How do chapter 13 families make it thru the month?

[sheilaE]

I have a question: Sharina, being that you are well into your plan and we are at the beginning, can I ask how you did it each month? My big fear is that we won't make it through the month before running out of money. At our free consultation, the lawyer told us our payments would most likely be around $1300.00 per month. My husband and I almost fell out of our chairs! That's about what we'd been paying out on cc each month and always needed to use one to cashadvance on to fill the gap-or gas a car with. It's been so stressful for the last two years because we have been falling short each month, now I find out we might have to pay back that same amount every month for 5 long years. I'm even more stressed thinking we are going to be sinking each month and what happens when the are needs gas and there's no more money? And what about birthdays for our 3 kids-we can't just give the children b-days cards and say happy birthday-Mommy & Daddy will get you something in 5 years and what about Christmas presents?
Sorry to go on and on. I was just wondering how you made the plan work. I'm so much more stressed now since meeting with the attorney.

[sheilaE]

How do chapter 13 families make it thru the month?

We have not filed as of yet, but met with a Lawyer last week. He gave us a rough estimate of our repayment-it looks like it could be around $1300.00 a month for $80,000.00 worth of cc debt. That's about what we pay out each month in cc payments right now and every month we sink and need to use a cc for gas or groceries. Our Lawyer said we might want to think about walking away from our home-but my husband is in his 50's-I'm almost there-this is probably our last chance at owning a home, so we are going to keep it.

Anyway, my question is: How do families survive on their repayment plan? We have 3 children, 2 with birthdays coming up this summer. If we have to pay $1300.00 a month back, it's going to leave us completely broke with nothing to spare-not even a trip to McDonald's for kid meals. And what happens at Christmas? Do I tell my 3 children-we'll make up for it in 5 years? What happens if we run out of gas and have no money to gas the car?

I'd love to hear from people who are on a repayment plan and how they are surviving on it.

I know these may seem like silly questions and we shouldn't have let ourselves get into this mess in the first place.

Thank you

[helpmeout]

I'm 44 years old. I'm a single parent. While I'm a Chapter 7 and not a Chapter 13. I am walking away from my house. I will never own a house again. I have an 8 & 10 year old who have only lived in this house. They are going to be very upset about moving.

But I will be in a better position financially for having walked away from the house. The cc payments weren't what caused the problem. They just helped prolong the inevitable. The fact that I can't afford both a mortgage and childcare payments.

If your repayment plan is the amount of your cc payments are and you can't afford that, then you really need to take a long look at your finances. And get rid of what you can't afford. I strongly suspect that your attorney is correct, you need to walk away from the house.

[lrprn]

[sheilaE, I moved your original post from the end of another thread to here where you started your own thread asking the same questions. I moved my response to your original post here as well. -lrprn]

My big fear is that we won't make it through the month before running out of money.

All of us in Ch 13s have that fear. You manage by (1) quickly figuring out the difference between "I want" and "I need" and then ruthlessly stripping out all of the "I want"s from your spending right now; (2) knowing exactly where your money is going every single day until you get the hang of living within what you actually bring home before filing; (3) going over your living and other expenses with a fine toothed comb so when you give them to your lawyer, they are accurate and include everything, including a small amount for gifts every month; (4) going over your filing forms with a fine-toothed comb to make sure everything is correct; and (5) *NOT* signing those forms if they demand a payment you know you can't make.

At our free consultation, the lawyer told us our payments would most likely be around $1300.00 per month. My husband and I almost fell out of our chairs!

Keep in mind that until an experienced lawyer who files a goodly number of Ch 13s fills in the Means Test and Schedules with your exact income and expenses, you really don't know what your payment is going to be. This lawyer gave you a "best guess" - don't get tied to that amount because it isn't necessarily what you will pay.

...I'm even more stressed thinking we are going to be sinking each month and what happens when the are needs gas and there's no more money?

This is why it's crucial to pare your budget down to the essentials only, especially during year one, to build up an emergency fund. It's the emergency fund that gets you through the inevitable months where "____ happens" - fill in that blank with anything unexpected.

And what about birthdays for our 3 kids-we can't just give the children b-days cards and say happy birthday-Mommy & Daddy will get you something in 5 years and what about Christmas presents?

Your lawyer needs to add in a reasonable amount for gifts into your budget, either openly as some local courts allow or hidden in your other expenses.

Also you need to look at this experience as an opportunity for your children to learn a tremendous life lesson about what happens in a family when a catastrophic financial event happens or you live beyond your means. Many of us were afraid of somehow harming our children, but frankly most of us have discovered our children are the better for the experience. There's a lot to be said for learning how to save up for what you want. The reward is all the sweeter for the wait.

