1700 per month for family of 4

[rdwng11]

I'm looking for some straightforward and honest opinions for the many experienced individuals on this board.

I am approx 10 months into making payments into a CH 13. My Plan has been confirmed since late November. Since I started making payments I took two pay cuts and also saw a substantial increase in heath insurance payments deducted from my check at the start of 2010. As all of this was occurring, the Trustee twice recommend increases to my plan prior to confirmation. Here is where things stand now:

I am paid twice monthly.

2810.00 per month is made towards the plan. This includes my mortgage payment of 1800.00.

I take home a total of 1738.00 per month. My monthly fixed expenses are as follows:

Car Payment - 432.00
Car Insurance - 160.00
Cell Phone/House Phone - 90
Cable - 40
Gas Bill - 140
Electric Bill - 120
Water Bill - 40
Trash Removal - 30

This leaves a remainder of 600 per month to cover all the other expenses such as groceries, gasoline, household items, clothing, school expenses, home and car maintenance, etc.

Prior to the pay cuts and increase in health care premiums I suspect I would have had approximately 1000.00 remaining per month. I informed my Lawyer each time my pay had been impacted yet nothing has been done.

The primary purpose of the CH 13 is to pay 16,000 in arrears on the mortgage of our primary residence and to keep the home. Everything else in the BK is unsecured. We are in a 42 month plan. At this rate we will pay 42,000 into the plan.

Is it just me or is there considerable room for modification in my plan? What are my options if my Lawyer is unresponsive to my needs?

[LadyInTheRed]

Prior to the pay cuts and increase in health care premiums I suspect I would have had approximately 1000.00 remaining per month. I informed my Lawyer each time my pay had been impacted yet nothing has been done.

......

Is it just me or is there considerable room for modification in my plan? What are my options if my Lawyer is unresponsive to my needs?

Did you simply inform your lawyer of the pay cuts and increase in premiums or did you also say, "with the decrease in my disposible income, I don't think I can make the plan payments. I would like to discuss a modification of my plan"?

Yes, when you told him your expenses have increased, your attorney should be proactive and review your file and suggest a modification if appropriate. But if he doesn't, you need to be assertive and direct to let him know what you think should done. If he doesn't agree a modification is appropriate, he should explain why. Follow up if you get no response.

[sheilaE]

WOW, this is what scares me. We have yet to file-it will most likely be early summer. We are a family of 5. I spend at least $600.00 per month on groceries to feed my family. Gas is around $200.00. Electricity, trash pick-up, phone, clothing, school supplies. What about vehicle registrations, school lunch accounts, pet food for 2 large dogs. We'd never make it

[justbroke]

No need to be scared.

You really need to push your attorney to modify your confirmed plan. For rdwng11, this is exactly why you need to be diligent. There is something really really wrong with your plan payment. I have a family of four and my food allowance alone is $1,370 per the IRS guidelines. I don't see how you're even living.

Something is wrong, wrong, wrong. A Chapter 13 is not meant to be punitive. I would be in my attorney's office yesterday.

[sheilaE]

Ok, that just made me feel 100% better! Thank you justbroke! I was thinking oh my gosh-there would be no way we could live!

[SMinGA]

You mentioned $16,000 in mortgage arrears, and that your mortgage is included in the plan. The arrears averages to ~$381/mo as you said over 42 months. Depending on what your mortgage regular payment is, there may not be much room to change the payment.

How much is your regular mortgage payment? If the $2810 is $381 to arrears and 10% (maybe less) to the trustee, $2148 remains for mortgage and anything else. If your mortgage is in the area of $2000-2100, then extending the plan to be 60 months will do very little to help. Perhaps free up about $100/mo? If you were paying the mortgage directly then the tt fee would be less and you'd have more flexibility in your payment.

[rdwng11]

The mort. payment is 1800 per mo. By my calculations there is room for at the least an addtl 400 - 500 per month to go toward my families expenses and 500 still toward the plan.

If i continue with the plan as is I will have paid 42,000 to the plan in 42 mos.....but we will be dirt poor

[justbroke]

The real question isn't how much the mortgage payment is, at this point. Again, at this point, the question is, how much of that Trustee payment is "disposable monthly income" (DMI). Of course, what makes a Chapter 13 so complex is that the Plan must pay the Chapter 7 liquidation value as well. There are factors that can't be seen just by looking at the "payment" to the Chapter 13 Trustee.

Suffice it to say that I think that the poster has a troubled and infeasible plan. I'm surprised that it wasn't disallowed for the mere fact that a family of 4 can't live on $600 a month. Okay, yes, there are families of 4 that live on less than $600/month, but they are entitled (can I use that word?) to assistance.

