Variable income question?

[vicmost]

I'm an automotive technician by trade and my income varies. I've been preparing to file Chapter 13 for the last 5 months and have been trying to keep my income just below the median income level. My goal is to have a 36 month minimal payment plan.
How does a Trustee monitor my income in a situation like this? I know I must turn in tax returns at the end of the year, is that when my plan would be reviewed?
I can control my income to a certain extent (types of jobs, overtime, speed of work, etc, etc...). I cannot control how busy we get so I thought a lower income would be better to work with while starting the plan.
Which leads me to the next question. How much does the trustee take if my income goes up...Say 10-15% at the end of the year.

Thoughts anybody?

[lrprn]

How does a Trustee monitor my income in a situation like this? I know I must turn in tax returns at the end of the year, is that when my plan would be reviewed?

Your Ch 13 trustee can review your plan or anything else related to your filing or finances any time he/she wants to. However, unless you do something to get yourself on their radar after confirmation, that very rarely happens.

Typically if your trustee is one that requires providing copies of your tax returns every year, then there's a review of your income when they receive the copies from your lawyer (or directly from you if that's how the process is done in your local court). Frankly unless there's a significant increase in your income over the year (usually over 10%), then your trustee is likely to leave things as-is.

How much does the trustee take if my income goes up...Say 10-15% at the end of the year.

If your trustee decides to go after the extra income, then you'll hear that from your lawyer and be notified by mail from the court. Then you and your lawyer have an opportunity to rework your Means Test and Schedules to see if you have an actual increase in disposable income. (You could have increases in expenses too.)

If reworking the Means Test and Schedules still shows a significant increase in your disposable income over what was there when you filed, then your trustee can ask for your payments to increase to that reworked figure.

Keep in mind that most trustees are unlikely to do this. Most are more than happy if you keep sending in your payments on time because taking you back to court to try and increase your payments is time-consuming and expensive for them.

[walkthaplank]

The lawyers I have spoken to in our area have said that the trustee's don't really look at you once you've been confirmed. They said they don't even really look at the tax returns you submit beyond making sure you submitted them.

As to the time frame of your plan, in our area, if you are lien stripping you will be in a 5 year plan, no if's and's or but's. That's just how they roll.

[vicmost]

Thank you both!
I should be okay income wise until my wife starts working. Even though she is not going to be on the bk and currently not working I'm sure any future income will count. That's not to much of an incentive for her to get employment.

That's to bad about being on a five year plan do to a lien strip. I was hopeful for 3 years but I live in the same area as you (walkthaplank).

[CH33 Paralegal]

The three years only applies to your APPLICABLE COMMITMENT PERIOD. That's the minimum amount of time you MUST be in the case if you want to propose to pay less than 70% of the unsecured debt in the plan.

The only real way you could do a legitimate 36 month payout paying less than 70% is if you didn't have much secured or priority debt to pay out in the case and if you were just broke enough to not have any extra money, but also steadily employed enough to make the payment work.....very small population there.

[vicmost]

Thanks for the input.
I'll find out more when I submit all my documents and the lawyer reviews them. It looks like a 60 month plan is eminent as I have a significant amount of secured debt.

[walkthaplank]

BTW, keep in mind it takes a bit of time for them to get your paperwork together. It is a booming business so plan accordingly. I was given a 4 week time table to take my information and have the paperwork ready for me to review.

Of course if you have something pressing like a repo or garnishment they'll file on an emergency basis.

[vicmost]

Thanks Walkthaplank, I'm sure business is booming for them. I don't have anything pressing. I read that 2009 is going to be a record breaking year for bk's. Looks like we will get to join GM in upholding this prestigious honor!

[walkthaplank]

Thanks Walkthaplank, I'm sure business is booming for them. I don't have anything pressing. I read that 2009 is going to be a record breaking year for bk's. Looks like we will get to join GM in upholding this prestigious honor!

If only we could get the fed to buy out 60% of our debt prior to BK

[vicmost]

I actually hired an attorney today and it looks like I could do the 36 month time frame but because my income is so low I wouldn't be able to provide a confirmable plan. Kind of a catch 22.
I must say it was quite a relief to have finally hired an attorney! I've been waiting 6 months to file and my plans have finally materilized. Tentatively it looks like I will be able to keep my house and lien strip my second mortgage...I will have a zero payment plan on unsecured creditors and I will be paying about $350 per month for secured debt. That's not such a bad deal for $265k of dischargeable debt!!!

btw-When I got home and checked my snail mail I already have a credit card offer by one of those post bk creditors! Man they work fast!!!

[vicmost]

Walktheplank

Incidentally,
I think we have the same lawyer...Mxxxxx on San Antonio...
They are now running 6-8 weeks for paperwork review! Business really is booming!

[walkthaplank]

Incidentally,
I think we have the same lawyer...Mxxxxx on San Antonio...
They are now running 6-8 weeks for paperwork review! Business really is booming!

Wow, same guy told me 5 years for lien strip, no ifs ands or buts... that is comforting...

Glad you are moving forward!