Plan pmts for self employed

[doublestop1]

Does anyone know whether plan payments will have to vary (monthly) on a plan for a self employed debtor? In other words, do they in essence calculate a miniumum with the means test...and then use the monthly income/expenses statement to calculate your actual payments each month?

I'm just wondering whether I'm going to be able to save any money that I'm lucky enough to make in those rare, but good months.

[HHM]

Not necessarily. Chapter 13's are designed to be predictable, so the plan payment is set up front. However, many trustees will require quarterly reporting for the self employed (whereas normally, most debtors need only provide their annual income tax return).

However, chapter 13's are not designed to allow you to save, they are designed to get you out of debt in 60 months or less.

[bigsapper]

I'm self-employed and filed a 13 in May. Still waiting to get confirmed and I appear in court next week for my final attempt.

Since the filing, I've had to submit a Expenses & Earning (with P&L statement) report to the court with copy the the Trustee, every single month. Not sure when or if it will end.

[doublestop1]

I think my primary concern with not having some kind of savings is being able to cover unexpected expenses. Things like medical expenses (I now have a $5000 deductible) more expensive car repairs (beyond what's proposed in my monthly budget), larger business expenses that require months of savings...or anything along those lines. Things that are clearly inevitable but simply cannot be covered without 1) access to credit, or 2) cash in a savings account of some kind.

Any idea how the trustee might address these concerns? I haven't met with him yet. My meeting is coming up in about 3 weeks.

[HHM]

I think my primary concern with not having some kind of savings is being able to cover unexpected expenses. Things like medical expenses (I now have a $5000 deductible) more expensive car repairs (beyond what's proposed in my monthly budget), larger business expenses that require months of savings...or anything along those lines. Things that are clearly inevitable but simply cannot be covered without 1) access to credit, or 2) cash in a savings account of some kind.

Any idea how the trustee might address these concerns? I haven't met with him yet. My meeting is coming up in about 3 weeks.

A good attorney will prepare a budget with "padding" to address unpredicatable events. For example, you may not literally spend $250 per month on car maintence, but you are going to budget for that because you might actually spend $3,000 over the course of a year (for older cards). If something particularly drastic happens, you can always petition the trustee for a temporaray forebearance in the plan payments.

[lrprn]

A good attorney will prepare a budget with "padding" to address unpredicatable events.

HHM is right. It's your lawyer who you need to speak with about this. Your trustee is not there for you, he/she is there for your creditors.

Typically in most self-employed Ch 13 situations, the best option is to save every penny of any extra money from any month to cover the months where there's a shortfall. The first year while you are building up an emergency fund to handle the tough months is the hardest.

As HHM said, your lawyer will be your best protector in this situation by writing a plan that has some accomodation for lean months.

Be sure to interview at least 3 to 4 experienced bk lawyers in your area who frequently file Ch 13 cases. Writing a good Ch 13 plan that filers can live on for five years is much more an art than a science.

Finding an excellent lawyer is half the Ch 13 battle and one of the most important things you can do for yourself and your family.

[bigsapper]

I'll affirm the previous post about finding an experienced attorney to handle this. My current nightmare will be over one way or another today.

[doublestop1]

Thanks to everyone who replied to this thread. I've been very happy with my atty, but my plan is somewhat unique. And he's just not sure how the trustee is going to react to it. The plan payments are low in part because of my tight budget, but also because the majority of the plan is based upon the future sale of family property that I have not, to date, been able to access. The parties cannot agree on its disposition, so it's at standstill. Which is what forced me into BK in the first place. I ran out of time. My atty filed a motion for sale at the time of my filing...which has inflamed an already tense family situation. So we're trying to convince the trustee that my monthly payments can be low because of the equity that this sale should generate.

In the short term, however (i.e. until the court can successfully force a sale of the property) I'm concerned about not having enough of an emergency fund to cover unexpected expenses on my house, my car and business expenses. My plan is just so tight. I have a small amount of savings and I'm concerned that the trustee will say "hand it over" at the meeting, effectively leaving me broke. And simply having the option to suspend payments for a few months won't help me in the event of a disaster. The plan payments are too small to generate any savings.

With assets that could potentially wipe my debt away, is there a chance that that I could be forced to convert to a 7? Who initiates this? The trustee or the court?

[daytona]

The way I understand it in a CH13 is that as long as you list the asset and it is sold during your 5yrs in the plan then the sale amount (less taxes) would have to all be applied to your Ch13 plan, once you reach 100% repayment any additional proceeds would be yours and the Ch13 would be over.

So for example, if you had 50k in unsecured and were paying say 200/mo towards your Ch13 and in 1yr the property sold for say 100k net to you then you would have paid 2400 towards the 50k and the additional 47,600 would be paid "lump sum" from your 100k leaving you with 52,400 to keep. Your Ch13 would then be over since you paid 100%. I don't see how they can "force" a sale when other members are involved...unless they buy it (not going to happen.) You could be running into issues relative to what unsecured creditors would get in a Ch7 vs a Ch13 because it has to be at LEAST as much...just a thought...very interesting though since it's an "illiquid" asset and there are multiple other party's involved....

[doublestop1]

Actually, it's multiple assets...in the form of lots. My atty is saying that he can force the other parties to either buy me out or transfer complete ownership of one of the parcels to me (in exhange for my interest in the others) so that it can be sold. Basically any combination of sale or buyout that frees up enough money to settle my case.