Can someone help? Chap 13 payment question.

[roxy]

I've searched on here for the answer and can't find it, so forgive me if this has been covered before.....

We fail the means test by about 15K. So if we file a 13, will our payment be based on the income we made in the past 6 months or our income we make now? It has changed (I'm making less). If we wait 6mos to let some income roll off, we would pass the means test, but I don't think we can wait that long, we are behind on CC payments by 2 months.

Also, we don't have as much disposable income as it says. I couldn't figure how where to enter 401K loan and school loan payments. With those figured in, we are negative every month.

[Scott50]

Your Student loan payments can't be used when determining your disposable income.. 401K loan repayments can be used- On Schedule J- Line #13 Installment payments..

[Universal]

I've searched on here for the answer and can't find it, so forgive me if this has been covered before.....

We fail the means test by about 15K. So if we file a 13, will our payment be based on the income we made in the past 6 months or our income we make now? It has changed (I'm making less). If we wait 6mos to let some income roll off, we would pass the means test, but I don't think we can wait that long, we are behind on CC payments by 2 months.

Also, we don't have as much disposable income as it says. I couldn't figure how where to enter 401K loan and school loan payments. With those figured in, we are negative every month.

Get an attorney. The BK laws in each region are very complicated. No matter where you have to get the money from; a good attorney is invaluable and can't be replaced.

[momofthree]

Being behind on credit cards by 2 months is really nothing in the bankruptcy world. Many of us were behind 6-12 months when we filed, with no legal action against us at all. My advice, unless you are being sued, wait another few months (6 months if that's what it takes) to file until your income is low enough to pass the means test and file chapter 7.

[BnkrptcyLwyr]

Just a point of interest ... the answers to your questions will vary depending on your district ... but a lot of the confusion should be sorted out when the Supreme Court decides the Lanning case.

That said ... If you just suffered a serious loss of income as a result of reduced hours, pay cut, etc. then you can claim the reduction as a "special circumstance" warranting an adjustment in income.

Of course, if you can wait to file, then you should let the income come off, because then it may make a difference between a 3 or 5 year plan.

Another way to have the income reduced is to have the judge change the six month look back period (which can be done under the authority of 11 USC 101(10A)(A)(ii)). Move it to a different date which will work (beware, nearly all attorneys are not aware that this can be done ... but there are a slowly growing number of decisions which recognize this ... and the Trustee in the Lanning case admits that this can be done in the brief that he filed).

401k loan payments can be excluded. There is no real doubt about that.

Student loans, on the other cannot be directly taken out. However, the case law is all over the place as to whether or not they can be deducted as a "special circumstance" (and this is usually in the Ch. 7 context).

In short, if you can wait ... wait.

Don't worry about the fact that you're behind on credit card payments, it would take them many months before they ever get to the point of suing you. By then, you're ready to file.

[Depressed]

I haven't paid on mine since last June, 8+ months now. As of a week or so ago, haven't been sued either.

[roxy]

Thanks everyone. We are going to get an attorney. We've talked to 3 different ones and they have all told us 3 different things. Frustrating. I think we will wait and hope the creditors don't get moving on legal action anytime soon. I chose to take a part time position to be home with our children and save on some daycare. In the end, it probably a wash , but I'd rather be home with my kids while they are little, than at work paying for them to be in daycare.

[tigergem]

Ok, this 6 month income look back thing keeps coming up, and I will tell you what happened in my case. It may or may not work for you, but I am thankful for the "Local Rules of Common Sense" that prevail in my district. My income was in the process of changing as I was filing my chapter 13 in December. I put all of the correct information into the forms, but I was able to base my payment on what my actual income was about to be with the cessation of an income source mid January. Then I annotated cessation of the second source in the form effective 01/13 or whatever it was.... the Trustee did not object to this at all.... didn't even question it. Of course I had proof in the form of a letter that I provided that this supplemental income was about to stop.

[optimistic1]

tigergem congrats on your pro se confirmation, (bow).

[tigergem]

tigergem congrats on your pro se confirmation, (bow).

Thanks! I was pretty jazzed about it.

Now I am cringing about the possibility of a massive 1099 implication in 2015. But I guess I will cross that bridge when I come to it.

[optimistic1]

1099 for what? The discharged debt, proving insolvency shouldn't be too hard now should it.

[tigergem]

1099 for what? The discharged debt, proving insolvency shouldn't be too hard now should it.

Yeah. There is that. But that is a long way off to be worrying about it now anyway. Much can change between now and then.

[kornellred]

Ummm......I may be wrong, but the 1099 form gets issued when a creditor settles with a debtor for less than the whole amount owed. The amount not paid back to the creditor is then considered as income for tax purposes.

[forgotten]

Thanks! I was pretty jazzed about it.

Now I am cringing about the possibility of a massive 1099 implication in 2015. But I guess I will cross that bridge when I come to it.

There is no tax liability for any debts discharged in bk.
If you get a 1099 you file IRS Form 982, and check the box "discharge of indebtedness in a title 11 case". No tax is due.

[tigergem]

Oh thank you so much for that information, forgotten! Very cool. One less thing to worry about. I hadn't even researched the matter yet.