My monthly payment went up by $400 after my 341 meeting?

[mrslick]

this site is great, thank you. i have a few questions and concerns and i hoping that you guys can help. my attorney is very nice but i can tell she's very new to filling bankruptcy. she had my monthly payment at $352 but at the 341 meeting the Trustee point out a few mistakes which requires two new ammendments and plus Trustee is looking to increase my monthly payment to over $750 . that new payment is freeking me out especially with a baby on the way. Plus both of the cars we own just started to give us serious, i mean serious problems. 2002 Mercedat ML ( $6K loan ballance and current) will cost over $1000 to repair and 2002 Chrysler Sebring (own out right) needs a new motor (oil sludge). all that happened after my creditors' meeting the same day.
so my questions are:
will the Trustee allows us to get an auto loan to replace the chrysler? If yes, will the car payment be added on top of the $750 or will it be included in the payment? Also will the trustee takes my future tax refund if we don't owe any back taxes?

Please keep in mind that our plan has not been confirm yet, the trustee wants us to retake the means test and submits new expenses. I'm planning to call my attorney on Monday to tell her about my cars troubles. and by the way i live in massachusetts and the reason we find ourselves in this mess is because of investment properties and i lost my job for 5months last year. i got a new job since then with a $10k paycut and my wife changed job took a $3k paycut as well to be close to home. the paycut does not bother me at least i find something. we owe less than $25k in credit cards, 3 months behind our mortgage ($8600), and over $150k differences on the foreclosed investment properties. I know that's alot of info, but i wanted to give you a brackground of my situation. any ideas will be greatly appreciated.

[lrprn]

my attorney is very nice but i can tell she's very new to filling bankruptcy.

If you are right that your attorney doesn't know much about filing Ch 13, then that's too bad. When investments are involved, that's not a simple Ch 13. What led to you retain someone who wasn't very experienced at filing Ch 13?

that new payment is freeking me out especially with a baby on the way.

What was the emergency that you couldn't wait until the baby was born to file? With one more family member and the increased expenses that come along with a new baby, that alone would have likely decreased your disposable income and thus lowered your payment.

Plus both of the cars we own just started to give us serious, i mean serious problems.

One of the cardinal rules of filing Ch 13 is to not go into the 13 with old cars. Yours are old. Did your lawyer not encourage you to replace at least one of your cars before you filed?

will the Trustee allows us to get an auto loan to replace the chrysler?

It's possible for your lawyer to get your trustee's permission to go car shopping, although you are likely to be asked why you didn't do so before filing. Once you get a new(to you) car, then your lawyer can amend your plan to include the new car payment. However, since you just filed, the chances of you getting any kind of a decent APR is about zero, if you can get a car loan at all. That's really bad timing on both cars going south just weeks after filing, that's for sure

If yes, will the car payment be added on top of the $750 or will it be included in the payment?

If you replace the paid-off Chrysler, then the new car's payment can be included in your plan as an expense when your lawyer amends it. Depending on all your other financial figures on your forms, that *could* potentially reduce your payment a bit.

Also will the trustee takes my future tax refund if we don't owe any back taxes?

If you don't owe back taxes, your trustee could still take all, part, or none of your tax refunds while your case is active. Ch 13 trustees vary widely about what they do with tax refunds during active 13s across the country. You'll have to ask your lawyer what your trustee does with tax refunds every year.

No matter what your trustee does with tax refunds, going forward your best bet is to stop using Uncle Sam as a no-interest savings account. Look at your withholdings and have your wife look at hers too. The goal should be to return as much as possible to your pockets with each check rather than sending it to the government to hold out of reach for a year.

Aim for having around a positive $250-500 refund each year, and that's all. You don't want to owe taxes, but if your trustee is one that wants all your refund every year, then you definitely don't want to line your trustee's and your creditors' pockets any more than absolutely necessary.

You need to budget and also put any extra money you end up with each month right into savings to build an emergency fund. There's no time like the present to start down that road.

[andy158]

Amen to the emergency fund. Had to dip into ours (actually depleted it) last week. Both car and truck would not pass state inspections. Truck needed a muffler and tailpipe and the car needed front brakes and rotors to the tune of $500.00 total. In the six months we have filed, we managed to save enough money to take care of unplanned expenses such as these. Have to replenish the e-fund now, but at least we didn't use a credit card as we did in the past. A good feeling knowing the repairs were made and paid in cash!

[mrslick]

my attorney is very nice but i can tell she's very new to filling bankruptcy

thank you lrprn. well i ended it up with this attorney because the one i went to see asked me to pay $4000 up front, now if i have that kind of money in the bank i would not be behind on my mortgage payment. the attorney i have now asked for $2500 upfront and she seemed honest, so i used the mortgage payment to paid her. I'm in the banking industry so i did not want to use an attorney that's close to my house or my job.
to answer some of your questions lrprn, i did not want to lose my home and the phone calls never stop coming that's why we filed. the baby news came after we paid we were deep into the process, but the attorney said we could change our expense once the baby is here. Bankruptcy is not something that people (me) likes to be open about and i did a lot of research but i wished i find this website before i filed. As far as the cars situation go she should of told us to get a new car, this is one of many reasons i think she doesn't have too much experience.
getting a car loan will be very difficult so, anyone knows where i can look for a car loan?

