Filing CH 13 soon

[Lawrence21]

Hello,
I was getting ready to file this week when I awoke in the middle of the night (not sleeping at all lately) realizing back in Jan I received a Paid Time Off payout that really skews my last 6 month's income that I will be providing. Should I wait another month or would the Trustee take that into consideration? Basically it bumps my last 6 month's average pay by $1k per month.
Thanks

[justbroke]

Chapter 13s are forward looking. Just make sure your attorney accounts for that "one-time" payment. You may get into a tussle with the Trustee to explain that, but if this is something that you normally do annually (take a lump sum), then it should be included in your "annual" calculation.

I do the same thing (take a payout) and it's significant just like yours. However, you should think about if you'll take the PTO or take the payout in the future. If you keep taking the payout, then it must be factored on an annual basis (not 6 months). That could increase your monthly income to $500 (based on your $1K for six months).

[shipo]

Lawrence21, back in 2014 when my attorney and I were writing up my Chapter 13 filing, we deliberately delayed the filing so as to not show spot bonus I'd received. If I recall correctly, we finalized the filing paperwork before Thanksgiving, but didn't actually file until late January of 2015.

Given yours is due to untaken vacation, my suggestion is similar to what justbroke wrote, I would strongly recommend you start taking enough vacation for at least the next two or three years so the payment doesn't bump your annual income enough to raise attention from your Trustee.

[Lawrence21]

Thanks for the quick responses. The PTO payment was a one time (lifetime) payout so it will not happen in the future.

[justbroke]

Please be sure to inform your attorney that it was one-time and that you want to make sure it's not used in the determination of your disposable monthly income (DMI) calculation.

[flashoflight]

Thanks for the quick responses. The PTO payment was a one time (lifetime) payout so it will not happen in the future.

Can you explain this a little bit more. The trustee will want the same thing. It's once in a lifetime because you decided it was so or is it written in the HR manual like that? You deciding you will never cash it out again isn't good enough. The payout may also be revealed in YTD figures on current paystubs too and might have a line item mentioning the PTO cashout. Ultimately, it's the judge who decides if the income counts, but the trustee decides if the income counts in uncontested matters. Your bank statements may reveal the cashout as well depending on how many you have to submit upon initial filing.

[justbroke]

For Chapter 13s, it's a little nuanced. Since the SCOTUS decision in Lanning, Chapter 13 bankruptcies are arguably forward looking. A one-time event should be explainable. However, as you point out flashoflight, whether accumulated or accrued vacation pay is an "asset" in a case. I have seen it argued both ways and neither the SCOTUS Seagle case or the Lines case give me a clear answer. If a debtor, such as myself, can determine when a PTO payout/cashout is done and as a lump sum, then the Trustee should have the same rights (as they step into the debtor's shoes).

Despite the fact that unpaid wages are generally on the table, unless exempt, this is a tricky area. For a Chapter 7, this may be easier by exemption "unpaid" wages under a particular State's non-bankruptcy laws. For Chapter 13s, the future potential payments could be problematic, especially if the Trustee reviews annual tax returns. If the PTO is just deferred payment of overtime, it makes it even more trickier because the income has already been earned. (I make no reference to other PTO such as sick time.)

I had to argue a "bonus" as a one time thing (we never ever received another one in over 10 years). I told the (Chapter 13) Trustee that if I get one, I'll pass it along. Interestingly, no such language was in the final order confirming plan, although I was expecting that language to appear.

[Lawrence21]

Can you explain this a little bit more. The trustee will want the same thing. It's once in a lifetime because you decided it was so or is it written in the HR manual like that? You deciding you will never cash it out again isn't good enough. The payout may also be revealed in YTD figures on current paystubs too and might have a line item mentioning the PTO cashout. Ultimately, it's the judge who decides if the income counts, but the trustee decides if the income counts in uncontested matters. Your bank statements may reveal the cashout as well depending on how many you have to submit upon initial filing.

Thanks for the response. Our company went from PTO to a NO per-pay-period accrual plan. I have emails from HR backing it up, and on my pay stub it has it as PTO Payout.