Trustee Motion To Raise Current Payment By More Than 50%

[Barbisi]

UPDATE: While the new final payment hasn't been negotiated yet, we were able to speak with our attorney vie phone.It does appear that our final DMI after expenses is only about $40+ more than in 2017, even with the "20% increase in compensation" for my husband after changing companies following his layoff. The main reason is our insurance premiums have quadrupled and our out of pocket costs per visit has increased, with a 2K out patient surgery coming up for me plus 5 dental crowns for my husband during this BK13 and a possible bone grafting ($1200) on my implanted tooth , if the antibiotic fails to stop the current infection. COL in Colorado has substantially increased and while we have a tiny cushion of wiggle room to deal with the frequent emergencies which have befallen us,we certainly don't have more than $600 new DMI to hand over to the trustee every month.
He also touched on the fresh lawyer fees to fight this modification which he will bill to the unsecureds, thereby reducing their share of the payback and possibly the trustees fees as well.
I am certain the trustees wants the entire $197 monthly car payment which ends in Dec.2020. And he will probably further increase the payment by as much as he get away with.
Though most of you have the most wonderful trustees and love everything about your BK13 lives , can any one blame me for wanting to get out of here so I can change my life and start over some where different with out the constant reminders and baggage of this BK13?

[Carmella]

Barbisi I hope your lawyer is able to get the point across that your DMI is around $40 more per month and that the plan continues as it was initially intended. We are in 100% pay back and in the original agreement they will take an extra $227 a month after our car payment is finished--but we knew that upfront/expect it. I hope we don't get any bumps in the road when our mortgage is paid off since we will have more money which we really need since we cannot afford "extra" expenses for anything outside of the regular budget. Even if we have a budget of $1,000 for the house that money goes quickly. I wish I understood the budget better when we first applied, whether it made a difference or not I will never know. But I can say I really underestimated and did not plan for anything out of the ordinary like the refrigerator dying. If we have $1,000 budget most of that would cover a refrigerator (not even a fancy one, it's on sale and replacing the fairly standard, smaller than most people I know have refrigerator) and then there's nothing for any other expenses. If we didn't have the stimulus I would have had to live out of a small college size refrigerator or maybe two of them!

My dream would be for Chapter 13 to allow more for home expenses and car repairs--that sort of thing. And to take into account savings. Even if it was a forced savings where part of the payment went into savings and you had to justify why you wanted to use it!

[justbroke]

There's no one in a Chapter 13 that "wants" to stay in a Chapter 13. I didn't like my first Chapter 13, and I converted to a Chapter 7 during my first Chapter 13. I gave up wanting to keep investment property -- and that dream -- in order to get out. For the majority of Chapter 13 cases (let's just say 90%), the Chapter 13 Trustee is fine with the case and there's nothing that complex or interesting about how income works. In the other 10%, where there are many factors specifically related to income and especially expenses, those trustees are more active in those cases.

The only luck I had was highly stable income and employment for 20 years. My other luck was there was nothing extraordinary about my expenses (whether medical or special cases). When a Chapter 13 Trustee has fought through confirmation and later, on annual audit, sees marked income increases we all expect that the Chapter 13 Trustee is going to motion for a modification. It's the nature of the beast. A survey of Chapter 13 Trustees found that they move to modify plans in only about 10% of cases (that why I say that 90% of cases are probably standard).

As I always write, a Chapter 13 is not a cakewalk. It is not your friend and it will never love you. It is a commitment to living through every single thing that life throws at you while persevering to see the discharge (Chapter 13 or conversion to Chapter 7 if you can). The tough part is that the Chapter 13 is there to protect you but it is still voluntary. We choose to live under the budget constraints and life's challenges in order to keep creditors at bay. Otherwise, like more than 50% of other Chapter 13 debtors, we let our Chapter 13 case dismiss and seek redress with our creditors in another manner. We must weight lawsuits, judgements, evictions, repossessions and foreclosures. As my favorite judge puts it... it's a pay to play system.