[SMinGA]

All valid points - by asking about the mortgage amount I was trying to figure out the minimum that needs to be paid in to be a satisfactory plan. It must pay the arrears, ongoing mortgage payments, any other priority debts (taxes, atty, etc.) and cover the TT fee. And if there are non-exempt assets, the plan must pay enough to unsecured to cover the non-exempt amount.

For 42 months, the minimum (if the mortgage & arrears are the ONLY priority debts, no atty fees included in play payback):

$1800 Mortgage
$ 381 Arrears
$2181

If the TT's fee is 10%, that becomes $2423. Round up to $2500 to err on the safe side? (Not sure if the arrears gets interest, rounding up should cover it if so.) @rdwng11, do you have any attorney fees being paid in the plan, any taxes, or anything else 'priority'? Any non-exempt assets you are needing to cover?

Its @ $2810 now, so there appears to be some wiggle room for legitimate expenses to cut the plan payment down. Unless there are other priority debts. Even then, all but the mortgage could be spread out over 60 months instead of 42 if the issue is making sure enough gets paid in.

I can't help but question the ethics of including the mortgage payment in the plan. If a filer really has the DMI to pay the TT fee on that payment, wouldn't it be more fair for it to go to unsecured creditors instead of the TT? And if the filer does not have the room in DMI, it forces one to cut back on necessary expenses (on paper) and perhaps end up in a bad plan.

The real question isn't how much the mortgage payment is, at this point. Again, at this point, the question is, how much of that Trustee payment is "disposable monthly income" (DMI). Of course, what makes a Chapter 13 so complex is that the Plan must pay the Chapter 7 liquidation value as well. There are factors that can't be seen just by looking at the "payment" to the Chapter 13 Trustee.

Suffice it to say that I think that the poster has a troubled and infeasible plan. I'm surprised that it wasn't disallowed for the mere fact that a family of 4 can't live on $600 a month. Okay, yes, there are families of 4 that live on less than $600/month, but they are entitled (can I use that word?) to assistance.

[rdwng11]

@rdwng11, do you have any attorney fees being paid in the plan, any taxes, or anything else 'priority'? Any non-exempt assets you are needing to cover?
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No. We paid the attorney fees upfront. No taxes included. Nothing else priority. We are simply trying to handle the arrears on the mortgage and of course pay any additional amount towards unsecured debts.

Now that I'm getting more educated in this process (something I should have done sooner) I am also questioning the value of having the Trustee pay the base mortgage payment. That is the bulk of the Trustee fees (just over $6,000). I am meeting with attorney today and think it is not unreasonable to have the plan modified to address all of the issues I've outlined including paying the mortgage on my own, reducing the trustee fees and using those funds in a better manner.

[SMinGA]

Some things are district specific or trustee specific. Which I think sort of translates into trustees get to say whether you have to pay thru wage order, what is paid in the plan, etc. I don't think they are in the BK code so one could try to fight them - but playing by the trustee's 'rules' means you get less scrutiny??

From the #s you've given, it seems you have a clear case to revise your plan. Make your atty go over your expenses/current disposable income. Insist on a plan modification. If your TT fees are 10% (mortgage in) then it seems you should have a case to claim up to ~$350 more expenses on the 42 month plan. Or go to 60 and be able to claim ~$450 more in expenses. And still meet the basic plan minimums, with next to nothing going to unsecured. More if your TT fee is less than 10% of course, and more if your mortgage came out.

[rdwng11]

SMinGA...

Thanks for your well thought out advice and support.

[jamesalip]

We were about $16,000.00 behind in our mortgage when the chapter 13 began. However, I worked with my mortgage company (Wells Fargo) to modify my loan. They increased the principal balance from about 155,000.00 to 172,000.00 and lowered our rate from 6.00% to 5.125%. This allowed us to take the arrears out of our bankruptcy and lower our trustee payments about $300.00. At the same time, it did not increase my mortgage payment due to the interest rate decrease. This may be an option for you as well. The government program (HMP) allows for interest rates as low as 2.00% to help keep you in the home. Anyway, just something to think about, it really helped us out.

[frankies_mom]

@jamesalip: we are just starting a ch 13 too with the arrears on wells fargo. how far were you into the 13 when you got the mod? we have our 341 in a week. Just wondering if it is possible they would take 1/2 of our arrears and rework a plan so we have a lower ch 13 payment. how did you go about doing that? did you have to ask your attorney first before contacting wells? any info is much appreciated!!

[rdwng11]

frankies_mom - All good questions that I intended to ask jamesalip as well. In doing some research I did find the official website for the program Jamesalip referred to. You can find it at http://www.makinghomeaffordable.com . I have emailed my lawyer asking what the proper course is to apply while in CH. 13. I will post any useful information.