Payment on 13

[Dennis1971]

Can somebody give me a idea how they figure up your payment on a chapter 13 bk. Our attorney thinks were gonna be able to file a chapter 7, but he mentioned a 13 wouldn't be the end of the world if we have to go that route. He mentioned something about paying back 10% of our cc debt. I have read other stories on here of some people paying anywhere from 66% to 100% of their debt back. If you have to pay back 100% then how does it help that much, other than not having any interest accruing on your debts?
Thanks Dennis

[jwbbx]

I got some good initial idea by filling out and looking at the means test at http://www.legalconsumer.com If you fill it all out correctly, it will give you an initial 'Disposable Income' figure. I took that as a high water mark.

Maybe it will help you too.

[kornellred]

I am in Chapter 13 BK myself and paying the trustee but my plan is still unconfirmed. My attorney submitted a payment plan at the initial filing which is basically in-line with the results of the means testing, budgeting and various allowances which determine disposable income. As a result, I have a lot of money left over because my actual living expenses are much lower than the IRS allowable deductions for housing, transportation, and the like. When I asked my attorney about how I should handle all the extra money I will end up having if the trustee recommends confirmation at the original proposed amount, he just said "just go and live your life".
I think that there are quite a few debtors in BK 13 who feel that they are getting off pretty darned easy and would feel embarrassed to admit it.

Oh my - did I just say that in a public forum?

[chloe0724]

Korn,

I don't think it's that people think they are getting off easy at all. You should have money left over at the end of each month, it's for the things that happen throughout the year that aren't on a monthly basis. That's why you need to include every expense in the plan, for when you need new brakes or the AC goes for the house. That's money for savings for emergencies.

I think most of us that are here are because we never saved for unexpected things and relied on our credit cards.

Chapter 13 is not a cake walk, but it's a way for you to get your life back.

[Flamingo]

I am in Chapter 13 BK myself and paying the trustee but my plan is still unconfirmed. My attorney submitted a payment plan at the initial filing which is basically in-line with the results of the means testing, budgeting and various allowances which determine disposable income. As a result, I have a lot of money left over because my actual living expenses are much lower than the IRS allowable deductions for housing, transportation, and the like. When I asked my attorney about how I should handle all the extra money I will end up having if the trustee recommends confirmation at the original proposed amount, he just said "just go and live your life".
I think that there are quite a few debtors in BK 13 who feel that they are getting off pretty darned easy and would feel embarrassed to admit it.

Oh my - did I just say that in a public forum?

I good Chapter 13 Plan will allow you to have some money left over - what you need to do is save that money because during your Plan everything is cash only and if something goes, you will have the money on hand. We saved extra cash like crazy and even went so far as to toss loose change at the end of each day into a big container which we would use for Christmas or birthday presents as the event arose. No cash to us was extra as we knew we had to save it. House repairs and car repairs/tires, etc. are expensive and the money has to come from somewhere during those 3 to 5 years. Be thankful you are not one of the folks on here complaining how tight it is for them under their Chapter 13. Plus you are at the beginning of your Plan and still have a while to go. No BK, 13 or 7, is a walk in the park as in many ways including the credit side, you feel the effects of filing for many years.

[jwbbx]

I have to agree with Flamingo on this. A good plan has to have room in it. If I am in to this at month 3 and have nothing to save I'll know I've failed and will probably not make it for 5 years. I have been looking at these numbers and given the current state of the economy I'm trying to take the time that's required to think of as many of my on going expenses as I can.

Granted, many of them are not monthly. I had to force myself to break out of the monthly and think long term. The means test is DECEPTIVE!! Once I determined I could not qualify for Chapter 7 based on that criteria, I had to look at what my real expenses were. The means test is based on a FINITE SLICE IN TIME!!! I'm trying to put together a 5 year budget. They are VERY different!

From my reading of this Chapter 13 forum I believe there is way too much effort centered on the means test and not enough on defining ongoing expenses. Once you've failed (hate that term but what else is there?) the means test, it's time to concentrate on a realistic budget. Maybe the IRS numbers work for some cases, but for mine they don't.

Just one for instance - I went back through the Home Depot credit card bills and tried to ID the home maintenance items. Think of those yearly or every couple of year things -they are legitimate expenses.

Softener Salt
Furnace Filters
Chemicals for the lawn
Mulch for the garden
Service for the Lawn Tractor
Water filter cartridges
Salt for Ice/Snow
Downspout Cleaning
GAS for the tractor/snow blower etc
etc etc etc

I did not try to assume that things I have had done for me in the past like cleaning the downspouts was something I would/could do myself. My aversion to ladders won't go away with a Chapter 13 filing!!

All of this adds up, and maybe it's within what you have budgeted and within those weird IRS guidelines, but I'll bet not if you really get down to the nitty gritty and add it up and document it properly. Forget monthly expenses and go through a full year of home expenses - that's what opened my eyes!

A good example that's certainly outside the IRS guidelines is my property. I have 8 old growth trees here that need care every couple of years. Last year I spend $450 on pruning, and another 900 on getting an old elm just removed. It's maintenance. It has to be done. I won't need it this year, and the 900 won't repeat - but in 2 years yes I will. It goes in the plan!!

This is all stuff where I used to say 'Charge it'. I won't be able to do that anymore. I have been thinking for so long that 'Monthly Expenses' is the same as 'Monthly PAYMENTS' that I was at first lost on how to go about this.

It's not cheating - it's what it really costs to live and maintain a property. Don't be lured into accepting those silly guidelines. Do the homework and rack your brain for everything you can DOCUMENT as an expense. I used to think "It's only $4 - nothing". CORRECTION!!! On a tight budget - that $4/week for gas for the mower coupled with all the other under $10 expenditures really adds up fast!

Isn't it worth spending the time to know what your real expenses are?? I will feel much better at a hearing knowing that I've done my homework and can justify each line item. Even if they tell me they won't allow my number, I'll now I didn't just pull a number from thin air.

I guess my real point here is it's very easy to minimize what it really costs us for the day to day running of our lives if we're used to adding to credit card balances and paying minimum payments. I know for me there was little regard for what my ongoing expenses were - I was far more concerned with my open credit . Sad.

Again as always - just my thoughts on this - feel free to chime in.

[Flamingo]

jwbbx touches on excellent points for those going into Chapter 13. Many folks filing are so happy to get the BK filed they have a hard time adjusting in the next several months to the huge lifestyle change that is about to take place once they start making those plan payments. In the months prior to filing, most have stopped paying their credit card and other payments and have lots of money. Once the payments start, that is all gone and you are in for 3 to 5 years of going without credit, extra money and learning to live on cash only. It can be a super shock to many. Those that cannot adjust and learn to budget can end up having their Plan dismissed if they cannot make those Plan payments. Saving whatever can be saved during that time needs to be come a newfound hobby and jwbbx's ideas and listings give an excellent point as to what should be used and considered as starting points.

The OP needs to save all he can of his extra funds to continue to do well in his Plan and stay on track. The reward comes at the end when all is paid on time and that is viewed favorably by creditors and if one is seeking to purchase or refinance a house after discharge or even to buy out early if that is a possibility.

Lifestyle change experience one for us after filing; our good friends going for their yearly trek down the shore at the end of July and us just filing in June with absolutely no funds available to even consider one day with them. We used to go every year and spend several days in their beach house rental sharing expenses. We started a separate savings fund after that disappointment which allowed us to spend time there each year thereafter. It's all about saving and budgeting which is hard for some folks to learn to do if they have not done it previously.