chapter 13:Disposable income = Trustee payments?

[rjl0206]

to all,

just want a clarification on disposable income and trustee payment? does that also have to do with how much money you take home? and if you are above the median in your state? here is a glimpse of my situation:

IF I filed chapter 13:

unsecured: $75,000
Secured: $0
no arrearages etc.

total net monthly income :$8500 (both wife and myself)
total exp. with mortgage :$7900 (monthly)
Disposable income :$600

so that pretty much means they take the $600 as my monthly? or does it depend on how much I owe and at what percentages the creditors are getting back. lastly, for the state of NJ how much of our income tax return may we keep? we took home average $6K for the last 2 years.

thanks all, new to all of this, just wanna get my research done before getting in touch with a lawyer.

Ray

[HHM]

That is "basically" correct. The only caveat would be whether some of your living expenses are too high or allowable, but your repayment amount has nothing to do with what you owe.

[justbroke]

The other caveat is whether your District requires all secured debt to be paid through the Trustee (via the Plan).

Even in the worse case, where your District requires such, it's easy to Motion the court to allow Direct Payments (or payments outside the plan) when you are current.

I've done this for my rental property, and the Court and Trustee were actually happy not to be receiving rental checks directly.

[rjl0206]

ok, so if the total owed is $75,000 /60months = $1250 that and the amount of lawyers fee etc is all they can add towards it correct? and for the sake of argument this is pretty much a 100% repayment plan, and if I get a raise or such during the life of the bk or do some overtime to get some extra cash, WILL the trustee have the courts raise my payments or take my extra money from overtime pay etc?

[rjl0206]

The other caveat is whether your District requires all secured debt to be paid through the Trustee (via the Plan).

Even in the worse case, where your District requires such, it's easy to Motion the court to allow Direct Payments (or payments outside the plan) when you are current.

I've done this for my rental property, and the Court and Trustee were actually happy not to be receiving rental checks directly.

yeah, I dont think I have any secured debt I will be adding into the BK, just mainly personal loans and cc's. to make a clarification, IF Im already paying 100% to the unsecured, will any extra money I make either it being overtime or another job during life of the BK be taken from me? also how will it affect my income tax refund? because if anything my area of employment enables me to make some overtime from time to time and if Im already paying 100% on my unsecured through the bk then other than voluntarily upping my pay they would'nt go after me would they? thanks in advance.

ray

[justbroke]

ok, so if the total owed is $75,000 /60months = $1250 that and the amount of lawyers fee etc is all they can add towards it correct? and for the sake of argument this is pretty much a 100% repayment plan, and if I get a raise or such during the life of the bk or do some overtime to get some extra cash, WILL the trustee have the courts raise my payments or take my extra money from overtime pay etc?

I don't understand.

You write, above, that your DMI (disposable monthly income) is $600. You also note that your unsecured debt is $75K.

Now you write that you're going to pay 100% into the plan? Doesn't make sense as $600 x 60 = $36,000 or just under a 50% plan.

Are you telling me that you want a 100% plan and will somehow come up with the other money to get to $1,250 a month just fore unsecured debt?

If you're in a 100% Plan, I don't see where the Trustee would go after additional earnings. if you were in a less than 100% Plan, this would be an obvious pointer to the Trustee to increase Plan payments to get you closer to 100%.

Whether the Trustee goes after income tax refunds will be based on local rules and State law. Even if you're paying 100% back, teh Trustee may intercept "large" refunds to pay back the money quicker. I don't have any direct experience, but I would guess that some Trustees may even try to increase your payments -- even in a 100% Plan -- when your income increases significantly.

Remember, the Plan is all based on your DMI. If your DMI increases, you should be -- technically -- paying back MORE into the Plan. If this causes your Plan to decrease in term (from 60 months to 36 months), so be it!

[rjl0206]

That is "basically" correct. The only caveat would be whether some of your living expenses are too high or allowable, but your repayment amount has nothing to do with what you owe.

so for $75K/ 60months = 1250 + lawyers fee etc. =monthly payment (hypothetically speaking) ===$1500

can they raise it more than that? I mean that 75K will pretty much be 100% to unsecured correct? so it shouldnt be higher? thanks in advance

Ray

[rjl0206]

I don't understand.

You write, above, that your DMI (disposable monthly income) is $600. You also note that your unsecured debt is $75K.

Now you write that you're going to pay 100% into the plan? Doesn't make sense as $600 x 60 = $36,000 or just under a 50% plan.

