More instances of confirmable plans with negative disposable income.

[optimistic1]

This gets more confusing as I go along, according to these several cases, if you end up with negative disposable income because you use the means test to determine it for you. And you are above the state median income, if you end up with negative disposable income, your plan is confirmed? Then what exactly are you paying every month?

http://www.arb.uscourts.gov/orders-rules-opinions/opinions/taylor/frederickson.pdf

http://www.abiworld.org/committees/newsletters/consumer/vol4num5/DisposableIncome.pdf

[justbroke]

It just means that you pay the unsecured creditors (with caveats I'll mention later) 0%. Technically it means that you have no disposable income. This is the best of both worlds... a Chapter 13 paying back nothing to unsecured creditors.

Now, the caveats are that if you have non-exempt assets. If there is equity in those assets, you still must pay the unsecured creditors at least as much as the value of that equity. This is regardless of a negative disposable monthly income (DMI).

If I used my actual monthly income (and projected monthly income) on my form B22C, then I have a very negative DMI. However, I'm confirmed. The money just comes from you allowances.

For example, I have one vehicle that I'm paying about $209 a month in plan. That gives me $280/month in surplus funds. While that could be saved for repairs, it's actually a buffer. So I could easily go $-280/month DMI. Similarly, if I don't spend $1,370/month on food and clothing, or $533/month on utilities, and so on... then I have enough surplus to fund my plan.

Of course, I wouldn't try this if your plan wasn't generous. For example, I added an additional home energy costs (B22C line 42) of $225.00. I have plenty of cushion in my plan to be successful. What's unfortunate is that many pro se filers, and even some filed with lawyers, don't take every allowance that they are entitled to, and end up with Plans which will fall apart as soon as a financial emergency arrives. It could be something as simple as 2 new tires for your car!!!

Understand?

[optimistic1]

Trying to.

"the money just comes from your allowances"

What do you mean by this statement?

And, with all that being said, I dont really own anything that has equity in it anyway. So I dont need to worry about that.

My car loan is going to be paid in full in about 34 months. At that point the car would be worth around 5k, how does that effect the plan at about 2 years in? I havent even filed yet. But when I dont make that payment anymore, I would still be in the negative based on the IRS standards.

So, on my schedule J, I should come close to the IRS standards, to give myself some breathing room in case of an emergency?

Sorry if I ask stupid questions, I was so deep in the Ch. 7 stuff, the 13 is another world to me.

And one last one, so if I get a 36 or 60 month, and I have neg. DMI, what am I paying if anything at all?

[justbroke]

"the money just comes from your allowances"

What do you mean by this statement?

If you have a negative DMI of $-100, then it has to be offset somewhere (simple accounting principal). So, if you take in $1,000 month and have $1,100 in expenses, you have to reduce one or more of the expenses to meet the $100 deficit and balance your budget. So, you may have to take $100 from your food budget or your repair budget or utility budget. Understand?

My car loan is going to be paid in full in about 34 months. At that point the car would be worth around 5k, how does that effect the plan at about 2 years in?

Doesn't affect your plan at all.

So, on my schedule J, I should come close to the IRS standards, to give myself some breathing room in case of an emergency?

You're supposed to use your actuals on Schedule J unless you're below median then you use the higher of the IRS standard or your actual (whichever is higher). You may also exceed the IRS standard... you just have to justify it.

Sorry if I ask stupid questions, I was so deep in the Ch. 7 stuff, the 13 is another world to me.

Note stupid. It's better to try to understand this information so to put you at ease in how the process works.

And one last one, so if I get a 36 or 60 month, and I have neg. DMI, what am I paying if anything at all?

It depends on your District rules. You may be required to pay secured creditors through your Plan (through the Trustee). So, while you'll pay nothing to the unsecured creditors, you will pay your secured creditors and priority unsecured creditors (like your lawyer, the trustee fee, and certain taxes like the IRS), through the plan.

[optimistic1]

What would be the typical payment be to the trustee, the lawyer, and taxes on a 3 year plan. If I owed $1500 in taxes, and the lawyer charged me $3000?

Also, I mistyped my original question, by the time I get this plan setup and rolling the car loan I have would be paid off at about 24 months in a 36-60 month plan. Do they then modify it because I now have a fully paid off car, or only if there is equity in it above the state allowance?

[justbroke]

What would be the typical payment be to the trustee, the lawyer, and taxes on a 3 year plan. If I owed $1500 in taxes, and the lawyer charged me $3000?

I can't tell you. The reason is, your lawyer will want most of that $3K paid in the first 12 months or so in the Plan. But, that all depends on your income as well! Typically, the lawyer tries to get his fee (less the "monitoring potion of the fee") in the first part of the Plan... in case the Plan fails.

If you did pay it over 36 months, then you'd pay $125/month (for the lawyer and IRS), and an additional $12.50/month in trustee fees (at 10%), or a total of about $138/month for 36 months.

