Defer pay for Means Test income?

[CA3kids]

[I moved these first 3 posts from original out-of-date thread for better responses -lrprn]

Does anyone know if you can defer pay for the income calculation? I have an extra paycheck coming in for work I've done over the past year and can defer it until the month after we file, but will that help? It's not a ton of money but we do have it earmarked for expenses incurred that won't be taken care of under the bankruptcy when we file, if I understand this all correctly.

We are filing Chapter 13 probably at the end of June and are just now researching attorneys and gathering paperwork. Trying to figure out how to do all this pre-bk planning you all talk about, including figuring out the income thing. Any help would be appreciated!
Thanks

[manglicmot]

RE: the ethics question in the first post. [fyi - this post was moved here from an out-of-date thread] I wonder if there is a creditor's message board out there with Providian asking the other members if it's ethical to charge someone 32% interest and $45 late fees. Probably not.

[DeadManCrawling]

RE: the ethics question in the first post. [fyi - this post was moved here from an out-of-date thread] I wonder if there is a creditor's message board out there with Providian asking the other members if it's ethical to charge someone 32% interest and $45 late fees. Probably not.

HAHAHA. So true.

We are in a unique "income situation" right now, as well.

We are coming off the worst six months in terms of income we have ever had, but are still well over the median.

Meanwhile, we are waiting on a 3k tax refund, 7k in business income that was not billed for by mistake, and a few other things.

Wife's real estate business is skyrocketing, so we are at the bottom of a "income trough" that will rapidly go upward.

Timing is everything, and we hope to time the filing of our CH 13 in such a manner that we reflect the lowest portions of the income, but BEFORE we see the rapid increases from her business. Also, it must be AFTER the tax refund and other income arrives.

What a tricky issue, timing the filing to fit all that!

DMC

[JollyGG]

I know someone who is going to take advantage of the family leave act. Two months with no income and she passes the means test. Ya do what ya gotta do.

I wasn't going to respond to this since an old thread was booted, which is against forum rules. However, it seems to have sparked a renewed debate. In April of last year I had a baby and took 12 weeks FMLA all but one week were paid. Also in July my company changed our pay roll dates resulting in a short paycheck. You can be sure that in October when we realized we needed to file we filed very quickly so that those two short paychecks would be included in the 6 month look back period. We were very close to the median and those two short checks made sure we were under. I have absolutely no problem with doing so.
My husband was looking for a new job at the time and he eventually found one (in April of this year). But we didn't want to be in a situation where a new job pushed us into a 13.
I don't see anything wrong with timing our filing as we did. It is not like we could have paid our debt back with the two weeks of pay I missed that put us over the median and now that my husband has a new job we still just get by so definitely couldn't have paid our debt.

As for defering income. I'm not exactly sure how that would work, expecially in a 13.

[lrprn]

Does anyone know if you can defer pay for the income calculation? I have an extra paycheck coming in for work I've done over the past year and can defer it until the month after we file, but will that help? It's not a ton of money but we do have it earmarked for expenses incurred that won't be taken care of under the bankruptcy when we file, if I understand this all correctly.

Not to burst your bubble, but you may get a trustee that wants to know about any extra income earned after filing (ours does). Also it's becoming more common for Ch 13 trustees to ask you to bring the paycheck stubs from all the pay you received between filing and your 341 meeting. How long can you defer getting the third June paycheck?

One big advantage to deferring the third June paycheck is that it will subtract extra total income for the previous six months which is likely to reduce your monthly payment to the trustee. No sense paying more every month for 3-5 years than you legally have to

What does your lawyer think is the best thing to do?

