Question Re: Voluntary dismissal of Chapter 13

[gingerbug]

We have been making payments for just over a year and we started the filing process about a year and a half ago due to serious job difficulties. Well, since then, dh's income has increased quite a bit and when we file taxes this coming spring and send our paperwork to the trustee, we will surely have our monthly payment increased. Now, I would have NO PROBLEM paying more if our income is consistent. DH is an offshore diver and when it rains, it pours but when work dries up, it gets tight. If they want to double our payment there would be problems because we dont make that all the time. We lucked out and received two contracted jobs in one years time that really increased out income. The only secured debt we have is our vehicles, which will be paid in full next June. I was planning on asking for a voluntary dismissal after the cars were paid in full. The majority of the rest of our debt is student loans which I plan to take my a case by case basis and get them paid off as soon as possible. I plan to do an 'informal' bankruptcy for any unsecured creditors beyond that. I should note that I live in Texas where there are strict laws against garnishing ones wages outside of student loans and federal debts. So, that is the background info. My questions are: How does one initiate a voluntary dismissal? How long does it take for the trustees to stop garnishing your wages? Will I get flack for it from the attorney? What is the likelihood that the trustees will even notice the increased income and try to raise my monthly payment? Are there any other things I should be aware of before I do this? Thanks for any and all help.

[Mary Irene]

I just voluntarily dismissed my Ch 13 after the secured debts were paid. I called my laywer and told her to do it. Soon as she got back the signed form, she took it in and it took like a day to do. This was on the 23rd of this month. Any payments rcvd by the court prior to that will be disbursed on Nov 1. Anything coming in after that, I will get as a refund. I didn't even have to go to court. Just got the letter, which I faxed to my employer to stop the garnishment. I did get one notice from an original creditor regarding it and made a very reasonable payment arangement with them. The other unsecureds are all debt buyers and I will challenge them if they send me any collection letters. I am very happy that I did this as I was paying 100% into the plan and was not happy with it as I had nothing left to live on. Not fair that everyone else was getting away with 10-20% because their trustee wasn't a ball-buster. Don't sweat it.

[justbroke]

If your DH's income is random, then you will need to have a Plan which attempts to accommodate that. Your Chapter 13 Plan is not just simply the "Disposable Monthly Income" multiplied by 36 or 60.

It is supposed to be a projection of what your disposable income is (projlected being the key word, hence they call it your projected disposable income).

So, if your monthly payment was $100/month, but DH made $100/month more than what was scheduled, and you're paying less than 100% to unsecured creditors, you'd have to dedicate that $100/month more to the Plan. I think you understand that part.

So, let's say in 2008, your DH made $100/month extra over the Plan. In 2009, the Trustee will increase your payments by $100/month. If, in 2009, your DH made "normal" pay (not the $100/month extra), then you'd file a Plan change in 2010 to modify the 2009 Plan! While Plan changes require time and court approval, that's the only way to work with irregular income.

As a matter of fact, the Chapter 13 is supposed to be for folks with regular income. Having irregular income makes it difficult to project your income, as you can see.

I wish you the best of luck, and hope you find something that works for you. If voluntarily dismissing your case is what you think is best, then do that. I've actually thought of doing it myself (already!).

[gingerbug]

thanks so much.

[Mary Irene]

If your DH's income is random, then you will need to have a Plan which attempts to accommodate that. Your Chapter 13 Plan is not just simply the "Disposable Monthly Income" multiplied by 36 or 60.

It is supposed to be a projection of what your disposable income is (projlected being the key word, hence they call it your projected disposable income).

So, if your monthly payment was $100/month, but DH made $100/month more than what was scheduled, and you're paying less than 100% to unsecured creditors, you'd have to dedicate that $100/month more to the Plan. I think you understand that part.

So, let's say in 2008, your DH made $100/month extra over the Plan. In 2009, the Trustee will increase your payments by $100/month. If, in 2009, your DH made "normal" pay (not the $100/month extra), then you'd file a Plan change in 2010 to modify the 2009 Plan! While Plan changes require time and court approval, that's the only way to work with irregular income.

As a matter of fact, the Chapter 13 is supposed to be for folks with regular income. Having irregular income makes it difficult to project your income, as you can see.

I wish you the best of luck, and hope you find something that works for you. If voluntarily dismissing your case is what you think is best, then do that. I've actually thought of doing it myself (already!).

OMG. You are paying almost $5000 a month? What the heck did you buy????

[justbroke]

OMG. You are paying almost $5000 a month? What the heck did you buy????

A house, two cars...