Trustee Is Doubling Our Payment Effective September2020

[Zombie13]

@flashoflight, well, unfortunately, this is our 'pay to play' terms, as JustBroke says. When the attorney contacts us, it's usually for our income tax returns, and my most recent paystub. I don't like it either! The trustee's job is to be an advocate for the creditors. So, the trustee (and creditors) is (are) exclusively interested in increases in income (they could care less about increased expenses). Our BK attorney is the debtors' advocate (ours); and is/should be interested in changes in expenses and income. I see it like this: a home seller (and their realtor) is interested in maximizing the home sale price. The buyer (and their realtor) is interested in minimizing the home sale price.

[flashoflight]

Zombie13 Oh no... that's a sign of a very picky trustee who has way too much time on his hands. Our confirmation order is the standard boilerplate requesting tax returns and tax refunds over $500 and no addendum. No paystubs, no wage deduct order, doesn't care if you change employers, doesn't say anything about reporting raises above a certain percentage, etc. It was hell negotiating the budget, turning in receipts, and turning in every paystub until confirmation but it's auto pilot after that.

[Zombie13]

Well, all we can do now, is let the attorney do their job by negotiating with the trustee, and provide any requested documentation. Then, talk with the attorney after. In the meantime, I am working on steps to deflect/soften the damage.

[Barbisi]

Unfortunately, when my husband contacted the 401K loan office to see if he could stop paying the $100 monthly payback amount until 1/22, he was told if we did that ,we would be delinquent.
So this "new" expense (now paid after-tax not pre-tax and directly taken from his pay check since my husband changed companies) will continue until we are allowed to sell the house in 2022. This is the last reminder of that awful house that forced us into BK13 in the first place, since this loan was used to secure a down payment.
A bitter memory indeed!

[sophieanne]

Barbisi - I’m surprised - I believe the cares act allowed employees to defer loan payments for one year if requested by December 31st.

[flashoflight]

With this picky trustee and the requirement to submit a paystub every year, the deferred payment from the 401k loan would be used to increase the plan payment. Better to pay back into the 401k rather than to the unsecured creditors.

The CARES act can be used to do a 401k in-service withdraw and roll over to an IRA to make the funds readily accessible in an emergency. But check with the lawyer to make sure any withdraw is not considered disposable income and doesn't become non-exempt exempt money in your district.

[sophieanne]

flashoflight - Good point about the picky trustee. Even if the loan payment could be suspended for a year, the trustee may want to grab that savings it if he saw it was available. The CARES act does allow someone to take money out their work 401K plan without having to roll it over to an IRA. The money could be paid to the employee, then the payments deferred for a year. That is how it is being done at my husband's company. No payment for a year on any loan that is taken for covid related issues - e.g., a job loss or inability to get a job due to the crisis, for either spouse. No questions asked, a person just has to certify (by checkmark) that they or their spouse were impacted - health wise or financiall. That could work because nothing on the paycheck shows a withdrawal and there would be no loan payment due for a year and would not show on their check. (So possibly ask the employer what options they've put in place per the CARES act).

[flashoflight]

sophieanne I think a corona 401k withdrawal is better than a corona 401k loan. No penalty, 3 years to pay the taxes, no monthly payments. The taxes from this withdrawal is a good way to soak up a tax refund that goes to unsecured creditors. Just make sure it's not disposable income and property of the estate via your lawyer before pulling the trigger.

[sophieanne]

flashoflight - you've given another good point to consider. My husband's work is also allowing anyone who does a 401K withdrawal to repay it within 3 years (they're still working on how that will be done) if the employee wants to; at the moment, it won't be through loan payments. I was just really suggesting Barbisi's husband speak to his work to see if there are any options. (I'm only suggesting, they may or MAY NOT want to pay back any withdrawal by the end of the 3 years - since they will be finished their plan before then)

[Barbisi]

Thanks, sophieanne and flashoflight for your suggestions.
Unfortunately, neither of us have been directly impacted by the Corona Virus (yet!) My up coming surgery is in no way connected to this horrid pandemic.
Rather ,my husband wanted to see if worst comes to worst, he could delay paying this extra $100 per month antil this BK13 ends.
Actually, my math was wrong :the trustee wants to increase our plan payment by more than 50% -from $559 to $1202. Even after a more than 10% increase in gross salary , the net pay is only a little more than $100 extra (from the 2017 take home pay) even after increases in expenses and current IRS allowables are factored in -hardly enough raise to incur such an increased payment.
This is clearly an unfair and unwarranted modification!

[sophieanne]

Sorry about that Barbisi - i went totally off track with the COVID loans...and please stay say and avoid it. I was just thinking if you were unable to get job because of the virus...it could've been an option..Sorry again, you're going through this.

[Barbisi]

It's OK, sophieanne.
We need to be grateful that Covid-19 hasn't impacted us yet.
From what I've heard, we will still be wearing masks a full two years after a vaccine is developed (2023-4?) So, even if we can leave these bad memories of death and BK13 behind in Colorado in 2022, the Corona virus will follow us to our new home!