[treehugger1]

Your situation sounds similar to my own. I first realized BK 13 was a legitimate option back in August (8 - 9) months ago. My income is decreasing. Attorney suggested that it is easier in my district to enter a 13 based on a low six-month average disposable and see what the trustee does if it goes back up again, than try to go in with a higher six-month average and file to modify on decreased income at a later date. I don't think there is anything wrong with "planning." I'm looking at fall at the earliest. The great thing about this site and speaking with an attorney is that you can learn what other folks are (or have) tried. If you are looking at a 5-year payback plan, make sure your home repairs are caught up, and you have decent vehicles that will survive the payback period. Not everyone has the opportunity to "plan." If you do, think of any pre-BK planning at personal finacial planning. In the meantime, it doesn't hurt to speak with creditors about your "current financial crisis" and see if they can offer any temporary relief. I'd be careful about mentioning BK, but some will work with you on a temporary basis.

[SinkingFast]

I don't see any harm in getting the paycheck after you've filed and had your 341.

It's no different than a Ch 7 filer planning their file date when the bank acct is the lowest and they haven't been paid yet.

What you have to pay in a Ch 13 or have to cover with Exemptions in a Ch 7 is partly a function of timing.

Some Trustees ask for the pay stubs between filing and the 341. Some Trustees don't.

Be sure, as Lrprn suggested, to ask your attny what's customary in your Court. If you might draw a Trustee that does check, you'll wanna defer that pay until after your 341.

[CA3kids]

thanks for everyone's input

This forum is great - thanks to everyone for your feedback. I don't want to do anything illegal or shady, but I also don't want the court/trustee to think I normally make an extra $4K in a 6 month period!

btw, I expect that all my student loans will not be under the bk plan - and am assuming, at this early stage of my learning, that they *will* be included in my regular expenses, since I've already deferred my own loan once and the other two are recent Parent PLUS loans. But it sounds so much like luck in who your trustee is and what they decide.

As my hubby said tonight, even if we do have to pay more than we expected for the next five years, it will be over in five years! (We've been struggling for the past three when he first lost his job and we kept using those cc's because we just "knew" he'd get the better job... and then he lost that one, too!)

Thanks for reading!

[treehugger1]

Student loans can be a wild thing to handle. My intention is to include them in my plan. Legally, I am out of any forebearance or deferment options. It will depend on your trustee whether you can pay them outside of the plan. I would try to get them included and be done with them in five years (if they get treated as a priority unsecured). Depends on the trustee and the district. Try to get a solid read on this from yoru attorney. My attorney said he would argue to get them in the plan at 100%. This implies other unsecured get less, so who knows. Do not let them put you in a situation where you don't pay for five years and interest accrues. This has occurred. Search the site for "student loans" and study other's experience.

[SinkingFast]

As my hubby said tonight, even if we do have to pay more than we expected for the next five years, it will be over in five years! (We've been struggling for the past three when he first lost his job and we kept using those cc's because we just "knew" he'd get the better job... and then he lost that one, too!)

Thanks for reading!

That's the spirit!!

When your payment plan is done, you're done!!

But no need to cut yourself tighter than you have to. If you can hold off getting that bit of pay until after you've filed, it should give you a little built in cushion.

Things can and do happen. There's no predicting what the next 5 years may bring.

[dizyblond]

In case it helps, I just posted some info on how my student loan was handled:

I have a student loan too (Wells Fargo). I called them to see what was going to happen because my student loan was included in the bk (as an unsecured debt) and due to a priority claim, no funds would probably ever get paid against the sl for the 5 year period.

They put my sl into automatic forebearance because I filed bk. Yeah, interest will accrue for the 5 years, but that's ok with me -- I really need to get rid of bigger problems.

[dizyblond]

Oh yeah, before the bk I had exhauseted all my deferrment/forebearance options -- I did it as many times a possible due to bad circumstances. Despite that, when I declared bk, to my suprise thay still put it in forebearance. Only good thing that has happened in this entire process.

[CindyLou]

Remember, states have different exemptions for earned but unpaid income. You could be asked if you've earned any income for which you have not yet received payment. If not 100% exempt you could lose a portion. Be careful and be prepared to answer that question if asked.