Confused about why everyone seems to be so broke during Ch 13

[anigrrrl2]

As I’ve been reading posts and experiences online, it seems like everyone who files Ch 13 talks about having no money during the payment plan - I have the opposite?

My payment plan payment is low - under 300 a month - and my mortgage and car payment are being paid outside of the bk- and before filing, I was down to the bone every month trying to make the loan and credit card payments. I now have more money to spend on groceries, car repairs, etc than before.

I don’t understand why people have no spending money during bankruptcy - am I missing something? I though the whole idea was to make your financial life easier, not harder. But from reading people’s accounts, it seems like most people had it easier before bk.

Just confused, I guess. Thanks for any insight on this.

[shipo]

A lot depends upon the savviness of your attorney, the flexibility of your Trustee, how much you owe, the value of your assets, your monthly non-debt obligations, how much you make, and what percentage of your total debt you are paying back. Some folks end up with a plan which is uncomfortable but manageable, some folks start out okay and then lose a job or incur unexpected expenses which takes them off the rails, and other folks (me in this case) start out able to meet monthly obligations, but not much else, and then due to job growth, end up being pretty comfortable by the end.

In your case, consider yourself lucky, build an emergency fund to use for unexpected expenses, and don't rock the boat with the Trustee until you get your discharge.

[flashoflight]

As I’ve been reading posts and experiences online, it seems like everyone who files Ch 13 talks about having no money during the payment plan - I have the opposite?

Are you in a 100% plan with a "small" amount of debt? That's the only way I can think of when it will be easy because the trustee doesn't want all of your disposable income. If you have 100% with a lot of debt or if you're in a less than 100% plan, the trustee will want every last dime from you. The absolute worse cases happen when debtors try to keep too much non-exempt property. Once your plan payment amount is driven by [non-exempt property/best interest of the creditors/hypothetical chapter 7 liquidation] rather than disposable income or the means test, your chances of surviving the 13 goes way down.

Assuming your court budget has true numbers and not inflated, it's not designed to give you wiggle room until you get raises or promotions from work. It helps a lot if your trusteeship is too busy with the bigger fish to fry and won't nickel and dime you every year to take away your raise. Yeah, you can change the deductible pre-confirmation vs. post-confirmation to give yourself more wiggle room and budget cut from your court budget, but there is only so much you can gain from budget cuts until the raises or promotions kick in. It also helps that my lawyer has never seen a plan modification initiated by the trustee due to increased income.

Another way to make your life harder is to keep paying on credit cards pre-petition rather than trying to live like you're in the future CH13. During pre-petition, you need to increase trustee allowed expenses to reduce the plan payment.

Just for comparison, I have a plan payment quite a bit lower than your $300 and over $350k in unsecured. I have a fatty mortgage payment on my primary that's deliberately 15 years instead of 30 and large required pension contributions. My plan payment is driven by the lack of disposable income for the credit cards. I don't really have extra money because of the fat mortgage payment except for the raises since filing.

With that, maybe you can give us an idea of why your plan seems easy. I'd be interested to know.

[Barbisi]

I looked at your other posts anigrrrl2, and it seems like you are still at the preliminary phase of your BK13 years, meaning only at confirmation will you know your final plan payment. Likely since your initial proposed payment is so "low", your trustee will probably double, triple or at least raise it considerably -that's what happened to us.
Just as flashoflight noted, we too had a high mortgage payment and other high medical expenses, yet we were forced to pay a significant amount back, but again, my husband was able to increase his income after a 2019 layoff that had been in the works for some time by securing a much better paying job immediately and having a substantial severance payout over three and a half months when he started the new position . (This was fully disclosed to our attorney in 2019, and the trustee finally pounced on us in trying unsuccessfully to raise the payment by 100% in 2020 during the Pandemic.)
I wish you luck in ending up with a low payment, but the reality for most people is they have very little money left over by the plan design ; that's why all Bk13 debtors are supposed to pay all their DMI to their creditors each month until the 36th /60th payment, and then the ensuing discharge and closing frees them from their BK13 obligations.

[flashoflight]

anigrrrl2 LOL... just saw your earlier posts. I should have checked. You haven't been to your 341 meeting yet. If you were in my neck of the woods, the trustee will have the objection(s) to your plan ready to be mailed the day after. Almost everybody gets one. The payment you have right now is merely a suggestion that's in your favor. If your lawyer did a good job, the payment may not move at all. If not, it's not unusual for it to triple. If your plan is still affordable after confirmation, let us know how you did it.