Also, I mistyped my original question, by the time I get this plan setup and rolling the car loan I have would be paid off at about 24 months in a 36-60 month plan. Do they then modify it because I now have a fully paid off car, or only if there is equity in it above the state allowance?

Nothing would change. Your payments to your car are actually calculated based on your 36-60 month plan.

So if you end up in a 36 month Plan, then they'll take what's left of yoru car and divide by 36. However, your lawyer can "accelerate" the payments to have it done in 24 months (2 years). Accelerating the payment can affect your overall plan payment if you're not paying money to unsecured creditors.

(This gets more complex as you go into the payment distribution scenarios. But suffice it to say that a simplistic model is to just pay everyone over the duration of your plan in equal amounts -- pro rata. This way, you don't get into the complexities of trying to pay one first over the other. )

[optimistic1]

you should be a lawyer, you really have this stuff down.

the one thing I still dont understand is, even in the NOLO book, its states that if your over the state median income, you must use the IRS standards, but like you said to me before, it is to make sure you arent exceeding them, if I can show the court that I can make it by based on my own Schedule J expenses, and I can dedicate a $125 payment to the trustee, the lawyer, and back taxes, then they should confirm my plan, correct?

[justbroke]

you should be a lawyer, you really have this stuff down.

Well, I don't think there are many lawyers who know all this really well... nor do I know everything. The application of the law differs by Bankruptcy District, and even by Judge within the District (sometimes). It would be very profitable to be a good Bankruptcy Attorney right now!

the one thing I still dont understand is, even in the NOLO book, its states that if your over the state median income, you must use the IRS standards, but like you said to me before, it is to make sure you parent exceeding them, if I can show the court that I can make it by based on my own Schedule J expenses, and I can dedicate a $125 payment to the trustee, the lawyer, and back taxes, then they should confirm my plan, correct?

Yes, if you are over the media, you use the US Trustee Allowances (based on the IRS standards). By this, Congress intended to try to level the playing field and make the whole expense category something that was objective and practical, rather than having it vary by District and person (as it did pre-BAPCPA of 2005).

So, in the end, your plan stiill ends up being based on characteristics of your individual family (family size), types and quantity of secured debt, arrearages, outside income, and other variables.

Will your specific plan be confirmed? Most likely... especially if prepared by a lawyer, since they will know what it takes to get a plan confirmed in your District.

[optimistic1]

You quoted.

Yes, if you are over the media, you use the US Trustee Allowances (based on the IRS standards). By this, Congress intended to try to level the playing field and make the whole expense category something that was objective and practical, rather than having it vary by District and person (as it did pre-BAPCPA of 2005).

So, in the end, your plan stiill ends up being based on characteristics of your individual family (family size), types and quantity of secured debt, arrearages, outside income, and other variables.



Would this be inlcuding your acutual expenses Schedule J compared to the IRS standards, thus if your expenses are lower, you free up $$$ for a payment?

And, do I have to pay my lawyer in full before filing a 13, or is it always in the payment once you have it confirmed and rolling?

[justbroke]

Would this be inlcuding your acutual expenses Schedule J compared to the IRS standards, thus if your expenses are lower, you free up $$$ for a payment?

The key is, you actually want your DMI on your Form B22C to be negative. This is what I call a strategy. This technically means that you have no money to pay unsecured creditors.

And, do I have to pay my lawyer in full before filing a 13, or is it always in the payment once you have it confirmed and rolling?

No. Most lawyers usually want a retainer which can be anything from the filing fee plus a couple hundred dollars ($500 or so) to the entire "no look" fee up front ($2,500) or even more. The more complex the case, the more they'll want, except in the "no look" (single fee) Districts.

Then most lawyers will put part of the money in the Plan. That way, you're not hit with $3K or even $5K in fees in order to file You file with as little as $500 to $1000 and then pay the rest back in your plan.

[optimistic1]

great, I cant wait to have my consultations next week and the one after, I scheduled with 4 total so far, although I wish I was a bright as you and do a Pro SE, thanks for all your help

[justbroke]

Pro Se isn't all it's cracked up to be... LOL! I wish you best of luck with your lawyers. You will find that the four lawyers have different styles and even strategies about how they attack a bankruptcy and the planning involved.

I would venture to guess that at least 2 of them won't agree with what I wrote. Hey, but that's what it is all about. So long as they have a good strategy to get you the best workable plan for you... that's all that matters.

[optimistic1]

I know exactly what you mean, I have had lawyers tell me stuff that is the complete opposite of what is stated in the Bankruptcy Code itself, and they try to be condescending towards me at the same time, like I have no clue what I am talking about. The same topics are clearly spelled out in the NOLO Chapter 7 book, and they still tell me that I am wrong. And then I call a different attorney and they completely agree with me. So it seems as though this will be the biggest challenge, finding an attorney to take my case for whats in my best interest, not his or the firms wallet. The often just want a quick open/shut case and make $$ rather than do their job as intended. I will re-post a new thread with some results as to these so called consultations.