[Universal]

We have not filed as of yet, but met with a Lawyer last week. He gave us a rough estimate of our repayment-it looks like it could be around $1300.00 a month for $80,000.00 worth of cc debt. That's about what we pay out each month in cc payments right now and every month we sink and need to use a cc for gas or groceries. Our Lawyer said we might want to think about walking away from our home-but my husband is in his 50's-I'm almost there-this is probably our last chance at owning a home, so we are going to keep it.

Anyway, my question is: How do families survive on their repayment plan? We have 3 children, 2 with birthdays coming up this summer. If we have to pay $1300.00 a month back, it's going to leave us completely broke with nothing to spare-not even a trip to McDonald's for kid meals. And what happens at Christmas? Do I tell my 3 children-we'll make up for it in 5 years? What happens if we run out of gas and have no money to gas the car?
I'd love to hear from people who are on a repayment plan and how they are surviving on it.

I know these may seem like silly questions and we shouldn't have let ourselves get into this mess in the first place.

Thank you

We are about to learn that lesson. Husband is 60 and fired after 39 years; I am about to be 55. That is about the same pay out. Our atty. says the budget we'll be on is doable. I don't see it. Atty. says she knows I'm not used to living with constrictions. I'm not sure at this point if we'll be able to keep the internet and phone even.

[momofthree]

Sheila, seriously, consult with a couple more attorneys. I really think you're freaking out needlessly. You posted your budget once before and there is no way in HECK you can support the $1300 payment that this attorney seems to think you should pay. All of your expenses are reasonable and allowable.

That said, to answer your question: we follow envelope budgeting. We take out our grocery money, misc expenses, medical expenses, etc in cash each month and put them into a labeled envelope. When our grocery money is gone for the month, then it's gone and we have to live off of what we have in our pantry until the next month. Believe me, after that first month of living off of very creative meals, we learned our lesson! lol. I have also found that writing out a shopping list ahead of time and adding up how much it should cost and then only taking that much cash with me and leaving the atm and checkbook at home (I usually add $10 to the total in case I calculated wrong or see something I forgot to put on the list), makes me stick to the list. If I calculate wrong, then I just have to put something back at the checkout counter. It was embarrassing at first, but now if it happens it's no big deal (rarely happens anymore as I add it up as I put it into the cart).

I also learned how to coupon effectively. There are some products that you should never have to pay for, you can get them free from combining sales promotions with coupons. Things like toothpaste, dental floss, toothbrushes, mouthwash, deodorant, body wash, shampoo/conditioner/stylers, menstrual pads, over-the-counter medications (motrin, tylenol pm, robitussin, gas-X, etc.) and many others...Things like razors (nice ones like venus or fusion) or household cleaners (lysol, clorox, dishwasher detergent, etc) you shouldn't have to pay more than $1 for. Check out http://hotcouponworld.com/forums/index.php for more info. They even have a forum dedicated to every store that will tell you what deals are going on and where to get the coupons, etc. You can also quite often get name brand items for cheaper than generic when you combine a coupon with a sale. We spend $450 a month on groceries and household supplies for a family of 5 and we eat a lot of fresh fruits/veggies and have to live a gluten-free, dairy-free lifestyle, which anyone can tell you is NOT cheap.

As far as the other envelopes, like medical, car registration, etc. Take the money out each month and put it in the envie, then when your car registration comes up, the money will be there, just deposit it in the bank and pay the bill. It's much easier to come up with $40 a month than to try to find $250 the month it's due. Same with medical. You may not need to see a dr. for months and then all of a sudden everyone in your family gets sick, has to go the dr, and needs a prescription...if your medical envie is full from all those months of no dr. visits, then you have the money to pay for that one sickly month. You can create envelopes for birthday money, home repairs, car maintenance, vacation, or anything else that you may need to save for or budget closely for.

We've only been in our 13 for a month, but we've been living this lifestyle for years (our debt is a combination of medical bills (autistic child) and basic living expenses due to a paycut, luckily I've since found a job to make up for dh's paycut. )

[momofthree]

Also (now that I read LRPRN's post), there is a point where you realize that needs and wants are completely different.

For example, the first month that we were without credit, my computer broke. O.M.G. I have a serious serious serious internet addiction AND my computer was under warranty, so I only had to pay $40 to ship it to the mfr and have it fixed. When we had credit, this would have been considered a NEED. However, on our cash budget, we didn't have $40 to spare that month and i had to wait 3 more weeks until the next month, because you know what, it was a WANT. Guess what? I survived!

