Making Extra payment (s) questions

[DUMBAGAIN]

1. If you find you have extra money left a month (of every once in a while), can you send an extra payment to the trustee?

2. If you get a yearly pay increase, can you send that extra money to the trustee to pay off sooner?

[liz417]

1. If you find you have extra money left a month (of every once in a while), can you send an extra payment to the trustee? I wouldn't do that because *if* you have extra money, the Trustee may review you case and up your payments.

2. If you get a yearly pay increase, can you send that extra money to the trustee to pay off sooner? See above answer. Some Trustees do yearly reviews of your tax returns and up your payment plan if there is an increase in salary.

I would recommend putting the $$ aside in an emergency fund. Your attorney must have given you lots of room in filling out your expenses, how do you have so much extra monthy income in a ch 13???

[DUMBAGAIN]

OK, that's a bummer. Espcially if you tighten the belt more and were able to get it paid off sooner.

[justbroke]

1. If you find you have extra money left a month (of every once in a while), can you send an extra payment to the trustee?

I would say no. Not unless, and this is very qualified, you are in a 100% payback, you have a LOT of cushion in your budget... and are close (months) away from paying back the 100%. Otherwise, you'll just end up paying the unsecured creditors more than they would have received!

As an additional pointer... there really is no such things as "extra" money. There's money you spent... and money you haven't spent, yet. You put that into your savings. It's just unused money at that point.

2. If you get a yearly pay increase, can you send that extra money to the trustee to pay off sooner?

Trust me... the Trustee will be looking for this anyhow -- by reviewing tax returns. The Trustee will probably up your payment if you get a significant difference in pay over the prior year. This varies by District/Trustee, but anything over 5-10% may get your plan payment adjusted.

[t160out]

I spoke to my lawyers last night and asked this very question. The told me that it is true that you're payments will go up, but the length of your plan would in turn go DOWN.

I was under the impression that whatever you're ch13 plan comes out to be, for instance 20% payback, then you pay back the 20% over the 3-5yrs, but if your pay increases substancially (10-15%) then the payback % would go up accordingly. I guess that is not so. maybe i misuderstood

thoughts?

[rrockinggramma]

I started out with a plan calling for 10 percent to unsecured's. That was if ALL creditors filed a claim. They did not, so the trustee raised it to 35 percent. Well I hit that mark but still wasn't at the 36 month mark, so they raised the percentage to 61 percent. In Michigan, your plan ends 36 months or 60 months from date of confirmation, not the date the first payment is made. So I had to send in payments for 39 months, actually. My final payout is scheduled for Dec 4. And the final percentage to creditors ended up being 82.31 percent.

[HHM]

You do not send extra payments. Plain and simple.

[justbroke]

You do not send extra payments. Plain and simple.

Short, succinct, concise, and very true.

[chloe0724]

The trustee is going to wonder why you have extra income if the budget you supplied for the repayment plan was supposed to leave you with no disposible income. Just set it aside for emergencies.

[endisnear]

what about if you run into a lump of money, say an annual bonus? can you use that to make a lump sum pymt to pay down your balance?

[justbroke]

what about if you run into a lump of money, say an annual bonus? can you use that to make a lump sum pymt to pay down your balance?

You do not send extra payments. Plain and simple. (To Quote HHM.)

The only reason to pay down a Chapter 13 Plan is if you're in a 100% Plan. With the enactment of the BAPCPA amendments in 2005, it is my judge's (and other Judge's) understanding that you can only get out of a Chapter 13 Plan one of 3 ways.

1. Dismissal
2. Discharge
3. Pay 100% to unsecured creditors, all arrearages under the Plan, all priority unsecured creditors

We are all patiently waiting for the first post-BAPCPA debtor to "buy" out of a Plan. Most don't think it can be done for less than 100%.

Of course, this is my opinion and read of the situation.

Now if you do run into a lump sum of money, the Trustee is highly likely to amend your plan (to increase payments) or otherwise seek to take that money.

(However, any unused portions of wildcard exemptions may still be used.)

[endisnear]

ahhh yes, the trusty wildcard.....at least then i'd be able to keep the money. but that has to factored in prior to confirmation correct? only prob would be i'd have NO idea how much my bonus would be

[justbroke]

ahhh yes, the trusty wildcard.....at least then i'd be able to keep the money. but that has to factored in prior to confirmation correct? only prob would be i'd have NO idea how much my bonus would be

I don't know if it can actually be done. I think it can be used for the CURRENT TAX year because you filed in that year. So, if you expect a refund, put it on your Property schedule as a "2008 Tax Refund" (for example), and claim the exemption.

Of course, I'm not a practicing attorney, but I read a case in which someone did just that.

Also, when an amount is unknown, you use $1.00 on the schedules.

[DUMBAGAIN]

Thanks all, I guess before I asked the question I should have stated that we DO have to pay back 100%. I just want to be done with it as soon as possible, I thought if perhaps there was a little left over some months then that would help me end this mess sooner. Thanks for all the input.

[justbroke]

Thanks all, I guess before I asked the question I should have stated that we DO have to pay back 100%. I just want to be done with it as soon as possible, I thought if perhaps there was a little left over some months then that would help me end this mess sooner. Thanks for all the input.

Well, even in a 100% plan, you don't want to pay extra in the early months of the plan, as you need to work on that budget and learning to live within it.

If you get later into the plan, have it under management, pay on time, and run into extra, and the extra would decrease the number of months in a good positive manner... I don't see any issue.

The key is, you don't want to make it worse on yourself by throwing more money into the Plan payments, and not have a rainy day fund.