Income decrease, medical bills increase

[mitchell]

I apologize in advance for any questions that may have already been asked and answered repeatedly, but this whole thing is very new to me.

My wife and I have filed Chapter 13 and are waiting for the 341 meeting.

Question:
It already looks like my wife may get hit with a cut in pay and my son's medical expenses are about to go up (he is ok, just requires ongoing medications). Are there any mechanisms available in a Chapter 13 that can account for such negative impacts to our monthly budget.

In fact, even with my wife's current income, due to some one-time bonus payments she received within the last six months, the monthly income listed for her is higher than what it really is meaning our listed disposable income is higher than it really is. Combine that with the mandated allowances for living expenses, the current payment to the Trustee will leave us negative 30.00 to 150.00 dollars at the end of each month. That is with everything cut to the bone (just spending on groceries, utilities, gas to and from work, medical expenses and that's it).

Even if my wife does not see a cut in pay, with the current numbers they crunched for us, something doesn't get paid each month (i.e medical bill, utility bill).

This is pretty scary because not only will we not be able to pay certain bills, but one breakdown in a vehicle or possibly the furnace this winter and we are finished.

I've heard so much how a bankruptcy can be the beginning, yet difficult, road toward financial recovery. So far it appears that we will not avoid being crushed by the weight of it. Since the mortgage was not part of our problem, I'm starting to think that filing was a big mistake and I should of just dealt with the phone calls and paid what I could when I could. (they were calling all my relatives so I had to do something).

I have the gut wrenching feeling we will be right back where we started except with the added pleasure of a dismissed Chap 13 and we will have moved in with a releative because the electricity has been turned off or we have no heat.

Sorry for the rant. I guess it is what it is and I suppose it has an end somewhere. Just feeling totally crushed and powerless to find a positive direction.

[AngelinaCat]

Go ahead and advise your attorney now of this possibility, if you have not already. You may be able to convert to a Ch7.

Later on, lrprn, Flamingo, and justbroke should be checking in. They are very knowledgeable about Ch13s.

Good luck to you and your family, and welcome to the Forum.

[mitchell]

Thanks Angelina Cat.

From what I understand, the means test prevents us from ever considering a chapter 7. Unless either my wife or I loose a job, which sadly sounds like it would be a good thing at this point

[BubbaGump]

If you or your wife have any "flexibility" in terms of going to your boss to request a salary decrease, you may want to consider doing that, file for Chapter 7, let the discharge blow over, then get back to normal. You can apparently have a "decrease in income" right after the 341 meeting and just convert the case to a Chapter 7.

This is purely speculation based on what my own attorney told me during the Chapter 13 filing process, but if your income decreases and you can't pay any of the plan payments, then it becomes a Chapter 7 case.

Somebody else may know better on this.

[mitchell]

Thanks for the reply BubbaGump

I'll have to do more research on what circumstances would allow a Chapter 13 to become a chapter 7.

The catch right now: since the plan payments come directly out of my paycheck, as long as I have my job, the payments will always be made and should never be late. It pretty much negates my whole paycheck except about $100.00. We chose mine because, for the moment, my employment appears stable.

The problem is how do we cover everything else when her income decreases or our expenses (medical) increase. Since the plan payments are still being made on schedule, is there any remote chance of a plan adjustment if we are struggling to keep the lights on?

[BubbaGump]

You should consult with your attorney on getting the plan payments lowered. If you have a change such as incurring medical bills (which are explicitly listed on the means test, as well as on the Schedule J) then I'd imagine you could get a change in circumstance change in the bankruptcy payments. Ultimately, I'd imagine that's up to the Trustee and whether they foresee it as an ongoing matter or a temporary thing. Definitely get in touch with your attorney before you are struggling to keep the lights on.

[woeisme]

We had a change in income, husband went on disability which changed A LOT of things in our budget, some positive (not requiring childcare anymore and no commute) but most negative (~60% of his prior income). We got our CH 13 plan payments suspended for 3 months while they figured out whether to give him disability pay or not, then got the payments modified to $400 per month (was $1100!), so you can indeed get your plan modified if your finances change. You can't get them modified if you just anticipate a change, had to wait until disability actually went through, you have to file motions to modify once the event happens. Good luck!

[mitchell]

Thank you woeisme and thanks again BubbaGump.

You have been very helpful and it is much appreciated.

[Billssuck]

My husband is being laid off this Saturday. We're looking at converting to a ch 7 once it goes through. We're loosing about $900 per month after unemployment and our DMI before was only $144/mo. My husband had a feeling this was coming so he has been applying for jobs for 3 months and has only had 2 interviews. But basically we've been waiting on the actual lay off and associated paperwork to start the process. I am told that you must first suspend plan payments for 3 months and then if things aren't better then, then we'll commence with the conversion.