Do they use real expenses or IRS numbers for 13 payment plan?

[woeisme]

I was curious, do they use your actualy expenses or the IRS database numbers when figuring out what you can repay the creditors each month? I think I spend well below the IRS numbers in some categories, like transportation, so was wondering if they use the values from the IRS or do I have to show exactly how much I pay for vehicle use each month? I'm concerned because both our cars are old, but paid for. They both have very high milage as well. Right now we spend very little per month on them other than gas, but I forsee big maintanence bills or needing new cars all-togehter before getting out of Chapter 13 if I file. I've only had a preliminary meeting with a lawyer and forgot to ask him which they use. He just told me to get the paperwork together, but didn't say anything about collecting reciepts for all my gas, oil changes, tire replacement, maintence, etc, so does that mean he'll just use the formulary numbers? Anyone with some idea on this question would be greatly appreciated. Thanks!

[CATCHMEIFYOUCAN]

The numbers given are just standards, if you use less than the standard than that is like more disposable income to go towards the plan if you are in Ch13. For example .. my area in Virginia allowable rent/housing cost was pretty high for single person (to me) .. my rent was well below the standards .. if you go over the allowable standards you better have a good explanation as to why you pay so much for certain things.

Best of Luck, CMIYC

Just another example, I didn't have a car payment when I originally sent my paperwork to my attorney, than just a month before I actually filed, my car got flooded and I had to buy new car. Well I would of had an extra $400 bucks to go towards my plan IF I didn't have a car payment, but now that I had a car payment that is less "disposable," income the trustee/creditors would of seen!

[JollyGG]

This seems to be an issue that is giving many chapter 13 filers problems. Which schedule do you go by when determining disposable income if there is a mismatch between schedule I and J?
Several of our members are currently waiting for a judge to decide that very question.

[Granny]

We just had to re-do the Sch J per the trustee's request. For you newbies, when I first filed, I had significant secured assets that were being paid in the plan. My first attorney had ridiculously low amounts for my budget, but that's the numbers that had to be to make the plan work. When we forfeited the asset, my plan payment went down almost $1000. So the trustee has now asked for an amended Sch J before he will confirm.

Yesterday, I spoke with the paralegal and we worked on the Sch J. She basically plugged figures where she knew the trustee would not object. Not one category was equal to or more than the standards, but there were some things in the budget that I don't spend money on such as laundry and dry cleaning. Her sole intent was to create a budget that would stand up to the trustee's scrutiny and keep my payments at the amount needed to pay off my secured and priority claims in 60 months. Keep in mind, that I am below the median income for my family size.

Keep your fingers crossed, I should be confirmed in a week.

[cso5@]

What Granny Said....

That's pretty much how it worked for me, too.
I have a "budget" for dry cleaning, although I don't have a year's worth of receipts to show I paid $XX for dry cleaning for the last year.

My attorney set up the budget showing amounts that he knew the trustee would be ok with, what works in this district.

I too am below the median and have secureds to pay off. Mine is a 58 month payment. Plenty of unsecureds to pay too, at the rate of 4.97%.

cat

[lrprn]

I was curious, do they use your actualy expenses or the IRS database numbers when figuring out what you can repay the creditors each month?

The 2005 bk law mandated the use of IRS national standards for allowable living expenses and local standards for other expenses - housing, utilities, and transportation. See http://www.usdoj.gov/ust/eo/bapcpa/2...anstesting.htm and click on the IRS and local links to see what is allowed in your area. It doesn't matter what your real expenses are in these limited areas - you have to use these figures on the forms. This is what leads to the Schedule I & J mismatch that is giving bk judges fits right now.

For expenses besides these your lawyer will use your average *realistic* expenses (not necessarily what you actually spent during the last 6 months to a year). For example, you haven't bought any new clothes or had dental care, you obviously will need those over a three to five year plan. Reasonable costs for these and other expenses not specified on Schedule J and any addendums can be included. The problem is that what expenses can be included and at what amount often depends on local court customs and trustee preferences. It's a real crapshoot.

As far as what your monthly payment will be, it's just not as simple as subtracting your expenses from your income. There's a lot of "magic" going on inside the Means Test and Schedules to come up with a figure. That's why filing Ch 13 with a good lawyer who knows what the trustees in your district will accept for expenses is so important.

[CATCHMEIFYOUCAN]

Mismatch Schedules

This seems to be an issue that is giving many chapter 13 filers problems. Which schedule do you go by when determining disposable income if there is a mismatch between schedule I and J?
Several of our members are currently waiting for a judge to decide that very question.

I filed for Ch13 because I had 2 full time jobs, which automatically threw me over the Median (State of Va by the way) for a single person. The Means Test proved I had NEGATIVE amount (- $60 disposable income), YET schedules I and J showed I had $800 disposable income!

The lawyer proposed what he called a "good faith plan," of $250 a month.

The Trustee threw a fit: OBJECT !

The judge decided he didn't want to rule on this because he was not sure what CONGRESS intent was with the new changes. He said, the law does not require you to work 2 full time jobs, you can quit one job and convert to Ch7 or you can submit another plan and try to work out something more reasonable with the Trustee but you know, you do have $800 available! You have 15 days to decide.

Well, weigh it out. Work 2 full time jobs and practically give the creditors my hard earned money for the next 5 years??? OR just quit one job for several months, have your case converted to Ch7 and possibly owe nothing, than you can do what you want within a couple of months - compared to 5 years.

I quit one job!

Best of Luck, CMIYC

[woeisme]

thanks for the replies

Thanks for the responses everyone. I guess I will need to call my lawyer and ask his opinion on this since he knows the trustees and the judges and what they allow. I was worried mainly because our two vehicles are 10 and 8 years old, both with well over 100K miles on them, so no way are they both going to last the 5 years of Chapter 13. So maybe we'll replace one of them before filing if my attorney advises it because I really don't want to get caught in a situation where they jack my payments up so high that I can't fix them if they go bad or can't get a new car if one blows up on me. Thanks again. the people on this forum are really nice.

[treehugger1]

Last fall when I felt pressed that BK 13 was my only solution, I was also concerned about vehicles: I had a 1995 subaru with 195K+ miles on it, and a 2000 subaru with many miles and blown head gasket. Several posters here said to get a car that would last the duration. I bought a new Corolla at excellent interest rates, and sold the 1995 Subaru. Here it is 7 months from the purchase, and i am still doing what I can to avoid BK 13 and work with creditors/collectors. I think you are fine to deal with your transportation concerns as long as you wait a few months before filing. I doubt it is a good idea to buy a new car and file a few days or weeks later.