In the end, no one wants to be in a Chapter 13. The Trustees are no more nice than the creditors that would sue you if they knew you had money. The niceties are nothing more than professional courtesies. The Trustees, after all, are litigators and trying to get as much from the debtor as they can, on behalf of the creditors. My position, as a debtor, is to pay as little to the creditors as possible (in bankruptcy). We are adversaries by definition as we have competing goals.

I'm glad to read that you're making progress and it's looking a little better. You are following the long-tried process for increased income. About 10% of cases go through the same thing when there is additional income. New Schedule I/J, hearings, and mostly negotiation. It reads as though your lawyer is negotiating and getting things done. I hope that you reach a number that truly reflects the difference.

[Barbisi]

Thanks, Carmella and jb!
There is a new wrinkle to our ongoing saga of BK13 survival -just after I posted, his new company did an "Off cycle Compensation Notification" which amounts to a raise of 4.75% (a" market adjustment") to ensure my husband is paid what other engineers at his level are paid. As the lawyer said "Nice raise ,bad timing!"
Now the crafty trustee will probably raise the modification by another$400 ( i.e.the estimated additional take home net pay. )
On the "bright" side (if there is such a thing in a BK13) maybe he won't be able to raise it beyond the $643 he's already set his sights on, since we weren't really making the $600+ before.
Oh the luck of the trustee LOL

[sophieanne]

Barbisi - if it’s not one thing, it’s another. I hope the trustee doesn’t take any more than the $643..it would be nice if you can get to the end of your plan with no more issues 😊

[justbroke]

Oh the luck of the trustee LOL

Yeah.... your Trustee is the only one "winning" at this. Maybe the raise won't show up for a few weeks.

[flashoflight]

Wait til hubby gets a paycheck with the new raise and taxes withheld before notifying the trustee. Sometimes these things are delayed by slow bureaucracy by a payperiod or more. Does your confirmation say you have to always notify the trustee when there is a raise? You don't need to tell the trustee early and maybe not until next tax season.

[Barbisi]

Well, sophieanne flashoflight and jb, we are honest and trying to pay only a fair share , not every last dime of what ever raise my husband gets. When he worked at R. ,he was clearly and woefully underpaid ,which led us to foolishly buy a run down house we couldn't afford to fix up ,but couldn't afford to live in as it was ,because of the deplorable condition it was in.
This climate helped hasten my mother's death in 2016, and has visited a whole host of chronic conditions on me that numerous doctors have told me will subside or just go away when I am allowed to live at sea level in a more humid and more temperate climate like Seattle without huge daily surges in barometric pressure, brutal temperatures with out a murderous sun and infinite altitude. I deserve better than the mountains and marijuana that this place has to offer.
The raise will be effective on Sept. 11, but it will be visible on Sept. 4, the day after the payment modification deadline.
The trustee demanded bank account receipts when we were battling to be confirmed. We are afraid, he will prevent us from getting a discharge in Feb.2022 and may even claim we are trying to defraud our "masters" ,the creditors , by purposely with holding money owed to them and maybe even triple our payment! The lawyer warned us in 2017 that the judge will always rule in this particular trustee's favor. I think he would definitely retaliate if we failed to disclose this increase.
We have always been unlucky in timing and I predict if we stayed here beyond 2022, my husband would not only not get any more raises, but he would also be laid off again as he was last year and almost was in the spring this year.
Colorado is our lifetime bad luck charm -he got this raise just so the trustee could successfully increase the payment.
My husband believes the trustee knew in advance about this net increase and coupled with the car payment, the amount would be a little over $600!
He knew exactly how much to raise the payment!

[Zombie13]

I am not "hubby". Thank you.

I was notified today, when the new rate begins, and the first affected paycheck date.
More than ironically, the new pay rate begins, 2 days after the objection date.

I conjecture, the trustee received advance notice of the pay increase. Perhaps they reserve the
right to request from the employer, advance notification of salary increases, so they can determine,
in advance, whether to prepare a "Motion to Modify the Plan to Increase Payments". I recall reading
about this, back in 2017, as we prepared for this situation. I could be wrong, but I doubt it.

Additionally, I find it rather odd the requested increase is very close to the salary increase plus the car payment amount (once paid off, in a few months).