We also canceled our cell phones a couple years ago and got prepaid phones for emergencies and short calls. We went from spending $60 a month to spending $200 for a YEAR for 2 phones (T-mobile prepaids are AWESOME). That's a savings of over $500 a year. We've surprisingly discovered that most of our chit-chat calls can wait until we get home. (shocker I know!)

We (just this month) bought a magicjack for all our long distance calls and switched our land line to basic local calling only ($10/mo) and bundled it with a special they have on DSL for the next 12 months ($24.95), and canceled our cable (again we've realized that it's a WANT and we can watch tons of shows online anyway), and we're saving $100 a month!!! We went from a bill of $135 to a bill of $35.

[HHM]

Bottom line, getting through a chapter 13 is about discipline and keeping the GOAL in mind.

The Goal: You will be OUT OF DEBT in 5 years or less. That is huge. If you could do that on your own, you wouldn't need chapter 13. Keep in mind that the DMI you are devoting to the chapter 13 now, becomes your SAVINGS in 5 years from now.
Discipline: As was already pointed out, you need to discipline yourself to achieve that goal. A good chapter 13 attorney will design a very reasonable budget, the only question you need ask yourself is whether you are disciplined enough to stay on it. You do not need to live like a pauper to be in a chapter 13, but you won't have much left over for "want" style spending.

Chapter 13's fail for primarily 4 reasons
1. Debtor has unrealistic goals (i.e. trying to save a house they cannot afford) so they go into a chapter 13 that never really had a shot at succeeding.
2. Poor representation by the attorney that provides no real guidance on budget.
3. Poor discipline by the debtor (i.e. not willing to make the "minor" changes to make the plan work).
4. Something changes during the plan. (jobless, etc). This last one does not usually represent a failure of the BK itself, these usually result in a conversion to a 7.

[andy158]

It's all about wants and needs. Pre bk we had a lot of "extras". Didn't think twice about pulling out the plastic to impulse buy. Economy and salary reductions brought us to a point that we were overwhelmed with a debt that had no possiblility of repayment in our lifetimes. Made it a point to be out out of debt and bk13 was the way. a complete lifestyle change was in order and it must be done to succeed. Let all unpaid toys go. Boat and motorcycles were surrendered first along with the payments, taxes and insurance payments. Immediately saw a dent in the monthly budget. Never will own a boat again. Yes it is a very expensive lawn ornament you keep throwing money into with very little use. Got rid of my truck and kept only vehcles necessary for work. It is a long road and you learn to save and watch for bargains. Lots of Dollar Store shopping and garage sales. You quickly will learn the diffference of wants and needs. Your needs do not have to be brand new store bought items. Lots of people get rid of "like new" items every day. Humility has a lot to do with it. You will start living within your means as we all should be. Great feeling knowing in the time you pay off a new vehicle, we will be debt free with the exception of our mortgage. Think of it as a five year course in money management and budgeting. Your diploma is a clean slate and hopefully financial rehabilitation. We will never let ouslelves fall into the credit trap again. This is truely an eye opener as to how these banks reek of profit from the loansharking of the middle class.

[tigergem]

Chapter 13 isn't chinese water torture. I review my budget and accounts every time I leave the house and make a note of what I have available to spend. Shop sales. Shoot, I got a gorgeous practically brand new pair of black suede pumps that fit me like a glove at a garage sale for only $2.00. I also got a really cute pair of sandals at the salvation army store for only $2.00. And a summer skirt to die for at a resale shop... you guessed it... $2.00. Got another complete summer outfit suitable for work or play on eBay for $9.00 and that included shipping. I spend $33.00 and get 10 frozen prepared meals from Angel Food Ministries every month. I do really awesome creative things with twice baked potatoes. If you want to make it work, you will make it work. For me, the fun of it is in making it work and not feeling like I am doing without anything. I have been doing such a good job, that I splurged and got a bottle of Bailey's for my coffee yesterday. All my bills are paid for the month. My gas tank is full. I have phone and internet and Netflix. I'm religiously putting 10% of my income into an emergency fund. My life is definitely not ending under a chapter 13. You know what I really can't wait for? The day I no longer have to send that money to the Trustee and can bank it for myself. Because I know darn well that I can.

[olivies]

We have not filed as of yet, but met with a Lawyer last week. He gave us a rough estimate of our repayment-it looks like it could be around $1300.00 a month for $80,000.00 worth of cc debt. That's about what we pay out each month in cc payments right now and every month we sink and need to use a cc for gas or groceries. Our Lawyer said we might want to think about walking away from our home-but my husband is in his 50's-I'm almost there-this is probably our last chance at owning a home, so we are going to keep it.

