How can my Ch13 payments exceed the calculated disposable income from Form B22C?

[bellyup]

10 months into Ch13 now. $4250 to the trustee a month. Tough nut. Failed business attempt plus have parent plus loans rolled in. 100% plan. Going over forms and I see that the calculated disposable income was only $1560.00. How is it possible that I have such a drastically higher payment?

[justbroke]

Welcome to BKForum, if I haven't already welcomed you personally.

The disposable monthly income, or DMI, is a component of your total payment to the Chapter 13 Trustee. Your Chapter 13 plan payment includes, attorney fees (that are in the plan), the Chapter 13 Trustee commission, priority debt (taxes), your secured debt (home(s) and car(s)) and then the DMI.

My DMI was $0 but my payment was over $7,000. Whether or not you can exclude your house payments from your payment "to the Chapter 13 Trustee" depends on some factors. Since you have a positive DMI, the unsecured creditors are paying for the Chapter 13 Trustee. In my case, with a DMI that was negative, I paid the Chapter 13 Trustee over $700/month to write out several checks. Doesn't seem fair, but that's the "pay to play" system.

So think about that. My payment was $7,000 higher than the DMI. It's just how it works if you're paying everything through the Chapter 13 Trustee.

(Also, please re-read the forum rules. You posted the same question to two different areas of the BKForum. I moved my response from that other thread to this thread. I also closed and deleted the other duplicate thread. Duplicate threads almost always cause your responses to be diluted and disconnected.)

[bellyup]

Thanks for response. Still unclear to me. I have managed to make the payments till now. My DMI was originally calculated with two incomes. Now my wife is no longer working the last 8 months. So our monthly income dropped $2560.00. This puts us into a negative DMI calculation. I am a month behind in mortgage and will not have the full 13 payment for DEC. I guess doing 100% at 60 months equals the $4250. Now this is untenable with income loss. Would it be possible to change to Ch7 now?

[despritfreya]

Form 122 (the DMI calculation) does not necessarily dictate your Plan payment. Nor does it change over time. It represents your current monthly income less "allowed" expenses as of the date you filed bk, based upon your income for the 6 months prior to filing. What happens in the future does not change the calculation contained in the form. Further, while Form 122 may have relevance there are many factors to look at.

1) You must pay to your creditors what they would have received if you had filed Chapter 7 or what you can afford to pay, whichever is greater. Thus, if you have a non-exempt asset (such as a diamond ring) that is worth $20,000.00 and you want to keep it, your creditors must receive that amount (subject to some deductions) through the Plan. On the other hand, if your "real" budget shows you can afford to pay those same creditors $40,000.00, you will be required to pay this higher amount. This requirement will impact your monthly Plan payment.

2) Your real budget (Schedule I and J) plays a very important role. If it says you can afford $x/month then you will pay $x per month even if that amount is higher than what is showing on Form 122. This goes to my comment above.

3) Since your income has changed you should be discussing with your attorney if a Plan modification is appropriate. This deals with amended Schedule I and J. Certainly, if you can no longer afford the Plan payment (regardless of what Form 122 states) something must give. Chapter 13 is flexible, or at least it should be. Discuss with your attorney as there are many factors that go into calculating what you must pay over the life of the Plan.

Edit to add: As to converting, such depends upon case law. In my district I believe one can convert if one "qualified" for a Chapter 7 on the day the case was filed but, for whatever reason, elected to file a Chapter 13. Talk to your attny.

Best of luck.

Des.

[justbroke]

Thanks for response. Still unclear to me. I have managed to make the payments till now. My DMI was originally calculated with two incomes. Now my wife is no longer working the last 8 months. So our monthly income dropped $2560.00. This puts us into a negative DMI calculation. I am a month behind in mortgage and will not have the full 13 payment for DEC. I guess doing 100% at 60 months equals the $4250. Now this is untenable with income loss. Would it be possible to change to Ch7 now?

Definitely discuss with your attorney. I like to tell every Chapter 13 debtor here that as soon as you have a loss of income or a significant financial event, contact your attorney. They can't help you if you don't contact them and too many of us wait way too long before seeking that help!

Desprifreya has listed the things that can affect your payment (which I didn't include the "best interest of creditor's test" because of retained property) and, more importantly, that you need to contact your attorney. When I converted my Chapter 13, I was already qualified for a Chapter 7 at the time of filing. I only filed Chapter 13 to save property (which is the classic reason for a Chapter 13).