Let's assume for the moment, the trustee did have advance notice of this pay increase.
Let's further assume, I chose to not inform the attorney, about the update.

What happens?

In 2021, the trustee already knows, I chose to be dishonest by not disclosing the pay increase. This gives the trustee a legally sound reason to retaliate, by increasing the payment much further, and possibly, choosing to reject a completion of the plan.

We cannot take that risk.

So, I notified the attorney. It's his job to advise us on the correct course of action. He stated, we probably need to report this. Yeah, although we don't like it, we need to do it.

Last year when I received a severance, while getting a paycheck from the new company, I notified the attorney of the situation. The attorney stated, we didn't need to notify the trustee. So, okay. We just kept moving forward.

We have 18 payments left. We shall make these payments, then we're done.

In the meantime: if we pay the maximum increase of $650 or so, we basically, stay where we are, no change.

Based on the timing, it would be a very poor decision to choose to keep this information from the attorney (our legal advocate) and by extension, the trustee.

Have a nice day.

[Barbisi]

Some people post on these forums that "BK13 is the best thing that ever happened" to them while also boasting that their trustee " never looks at their tax returns, pay stubs or pay raises" (i.e. leaves them alone).
Well, I hope you can understand why I don't consider these three and a half years the high point of my life and why I will never embrace what has come my way in this BK13.
As some one once told me "Any lesson that doesn't cost you a lot of money, isn't a lesson well learned."
Well, I've learned and I would rather be dead than go through another five years like this!

[Carmella]

I like justbroke explanation, just have to remember that BK 13 is not our friend that sums it up. In a way I am thankful I am in 100% plan because they can't get anymore out of us since they are taking it all. Even though the trustee tried once it was easy enough to say, "nope it's already 100%."

Hang in there Barbisi you are coming down the home stretch. We will hit the 2.5 yr mark in October. I am looking at each 6 month milestone as my short term goals, surviving another 6 months.

[justbroke]

... we are honest and trying to pay only a fair share , not every last dime of what ever raise my husband gets.

I agree that no one should pay more than required. For some reason you have a Chapter 13 Trustee that is a hard nose. But I've seen it in my trustee as well but I've seen him super nice most of the time.

Some people post on these forums that "BK13 is the best thing that ever happened" to them while also boasting that their trustee " never looks at their tax returns, pay stubs or pay raises" (i.e. leaves them alone).

Yes. That's true. In some districts the Trustees don't look at tax returns or anything else. Some districts even allow a debtor to incur up to $5,000 in debt without permission. Those are the lucky few. In Florida, the districts require tax returns and we can't incur debt. I don't begrudge those that are in more tolerant districts because Florida has the unlimited homestead exemption which "could" be an advantage over a district with a messily $11,250 in homestead exemption. It's a balancing act.

For some people, a BK13 is the best thing as it teaches them to budget, and teaches them, hopefully, that credit is not a crutch to use when unable to make ends meet. For me, I learned only that credit can be difficult to manage even with the best intentions (e.g. investment property going empty for 9 months). For some that don't know how to live within a strict budget, a Chapter 13 could be a blessing to them as they learn with the fear of having their case dismissed and then feeling the full wrath of their creditors. For others, using a Chapter 13 as a tool to save property is the greatest thing ever.

In the end, a Chapter 13 is defined by the purpose under which the debtor filed. If it was a voluntary Chapter 13 to save property, the debtor is likely very happy. If it's a Chapter 13 upon which a would-be Chapter 7 debtor were forced... it is likely that the debtor won't be happy. This is why I always write that every single Chapter 13 is different, unique.

As some one once told me "Any lesson that doesn't cost you a lot of money, isn't a lesson well learned."

I think I heard that somewhere as well.

[shipo]

Some people post on these forums that "BK13 is the best thing that ever happened"

Well, while I have never boasted as such, I would agree the prospect, and then the experience, of my Chapter 13 was exceedingly positive. Did my Trustee look at my tax returns? Yes. Did he ask for any amount over a certain tax return threshold? Yes. Did he flinch when my income rose due to a promotion? No; apparently my promotion netted me only a 9.5% increase in income and his threshold for that is 10% in any one year.