[jaffy83]

For me it was kind of rough. As my income is frontloaded Jan - April, I ended up accepting a payment plan that seemed logical, but in reality was a bit more challenging to manage. Instead of pushing for higher payments in the beginning of the year and lower payments for the remainder, stress and worry led me to agree to a flat payment each month. When my income is higher, it's no problem, but then I had to teach myself that I needed to keep the extra income in order to make the payments along with my regular bills for the rest of the year. I certainly hope your proposed repayments remain the same during the confirmation stage. While I was certainly able to make it through 5 years, there were some months where it was pretty tough.

[anigrrrl2]

Okay so my lawyers are literally the top bankruptcy lawyers in my state. They have assured me the payment will not
be adjusted after the meeting of creditors.

I have a relatively small
amount of debt, about 40k, and my house has protected equity of about 25000.

initially I was told my payment would be around 365, but after doing all the paperwork, it went down.

idk, I’m flying pretty blind, don’t really care to be too involved - I just want to make my payments and live my life.

[Barbisi]

Well, it does sound like you've this got this whole BK13 thing all sewn up and certainly won't need any advice from us old fogies, LOL!
Still you're always welcome to ask questions from the BK13 SuperGuru team - justbroke & shipo . (They helped us and many others a lot!)
And don't underestimate flashoflight , Carmella and sophieanne - they have some pretty interesting insights too!
Good luck again, anigrrrl2 , and may your BK13 remain as painless and stress-free as it is now.

[Carmella]

I hope you payment stays low anigrrrl2 Our payment plus the mortgage, 2 cars and HELOC was nearly 50% of our take home income that didn't leave much for anything else.

When your income is cut by 50% it was difficult to manage because we still had bills. We had a brand-new college graduate in our house who still depended on us because the way to get a job was a low paying internship. She chipped in for some expenses for herself, but we still were helping financially. We really didn't have disposable income and it was hard to set any money aside for home repairs, car repairs, etc.

We were actually better off than before the BK 13 because at that time we were barely making ends meet and using credit to pay some bills until the credit ran out. At least during BK we could pay our monthly bills even if some were paid late. The biggest problem was not having money for anything aside from the day to day expenses like tires for the car or plumbing repairs, etc. And I had to be very conscious of every cent I spent and where I shopped to get the best price...

When the wage deduction was stopped that first full paycheck made me feel like we hit the lottery!

[justbroke]

I Chapter 13 payment is complex. The big issue is that life happens. While a Chapter 13 is not inflexible, dealing with major issues, which will happen, can make the solution even more complex. I would say that by year 3 of my 5-year plan, I was comfortable in my payments, budgeting, and income. Despite a divorce and a $2,500/month alimony payment (along with a significant transfer out of my 401(k)), I didn't have nearly as many issues or problems as from the start.

Of course, I must say that, a debtor that refuses, is unwilling, or unable to budget won't have a good Chapter 13 experience. It's not easy, but it is entirely management. I call it budgeting on steroids. You must imagine that the money going to the Trustee does not exist and you have no access to credit products (which you generally do not). You must absolutely save and make a rainy day fund. Life will happen.

The problem isn't so much the payment as is the inability to create substantial savings before life happens.

[anigrrrl2]

I didn't intend to sound like I had everything figured out - far from it! I just know my lawyers are very good, and they have assured me the payment won't change. So I am believing them - hopefully I won't be proven wrong!

I am in a 1% plan apparently - I didn't even know what kind of plan I was in. I honestly am trying to not pay much attention. I just want to do what I'm told and hopefully continue to enjoy my life while making the bankruptcy payments.

I guess I was just surprised at how tight people's budgets seem to be, because even if my current payment estmate doubled, I would still have more room in my budget than I did before filing. I was stretched sooooooo thin, like 40-50 bucks leftover after all the bills were paid every two weeks. Even if my payment goes up, I will be in a much better position, so I was just trying to understand why it seemed some people's budgets actually got tighter.

Thank you all for sharing your input and experiences.

[Thingshappen]

Hello anigrrrl2! Did you get your plan confirmed? If so, did you payment increased or changed much! Just curious. I am having my 341 meeting soon.