Are you telling me that you want a 100% plan and will somehow come up with the other money to get to $1,250 a month just fore unsecured debt?

If you're in a 100% Plan, I don't see where the Trustee would go after additional earnings. if you were in a less than 100% Plan, this would be an obvious pointer to the Trustee to increase Plan payments to get you closer to 100%.

Sorry to mislead, the 75k broken down to monthly payments is only hypothetical, I just wanted to understand the scheme of how high they can go on payments if the case was I could afford $1250 or so a month...

ray

[justbroke]

Sorry to mislead, the 75k broken down to monthly payments is only hypothetical, I just wanted to understand the scheme of how high they can go on payments if the case was I could afford $1250 or so a month...

ray

What HHM and I are trying to convey, is that it's no (always) as simple as taking what you owe, and dividing it by 36 or 60.

In a Chapter 13, your Plan payments -- more precisely, the amount dedicated to paying administrative claims and unsecured debts -- is based on your Disposable Monthly Income (DMI).

That's why it's not simply $75,000 / 60 = $1,250. Your DMI may only be $600 (as you eluded to earlier), and you'd only be paying $36,000 towards your unsecured debt, not $75K.

The additional amounts you pay through the Plan -- for secured debt -- may increase the overall payment made to the Trustee, but that doesn't affect what your DMI is.

[rjl0206]

What HHM and I are trying to convey, is that it's no (always) as simple as taking what you owe, and dividing it by 36 or 60.

In a Chapter 13, your Plan payments -- more precisely, the amount dedicated to paying administrative claims and unsecured debts -- is based on your Disposable Monthly Income (DMI).

That's why it's not simply $75,000 / 60 = $1,250. Your DMI may only be $600 (as you eluded to earlier), and you'd only be paying $36,000 towards your unsecured debt, not $75K.

The additional amounts you pay through the Plan -- for secured debt -- may increase the overall payment made to the Trustee, but that doesn't affect what your DMI is.

thank you, I now have a clearer picture of this....

Ray

[lrprn]

so for $75K/ 60months = 1250 + lawyers fee etc. =monthly payment (hypothetically speaking) ===$1500

can they raise it more than that? I mean that 75K will pretty much be 100% to unsecured correct? so it shouldnt be higher? thanks in advance

Ray

Ray, you are misunderstanding how Ch 13 works. Take a read through the following links - hopefully it will make how your Ch 13 payment is calculated clearer:

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html

http://www.abanet.org/publiced/practical/bankruptcy13_whatis.html

http://moranlaw.net/13workings.htm#Chapter%2013%20practice

If you still have questions, keep asking them - we'll help you sort this out as best we can. However, the only way to reliably know how much your monthly Ch 13 payment might be is to have an experienced lawyer who files a lot of Ch 13s run your personal financial figures through the Means Test and Schedules.

[brokeinfl]

Would it be safe to say, the further you are in the hole, the lower your payments are likely to be?

[justbroke]

Would it be safe to say, the further you are in the hole, the lower your payments are likely to be?

Absolutely not!

In a Chapter 13, it's all about your income and your expenses. The more income and the less expenses, the more you pay.

Doesn't matter how much debt. In fact, the more "disposable" income you have, the more that gets paid to the unsecured creditors. At one point, my calculation was that I'd be paying back 100% to unsecured creditors (if I surrendered all my property, cars, homes) to the tune of $200K or so.

[brokeinfl]

Absolutely not!

In a Chapter 13, it's all about your income and your expenses. The more income and the less expenses, the more you pay.

Doesn't matter how much debt. In fact, the more "disposable" income you have, the more that gets paid to the unsecured creditors. At one point, my calculation was that I'd be paying back 100% to unsecured creditors (if I surrendered all my property, cars, homes) to the tune of $200K or so.

Thanks, I think I get it now. Disposable income is what you have left after cost of living and secured debt. Is anyone familiar with [URL="http://http://www.legalconsumer.com/bankruptcy/means-test/state.php?st=FL"] Would this estimate of payments be close?

[justbroke]

Thanks, I think I get it now. Disposable income is what you have left after cost of living and secured debt. Is anyone familiar with Means Test

Would this estimate of payments be close?

Yes, this would be close to what your DMI would be. Whether you have to pay secured creditors through the Plan (paid directly to Trustee) will be based on local rules.

I think you're in Florida, so most Trustees in Florida require secured payments through the Plan... unless you file a Motion to make payments outside the plan.