"Why", you might ask, "does shipo say his Chapter 13 was a positive experience?"

Simple, after my wife's business failed, we were in debt up to about the level of my annual gross income. Then we had to sell our house for about $48,000 less than we owed on it; the first mortgage company was made whole, but the second mortgage company kept insisting we had money stashed away and they wanted it; in the end we signed a personal (as in unsecured) note for that amount on the day we sold the house. Then the final shoe dropped, I discovered my (now former) business partner had obtained credit in my name in the form of three very high-limit credit cards and two signature loans; that debt alone was way over my annual gross income, and the three chunks of debt amounted to over three years of my gross salary!

Long story short, being hundreds of thousands of dollars in debt, all of which was unsecured, and only having a "decent" job (from an income perspective) was horrible, debt collectors calling and mailing, Sheriff Deputies knocking on the door, you name it, I had it. The Chapter 13 made all of that noise stop and allowed me to concentrate on living again, albeit on a shoe-string budget for 5 years. Yeah, I had challenges during those years, hell, I expect most folks in a Chapter 13 do, in my case, having my (then) 16 year old car succumb to rust and corrosion and needing to buy something newer was a hard pill to swallow.

Well, I've learned and I would rather be dead than go through another five years like this!

LOL, not sure I'd go quite that far, but yeah, I get your point, a Chapter 13 is not a pleasant experience, however, for many of us, it is a much more pleasant experience than the alternative.

[justbroke]

I conjecture, the trustee received advance notice of the pay increase. Perhaps they reserve the
right to request from the employer, advance notification of salary increases, so they can determine, in advance, whether to prepare a "Motion to Modify the Plan to Increase Payments". I recall reading about this, back in 2017, as we prepared for this situation. I could be wrong, but I doubt it..

Chapter 13 Trustees do not receive any notifications regarding any personnel matters from employers. This is precisely why most bankruptcy districts require annual tax returns. It's the only way, without a subpoena, for a trustee to obtain personnel records including payroll records. This is also why trustees ask the debtor for paystubs and other documents as the trustee does not have access to any of those items.

Chapter 13 Trustees usually fashion a Motion to Modify Confirmed Plan based on a tax return. They may condition that modification after then asking the debtor to submit new paystubs along with a new Schedule I and Schedule J.

(For those with Wage Deduction Orders issued to their employers, it usually only lists the Trustee's address for purpose of remitting the wages withheld. There is nothing special in the order granting the trustee any rights to personnel records.)

[Barbisi]

Thank you all for your responses.
jb, you'll notice I haven't decried the inability to obtain credit! I never liked credit in the first place and I rarely
used credit to buy things! I had a few store credit cards I used for discounts but I never accrued balances on them.
When we sold that accursed house for 380k we walked away with 80k( We immediately lost 20k for realtor fees, storage fees,final painting,etc .) We promptly paid 60k to the creditors, leaving us 20k for a down payment on a "new" house and some money for some electrical repairs, new refrigerator, new toilets,new vanity,etc. Our mortgage payment increased by $700 and that is when we knew not only that we couldn't repay what we owed, much less pay the increased mortgage. So we filed in Feb. after only paying 3 mortgage payments.
Had we only had the 100k from the house updates and repairs, the 60k would probably have been enough to avoid BK13, but we also had 60k from 10 years of unemployment, three moves to three different states over six years that my husband's company didn't pay for completely,emergency pet hospital bills, etc. We had more than 100k to pay off and we didn't what else to do besides BK13.
Shipo, I'm sorry you had such a nightmare leading up to filing and yes, Carmella, I wish we could pay 100% of what owe too , but with our very high mortgage and our burgeoning medical bills, there's simply no way we can do that now!
These last four years and four months have been hell (starting on April 26th 2016 when my mother died one week after being diagnosed with lung cancer brought on by this dry high altitude and the tremendous stress of constantly replacing systems and updating that horrid house.)
Yes, I have grown to loathe Colorado and everything it stands for and I know we will end back up in another BK13 if we choose to stay here beyond 2022! And I know if I don't get out of here I will die here ,just like my mother !!!!!