Anyway, my question is: How do families survive on their repayment plan? We have 3 children, 2 with birthdays coming up this summer. If we have to pay $1300.00 a month back, it's going to leave us completely broke with nothing to spare-not even a trip to McDonald's for kid meals. And what happens at Christmas? Do I tell my 3 children-we'll make up for it in 5 years? What happens if we run out of gas and have no money to gas the car?

I'd love to hear from people who are on a repayment plan and how they are surviving on it.

I know these may seem like silly questions and we shouldn't have let ourselves get into this mess in the first place.

Thank you

Meet with a couple more attorneys. Track all your expenses: categorize every expenditure. Mint.com has a good free budgeting/tracking program you can link to your bank accounts and ledger each transaction. This way you can be prepared to fill out your budget for your means test and schedules accurately. It sounds like you may be short in the budget, but not terribly short since you were taking cash advances to cover gaps while paying about $1300 in minimum payments anyways. So realistically you're saying if you get that payment down a couple hundred dollars your budget will work. Don't despair- you only got a rough estimate, not a final amount. Work on a budget, then start sticking to it. One idea, if you're going to drop a bomb like bankruptcy on your credit, you may as well stop paying on the credit cards now and save the $1300 a month until you do file towards an emergency/christmas/bday fund.

As for the house, if the mortgage payment is high, and it's one of the things preventing you from living within your means, you may want to consider selling it or relinquishing it. However, if you really want to keep your home, then you need to exhaust all other options and budget cutbacks first. We sold our house 2.5 years ago because the payments on 1st and 2nd mortgage were getting unbearable. I loved that house- it was our home and we put so much love and sweat and tears into the place. People will say you can make a home anywhere, but really when you are renting it's never "home", it's just someplace you live. Someday we'll be homeowners again, but for now we are trying to pick up our pieces and move on. But in hindsight, I should have pulled my kids from the $$ Catholic school and dumped my car payments before selling the house, because the kids ended up leaving the Catholic schools and going to public schools anyway and DH let his truck get repo'd anyway and here I am ready to give up my vehicle too. If we had just come to the realization that we needed drastic changes like that back then, sure we would probably still be filing bankruptcy but maybe I would have our home.

[sharina]

every 13 is unique, we are lucky as we got better paying jobs and the trustee is not going after extra income - 100% case. We do fine, really watch what we spend. Clip coupons, look for sales, use cheap cleaning supplies like vinegar and baking soda, When you use credit cards, you tend to buy more than you need. Now, we always have to ask the question - do we already have something that will work instead of buying more. Vacations are not really in the picture either. We are able to buy gifts, but watch for sales and have definitely scaled back.

The main thing for me that I HATE is that our car is not hopeful to make it through our plan and our house is getting in need of repair. We are actually going to talk to our attorney about a modification (we would still plan on paying 100% in less than 5 yrs). Our attorney did not do a great job with our plan and we were uneducated about this so we did not push or ask the right questions. Make sure your attorney is giving you room for car repair, home repair, dentist bills, - anything that you can think of that might come up.

[parkd]

I just don't understand a 100% repayment plan with a BK. Why even file BK then..

That's just debt servitude imo and you are wrecking your credit just for the privilege of paying 100c on the dollar out to your unsecured creditors. The absolute highest repayment plan I would accept in ch 13 is 50% and even that is ridiculous. Get a new lawyer or come up with a different plan and bolster your expenses.

[Universal]

I want to try to keep the attitude that we are paying back 100% or otherwise, what we owe. The whole mess is our own fault in our case, and now it is time to pay. There are a lot of reasons people find themselves in this boat, but for us, we lived like we made more than we did. Now we have to live like we should have been living all along, and they way our parents lived, within their means. I am not putting anyone else down, each situation is different. In our case, it is our own fault. Now it is time to stop the bleeding and get on a better road.

[tigergem]

I just don't understand a 100% repayment plan with a BK. Why even file BK then..

That's just debt servitude imo and you are wrecking your credit just for the privilege of paying 100c on the dollar out to your unsecured creditors. The absolute highest repayment plan I would accept in ch 13 is 50% and even that is ridiculous. Get a new lawyer or come up with a different plan and bolster your expenses.

I concur. I think in this case, I would sock away the amount that I would expect to be paying in to the plan, and I would attempt settlements first. Maybe. I dunno. I suppose with the possibility of lawsuits and ongoing collection calls, maybe not. There are arguments to either way. To each their own.