Bonus

[Toni]

Hello everyone and I hope all is well. I am scheduled to receive a bonus however I was told that the full amount would need to be paid into the plan and I would need to write a letter to cover needed expenses (tithes, car repair, braces for my daughter, my root canal and crowns). Has anyone ever written a letter and was successful in getting to keep some or all of their bonus? Please advise.

[shipo]

I received 7 bonuses, 6 raises, and 1 promotion in my five years and never had to write anything to keep them. As a general rule, unless all bonuses for a year bumps your income by 10% or more above the previous year, the Trustee will not notice.

[Toni]

Thanks for responding my bonus was 21%…

[justbroke]

There are some Trustees that want all tax refunds and bonuses unless they were calculated into your plan. For a Chapter 13, that could be a difficult plan to keep because if you receive a lower refund or bonus, then you paid more into the plan than you were capable of paying.

For that reason, you would provide the refund or bonus to the Trustee along with a letter of justification that you need to use it for another purpose. I did this, for my refund, 3 out of 5 years. I was successful each time because the expenses were true and extraordinary. By extraordinary I mean that they are not in the Chapter 13 budget. In my particular case it was a new sewer line (under concrete driveway), re-sodding the entire front yard (HOA), painting the house (HOA), and some other extraordinary expenses. Each time the Trustee approved the expenditure and I never sent the money (or check) the the Trustee. However, the last two years they received my refund after I had "cashed" the check (or it was deposited into my bank).

[Toni]

Thanks for responding. I’m hoping I can keep some of not all bc I didn’t plan on filing and planned to use my bonus for those reasons. My paralegal said I could keep $2k of my refund and the rest would go into the plan. When your funds were applied was you payment reduced?

[shipo]

When the Trustee took most of one of my tax returns it did not reduce my payment, it simply went to my creditors.

[justbroke]

As shipo wrote, it just gets added to the total. It doesn't reduce your plan base.