Question about payment plan

[Thingshappen]

Hello,

I prepared the income/expenses schedule with my attorney and the calculated DMI ended up been slightly lower than my car payment. She said that my payment will be around there or perhaps a bit higher than that. She was in a rush to leave so I couldnt discuss much to get additional details. We are in the process of filing but I am not sure how much my first payment is going to be. I emailed her but no response yet. Has anyone had a similar case where the calculated payment plan is lower than the car payment? thanks!

[justbroke]

There are too many factors to say exactly why your payment is small. If you had your car for more than a year, and are in an otherwise 0% plan, then you could be paying less than your original car payment over the next 60 months.

Your first payment should be exactly what they said your payment would be. if it changes to a higher amount, they should let you now. Follow up with an email to your attorney on how and when you should make the first payment (typically within 30 days of filing).

[Thingshappen]

She responded to me and we re-did the numbers. There was a couple of expenses that were entered incorrectly. The payment is now higher than my car payment but not by much. As of now, I am nowhere close to a 100% plan. I would say around 30% assuming that all creditors submit POC's. The attorney seems pretty confident that the payment is not going to change much. But this is just the beginning. Let's see what happens in the next few months. Thanks a lot JustBroke for your insight.

[Carmella]

When you say payment is the payment per pay check ? Our payment was from my paycheck every other week which equals 26 payments per year. I am just asking in case you thought payment was monthly, which I know it might be a monthly payment if you don't have the wage deduction requirement.

[Thingshappen]

When you say payment is the payment per pay check ? Our payment was from my paycheck every other week which equals 26 payments per year. I am just asking in case you thought payment was monthly, which I know it might be a monthly payment if you don't have the wage deduction requirement.

My attorney never mentioned that the payment would be split in two. It's that a norm? For me it would be better if the payment is once per month. I get paid twice per month; one paycheck goes to the mortgage and the other one would go to the trustee and expenses.

[justbroke]

If you have a Wage Deduction Order (WDO), then your "monthly" payment to the Trustee is deducted from your payroll based on the payroll frequency. To make this easier to calculate, we take the "monthly" payment owed to the plan and multiply it by 12. We then divide that amount by the number of paychecks that you receive per year.

For a person paid bi-weekly that number is 26.
For a person paid semi-monthly that number is 24.
For a person paid monthly that number is 12.

So it can be different for different people. At one point I was paid monthly so my WDO deduction was done monthly and in the same amount as my monthly payment owed to the Trustee/plan. When I changed jobs and went to being paid semi-monthly, the amount was split in half and I paid 50% of the monthly amount on the 1st, and 50% of the amount on the 16th.

If you don't have a WDO, the Trustee may require bi-weekly or semi-monthly payments based on the plan. From my experience, a person not on a WDO will be able to pay monthly. While I believe that not having a WDO and not paying every time you get paid (get a paycheck) is dangerous, my plan did not have a WDO. I signed up for the Trustee's ACH payment program and they took the monthly payment once per month on the 27th.

Using the Trustee ACH program worked for me because I had enough income to cover the payment with one check. For others, this may not be good in that they may be tempted to spend money that should have been allocated to the plan... thinking that they'll make it up somehow. It's also the reason that there are wage deduction orders to "help" the debtor stay on plan and not be tempted by having the money in their hands before sending to the Trustee.

[Carmella]

My attorney never mentioned that the payment would be split in two. It's that a norm? For me it would be better if the payment is once per month. I get paid twice per month; one paycheck goes to the mortgage and the other one would go to the trustee and expenses.

I think justbroke gave a good explanation of payments. You would need to clarify with your attorney how it works in your area. Here in Ohio I didn't have a choice they just told us how much would be deducted per paycheck and they went off of my pay since mine is higher than my husband's. I had no choice but to do the WDO. It just depends on how it works where you live.

[Thingshappen]

If you have a Wage Deduction Order (WDO), then your "monthly" payment to the Trustee is deducted from your payroll based on the payroll frequency. To make this easier to calculate, we take the "monthly" payment owed to the plan and multiply it by 12. We then divide that amount by the number of paychecks that you receive per year.

Is the WDO mandatory or do I have the option to pay the Trustee directly through an ACH? It would be nice if I dont have to go through the embarrassing situation of telling HR that I am filing for BK13.

Also, I think if the payment is split in two, then I should be okay. One pay period will be extremely tight.

[Thingshappen]

I think justbroke gave a good explanation of payments. You would need to clarify with your attorney how it works in your area. Here in Ohio I didn't have a choice they just told us how much would be deducted per paycheck and they went off of my pay since mine is higher than my husband's. I had no choice but to do the WDO. It just depends on how it works where you live.

I hope I get the option to pay the Trustee directly. I am starting the process so a lot will happen before I get confirm.

[Thingshappen]

justbroke Question. What if the Trustee comes back with a much higher payment than what the Attorney estimated? Can I object? Would I be able to voluntary dismiss my case and pursue other options if I want to? Just curious.

[shipo]

Is the WDO mandatory or do I have the option to pay the Trustee directly through an ACH? It would be nice if I dont have to go through the embarrassing situation of telling HR that I am filing for BK13.

Also, I think if the payment is split in two, then I should be okay. One pay period will be extremely tight.

The WDO varies by Trustee; many here had a mandatory WDO, others had an optional one, in my case, a WDO was not available and I paid the Trustee directly.

[Thingshappen]

The WDO varies by Trustee; many here had a mandatory WDO, others had an optional one, in my case, a WDO was not available and I paid the Trustee directly.

I hope that I get to pay the Trustee directly too. I would like to keep HR out of this if possible. thanks Shipo

[justbroke]

justbroke Question. What if the Trustee comes back with a much higher payment than what the Attorney estimated? Can I object? Would I be able to voluntary dismiss my case and pursue other options if I want to? Just curious.

That's why you pay your attorney... to object and to find you (hopefully) a reasonably feasible plan. They like to say if you're not happy and the Trustee isn't happy, then it's probably a good plan. Since a Chapter 13 is entirely voluntary, you can voluntarily dismiss. I don't know what other options, other than a Chapter 7, that is viable.

[Thingshappen]

That's why you pay your attorney... to object and to find you (hopefully) a reasonably feasible plan. They like to say if you're not happy and the Trustee isn't happy, then it's probably a good plan. Since a Chapter 13 is entirely voluntary, you can voluntarily dismiss. I don't know what other options, other than a Chapter 7, that is viable.

That makes sense. We filed last week. Now we will enter the "negotiation" process. My attorney is pretty confidence that my payment should not change much since she came up with a "realistic" budget based on her experience, but who knows. She has been doing this forever. My other options besides CH13 are debt settlement or perhaps debt management. I dont really like either of those options but will keep them there as plan B or C. Unfortunately, I do not qualify for chapter 7. I would go there in a hearbeat if I did.

[shipo]

Keep in mind debt settlement is a double edged sword; yes you get a reduction in the amount you owe, however, the IRS considers that forgiven amount "income" and taxes it at your highest fractional rate. Regarding "debt management", I'm not sure what that is.