[VegasBKLwyer]

It appears that your Chapter 13 plan was not properly calculated by your attorney and her mis-calculations were caught by the Trustee. Under a Chapter 13 Plan all of your "disposable income" is to be paid to creditors. Disposable income is determine by taking your gross income and subtracting your expenses. I am assuming your attorney subtracted too many expenses and the Trustee caught this.

Getting a car right now is not impossible but will be difficult. The mere fact you have already filed does not disqualify you from getting a car loan. Contact your attorney.

If you do get a car this amount will be included as an expense and will more than likely have no effect on your monthly payments.

Lastly, your Chapter 13 trustee is usually entitled to your tax returns for the length of your Chapter 13 bankruptcy plan.

[mrslick]

Thank you all for your input.

[Universal]

Amen to the emergency fund. Had to dip into ours (actually depleted it) last week. Both car and truck would not pass state inspections. Truck needed a muffler and tailpipe and the car needed front brakes and rotors to the tune of $500.00 total. In the six months we have filed, we managed to save enough money to take care of unplanned expenses such as these. Have to replenish the e-fund now, but at least we didn't use a credit card as we did in the past. A good feeling knowing the repairs were made and paid in cash!

good for you!

[mrslick]

My wife and I are expecting our first child in June which was mentioned in the chapter 13 paperwork. My payment plan is $786 confirmed on 1/25/10. We both work & don't have any parents who live in the state. I found someone who will baby sit the baby for me for $250/wk. i'll be paying that person with checks but i don't think she'll report to uncle sam. I called an infant place and they're asking $329/wk for 5 days. When i first started the plan my payment was $352 before the 341 meeting, the trustee said that we had to have at least pay 21% to the unsecured debt which resulted in the new payment. now if take the $250X4 that's $1k which is over the DMI of $786. plus all the other expenses that comes with a new baby. We're contrubuting 10% to our 401k, we only have about $15k total in retirement. we have no savings, we are driving two 8yrs old cars with over 115k miles each. We've spent $2kthis year fixing them and one needs an engine. do you think my case could be discharge due to infant care expenses or at least should i definitely summit a new expense sheet? Second, should i wait until the baby is born before i summit a new expense sheet?

[momofthree]

No, you won't get a hardship discharge just for having a baby, or even from having your expenses more than your income. You may, however, be able to convert to a chapter 7 once the baby is born.

[mrslick]

i would not mind to convert to 7. will i lose my house if i'm 2.5 months behind? i'm current with my car payment and its being paid outside the plan. between me and my wife we have $35k in student loans, $25k in credit cards, and over $150k on investment properties that were foreclosed on. so i know i'll have to pay the student loans, but if i can get the rest discharge by converting to ch. 7 that would be FANTASTIC.

[SMinGA]

It kind of depends on why you filed ch. 13 in the first place. From a little of what you've said, I'm guessing part of the reason was due to being behind on your mortgage. Did you also have assets to protect? Those things can factor into the minimum you need to pay into the plan. Whether or not you can convert to a 7 depends on those factors, and what you're willing to do about them. Such as being behind in your mortgage, a ch. 7 does not help with that. You'd need to catch up or expect to eventually move.

About the babysitter not planning to file taxes... You'll want to report the $ paid on childcare on YOUR taxes to get the tax credit for paying out child care. Could be trouble ahead...

[HHM]

It is not uncommon for there to be some adjustment of your payment after the 341 meeting, after all, it is the JOB of the trustee to object to something. I would go so far as to say that if the trustee didn't object to something in a chapter 13, then you left money on the table.

A chapter 13 is a negotiation, like any other. However, too many attorneys are simply willing to roll over and some are just not creative enough to make it work.

[LadyInTheRed]

About the babysitter not planning to file taxes... You'll want to report the $ paid on childcare on YOUR taxes to get the tax credit for paying out child care. Could be trouble ahead...

More on the trouble ahead: as the babysitter's employer you are required to report the income you pay to her and withhold as required by the IRS and your state taxing authority (there may be a certain amount you have to pay before withholding and/or reporting are required. Check with a CPA or do some research). If you do not withhold as required and she does not claim the income and pay the tax, you can be held responsible to pay her taxes and penalties. Even if she does report the income and pay the taxes, there may be penalties. Penalties for not withholding from payroll are high. I bet most people don't report income paid to baby sitters and don't get caught (unless they are audited or later run for political office). But, you should be aware of the consequences if you do get caught.

[mrslick]

the reasons i filed is because of 3 properties that were foreclosed on plus i lost my job in 03/2008 for 6months. i did not file then because just most of us here i waited too long to file. my student loans and my cc debts are not that much.

LadyInTheRed, thank you for the info. i would rather pay an established infant care and i think that's what i would have to do. Now my concern is this?

Once the Baby is born we will not be able to afford both child care and the plan. I don't have much equity in my home, but i don't want to lose it either. If i can come up with the 2.5 payments that i'm behind on, should i tell my lawyer to convert to ch. 7 now or should i wait until the baby is born?

If i wait for the baby to be born i may not be able to make the payment to the plan.

[SMinGA]

I did not mean so much why you filed bankruptcy, but while you filed ch. 13. If it was just due to having income available then converting to a ch. 7 when your finances change - should not be a problem.

But if you filed ch. 13 to protect assets and or/stall foreclosure on a home you wish to keep - then ch. 7 may not be so helpful.