and concerns is that as of Feb 1, my guaranteed monthly income has been lowered by 4K a month.
I was getting a salary + draw against future commissions. Understanding that I still have the opportunity to earn commissions above my salary, the courts will look at my last 6 month's income and that could be a whole lot higher than what I may start making. That doesn't seem fair. Any advise or experience with this?
Thanks

[justbroke]

Chapter 13s look forward, not backwards.

Let me explain. While the Means Test looks back, nearly every court and Trustee looks to Schedule I and Schedule J as to the "projected" scenario. That is, your Means Test will just be the "starting" point for the inquiry. Schedule I and Schedule J are going to drive everything in a Chapter 13. (This is because of the landmark Lanning case.)

Most attorneys will try to deal with commissions by averaging the commissions over the look back and even the look forward (Schedule I). In this way, it is already calculated. The downside to this is that if you don't earn the commissions, you may find yourself really short on income because you have already given it to the Trustee in anticipation of earning the commission.

There are several ways to deal with commissions, but please remember that Chapter 13s work best with "regular" income. If a lot of your salary is at risk, then you may need to propose some other way for the Trustee to manage your case.

[gremlin]

I had the same issue, when I filed i made about 30 grand in overtime. I told my attorney that it's not going to be like that all the time, but of course that's not how they looked at it and i got screwed. This year because of covid-19 i haven't had any so it's been extremely difficult to keep up. It's really sad during all this we have really heard about no relief for anyone in bankruptcy

[justbroke]

I had the same issue, when I filed i made about 30 grand in overtime. I told my attorney that it's not going to be like that all the time, but of course that's not how they looked at it and i got screwed. This year because of covid-19 i haven't had any so it's been extremely difficult to keep up. It's really sad during all this we have really heard about no relief for anyone in bankruptcy

You see, this is the issue I was talking about. Chapter 13 plans, in my opinion, should have special provisions to deal with overtime and commissions which are not guaranteed. It just puts you in a really bad spot.

[NoMoney30]

Yes be careful... while they do look forward, my 6 month lookback totally screwed me. My attorney should have better prepared me or warned me that I should wait longer. But I had all sorts of goofy things happen in my lookback. I had a small raise, I had health insurance premiums go up, I had a 401k adjustment (that my attorney told me to do) ... but basically nobody could figure out how much money I actually made and my trustee was like OH there's like 1000 bucks more a month here! After months of fighting I lost the battle and my payment went up by 900 bucks a month.

But definitely consult and find a GOOD attorney. Even if your creditor is going to sue you, you might still have some time for that... I really thought with all this pandemic stuff right now they weren't allowed to seek people out for bad debt.

[Lawrence21]

Thanks for the replies. I am waiting a couple of months before I file as the 6 month lookback with present a better picture of my true "current" income. The $9K one time PTO will not be there, and my $4K draw vs commissions ended March 15th, so that won't be there.

[Carmella]

Thanks for the replies. I am waiting a couple of months before I file as the 6 month lookback with present a better picture of my true "current" income. The $9K one time PTO will not be there, and my $4K draw vs commissions ended March 15th, so that won't be there.

It good you have time to wait. You would need to check in your state, but when we were sued it was easy to extend the time frame by submitting the required paperwork at the last date possible (if they give you 30 days you file on day 29 or 30) and when we do go to court we were able to by more time as we were deciding how to handle the financial situation. I did not volunteer info we were 99.9% sure to go into BK I only said I was exploring it as an option when they did ask. I had two hearing on a few of the credit cards. Make sure you check with your lawyer on how to handle it. We went to court without a lawyer, but my BK lawyer told me what we should do.

I am also in a situation because I had a second job. I know from experience that this sort of job in my line of work can be plentiful or nothing at all. At the end of last year work was sparse then picked up in January, but was totally shut down due to Covid 19 lock down and nursing homes not allowing people to work in more than 1 nursing home. I haven't had my second job since the middle of March and I do not see it getting any better through out this year. My husband and I both essential workers so we always had a paycheck and luckily my main job kept enough census to give me enough work. But that second job was counted as part of our income. I haven't contacted the attorney. My husband has got bonuses and now a little overtime, but it still doesn't make up for the amount I use to make. The stimulus check went to buy a new refrigerator since it died unexpectedly and the rest of the stimulus was absorbed into bills and other "needs." We are barely making ends meet living paycheck to paycheck. In October our first mortgage is paid and we get to keep that money so that will help a lot to get past the paycheck to paycheck.

BK 13 is not always easy. I agree with justbroke there should be some way to account for income that is not steady/bonuses. I would have been all for a lower payment with an agreement to pay a percentage of my second job paycheck on monthly or quarterly basis. On that job the paycheck varied from 0-$50 up to around $600, but generally $200 give or take little.