Trustee Meeting Gone Bad

[Hopefull69]

[SMinGA]

Could you give some more info?

What is your gross monthly income? What is your mortgage payment? Car payments? Non-exempt assets? Any payments to family/friends in the past 1-2 years? Any large purchases/cash-advances on the cards in the past 3-6 months? Any other priority debts, like IRS payments?

[momofthree]

It's difficult to comment without more details. Income, debt, & assets would be helpful. Also, your state and household size.

Are you trying to hold onto assets? Is it possible that the minimum you have to pay into the plan would pay all the unsecured creditors? Could that $4000 be including your mortgage?

[Universal]

My 341 is tomorrow; if that happens to me I'll simply crap!
I am so sorry. I am also interested in what advice others can give.

[justbroke]

There are even more reasons you need to be in a 100% plan. Something as simple as keeping an investment property, will usually push you into a 100% plan. That's one of the major reasons that I surrendered my investment property in my Chapter 13.

Also, there could be other "liquidation test" issues, which I'm thinking is the case.

[sheilaE]

Yeah, we are at the very beginning of this scary journey, but I just can't imagine that they would have you paying with money that you didn't even have, which would leave you in the negative every month. You thought you would be paying $1497 but they want $4000? I'm so new at all this, but somethings just not adding up here.

[andysmom]

Ok, now this is scaring the life out of me!
Just waiting for our tax refund (this week or next) to hit our account & we're filing chapter 13- we have no other option at this point- but there is NO WAY we'd be able to handle something like this happening!
Is this common? and, wouldn't your lawyer be able to somewhat predict something like this happening- before you file- when he's doing your paperwork and such?
I feel like I'm suffocating here just waiting to pull the trigger & get this done but scared out of my mind at the same time- especially when I hear things like this.....

[justbroke]

Ok, now this is scaring the life out of me!

Every Chapter 13 case is different. Each case is based on the particular circumstances, income, expenses, assets and even District. Never look at one Chapter 13 case and think that's YOUR Chapter 13 case.

Most of the time, probably over 95% of the time, the initial plan payment amount is accurate. We don't have enough data on this OP's specific issue, but I speculate that it could be related to a "liquidation test" issue. A liquidation test issue is generally caused by debtors wanting to keep certain property, but having to pay for it in their plan, which they didn't expect or were told at the beginning.

[andysmom]

Thanks justbroke.
We are barely over median (by just a few hundred dollars) and that's due to quarterly bonsuses that my husband has got- but not guarnateed. Just found out today they are getting one & they will go out in the next few days- so as sad as it is, if it's dated tomorrow or friday- we file chapter 13 in may, if it's dated saturday or later, we file chapter 7! (and it's only for about $600 net)
such is life....

Gross income is a little under $68,000/yr.
Family of 3 (one toddler)
Mortgage payment w/taxes and insurance at about $785/mo
401k loan with a balance of about $18,000 (around $88.00 a week)
No car payments
Car insurance for both cars $127/mo
health insurance out of my husband's check is $125/wk
life insurance $45/mo

My atty said because we are above the median they use the irs guidelines for the transportation costs, food, etc.

About $110,000 unsecured debt - all credit cards
No recent charges
About 2-3 months late on cards- stopped paying at atty's advice

In the chapter 7 means test, it should a dmi of about $370/mo- which would be our chapter 13 payment, except we have a 401 k loan which is almost identical to that- so he said we actually come up with 0 dmi. He said he talked to the trustee and that was fine - 5 years/ but instead of no payment- that the pymts we would have to pay to the trustee when the 401k loan ends (about 6-7 months before the 13 plan) he would want spread over the 5 years plus the trustee & lawyer fees. Which is fine- and i'm sure they'll want any tax refunds if we get any- which is also okay.

Don't have anything of any value / no valuable assets that are not covered w/ exemptions. No large amoounts of cash, etc. About $35,000 worth of home equity (almost $41,000 is okay he said) Using federal exemptions.

No car payments. Both cars are old and not worth much. One KBB value is under $3000, other is now about $2500.

Does what my atty sound correct / feasible? I can understand if the trustee needs more of a payment, I'm sure we can find a way to do something; but somebody please tell me it looks like my atty is going in the right direction & I'm not going to be hit with a megapayment in the thousands of dollars! I seriously think I'm going to have a panic attack after the last few posts I read- I do realize each 13 is different; but it is very scary especially when you're just starting out on this journey.

I sincerely appreciate everyone who posts!

[SMinGA]

From what you've posted (today and before) I don't think you have a problematic case, and it should be safe to trust that your atty is giving you good advice.

The ONLY potential problem I see is with a ch. 7. Your post gives me the impression you expect to file ch. 7 if the upcoming bonus does not hit in April. The 401k loan counts as an expense in ch. 13 but not in ch. 7. And it could be a problem to file ch. 7 (even if under median) when you're showing $300++ DMI. The reality might be that you simply cannot file 7 with your given expenses. Even though you are borderline for median income (not high, not low income) you have a moderately low mortgage, no car payments, no student loans. These are things that get some into a 7 when their income is right at or even slightly above the median.

On the other hand, if you file ch. 13 when under the median you can do a 36 month plan instead of 60. For 36 you really would not have the issue of being done with the 401k loans before the plan ended but could show ~$0 dmi counting the IRS guided expenses & 401k payment. If you ended up in that quandary, I suspect your attorney would assess your schedule J expenses. If you used actual expenses for utilities, groceries, etc. would you have room for a small ch 13 payment for 3 years? My guess is yes since you're not opposed to a plan payment. And it would be confirmed without much fuss I think.

[andysmom]

Thank you so much SMGA!
Yes, i could do a small payment if need be. I didn't know about the chapter 7 stuff you posted/ my lawyer just said if his check hits w/ a may date he was going to file it chapter 7; if it had an april date, chapter 13.
I am not opposed to a chapter 13- I'm just afraid of a plan not getting confirmed. How much dmi do you need to be able to show to get a plan ok'd?

Btw- before we came to the conclusion that we had to file for bankruptcy, trying to do everything to "save" ourseleves, we were idiots and refinanced our mortgage in december from a 15 yr fixed to a 30 yr- that's why our mortgage is so low. prior to January 2010, it was just about $1200/mo.

Thanks again

[SMinGA]

With no non-exempt assets to cover and no priority debt - my understanding it just comes down to making a good faith effort to pay in all your DMI for the length of the plan. I don't know that there is a minimum, though I have seen some low payments referenced in people's signatures. The specifics will just depend on the case/district.

[markdel16]

Yea, go figure. I don't know how I ended up with $150.52 a month, I thought the cut-off was like $160+. Also, don't know why I got a 3 year, instead of a 5 year, but no point in worrying about that, as I'm now confirmed.