What about when the big unexpected happens?

[c13ordmp]

We are in the process of filing a 13 and I need some advice from a few chapter 13 vets. What do you do when the an unexpected expense hits? We will have no credit cards and are allowed no room in the plan for savings, so I am looking for suggestions and stories about how to deal with an unexpected big expense like a car engine issue or root canal etc.

[momofthree]

If your lawyer helps you put together a realistic budget and use the allowable IRS standards for certain expenses, then you should have enough wiggle room in your monthly budget that you'll be able to save for those emergencies that are bound to come up.

For example, you'll get to allocate $XXX for car maintenance, but you won't use that each month, save it for when you actually have to use it, same with clothing, medical, home maintenance, etc.

And you'll be allowed $XXX for groceries, but if you shop sales, use coupons, and cook from scratch more often, you may be able to spend a couple hundred less than that each month--save it!

[newbie2]

We are in the process of filing a 13 and I need some advice from a few chapter 13 vets. What do you do when the an unexpected expense hits? We will have no credit cards and are allowed no room in the plan for savings, so I am looking for suggestions and stories about how to deal with an unexpected big expense like a car engine issue or root canal etc.

If there is an upside to a Chapter 13 it is that the plan forces you to budget for the unexpected.

For us, we were able to squeak approximately $100 each month into an emergency savings envelope for the unexpected (car repairs, furnace repair, etc.) by being extremely frugal with our budget. Thankfully this helped for the first 3 years.

Year 4 came though and the "unexpected" multiplied faster than our meager savings so we had to file a motion to miss 2 plan payments so that we could repair hubbys car (transmission). It was approved, but took 30 days.

I cannot stress enough the importance of not spending every penny of your budget each month and stretching every last dollar you can.

[1dayatatime]

The first couple of months seemed really hard. The anxiety caused by not being able to pay the bills was replaced with the worry about the inability to handle a crisis. No savings, no credit. We set out to find every penny we could to create a savings account. One thing we did was to look at our stuff and discover what we could do without. We sold a spa, a treadmill, a bike, etc. That got the savings account started. We intensified our effort to reduce all outgo possible. Pretty soon we had a new game. Instead of seeing how much stuff we could get, it was how much can we do without. The really cool game was, how much can we grow our savings. After 12 months we have saved over $5000. We keep finding ways to increase how much we save every month. Good luck to you. It can be done.

[sheilaE]

Hi C13ordmp.

I have your exact same concerns-we're in this together. We will be filing shortly. For us this would be so much easier if we didn't have kids-or if they kids were much younger. I can survive on skipping a meal but the kids can't. Having one child is expensive and we have 3. Ours are 12, 16 and 18. And although we're pretty lucky in that they really don't ask for much, there are things they need and it changes month to month. Mine are all do to see the dentist. One is in need of braces, but now I don't see how we could afford it now Other expenses are for school. Free education is no longer free. School lunches, field trips, school supplies, PE clothes, lab fees. It's always something. Our oldest is getting ready to head into her 2nd year of Jr College. We just paid for her classes ($600.00), now she needs books and we're looking at another $500 and that's if we can find them used or on ebay. In 3 more years our son will start Jr College. By then we'll be well into our plan, so not sure how we'll afford his books & classes, but I guess it won't do any good to worry about that now. I just really wish we had filed years ago, we knew at that time things we're not good. I guess we were hoping we'd win the lottery and everything would just get fixed.
Sheila

[Lissy]

It's best if you can go into the plan with a "mattress fund." That's basically what my atty advised me to do during my initial consultation. He said if you know you are filing, stop paying everything (except anything secured you want to keep, like car and mortgage payments) and put that money away until you file. He also advised me to keep no money in my bank account. At the time, I was facing a possible lawsuit from Discover. My atty said one of the first things they do after receiving a judgment is freeze your bank account, so keep the balance low. The money I usually used to pay my credit cards was withdrawn every pay day. Some of it was used to pay my atty fees, but the rest went into my fireproof portable safe. I waited 5 months after my initial consultation to file and saved every penny I could in that time. I now have a pretty nice emergency fund and I plan to add as much to it as I can manage during the life of my plan.

[Flamingo]

We are in the process of filing a 13 and I need some advice from a few chapter 13 vets. What do you do when the an unexpected expense hits? We will have no credit cards and are allowed no room in the plan for savings, so I am looking for suggestions and stories about how to deal with an unexpected big expense like a car engine issue or root canal etc.

What you will learn from a Chapter 13 you will carry on in the years that follow, believe me. First, you are so used to having that credit card and no savings as a back up. Now that the credit cards will be gone, it's all cash only. Learning to live by cash only can be as easy as you want to make it. The lifestyle change is the hardest thing with a Chapter 13; it will make or break you. If you want to successfully complete your Chapter 13, you will buckle down, lie low and learn to do some serious budgeting. Yes, you will have unexpected stuff happen during your Plan just as you do in life prior to a Chapter 13; need 4 new tires, engine blow, broken tooth, ill dog and vet bill, etc., etc., etc. Before one would whip out the plastic money; can't do it now...We would do without as much as possible during our Chapter 13; we would put money away on the side from our budget and not touch it; we also at the end of each day put the change in our pockets in a big jar. We used those funds to purchase birthday or Christmas presents. We learned to barter with friends...have friends/family that do car work or house work? Offer to cut their lawn or watch their kids or drive the kids to wherever they need to go in return for that oil change or car/house fixup, leaky sink, etc. Now is not the time to be proud and look into any freebies offered by your church or other nonprofits in your area as to food baskets, etc. Feel bad about that? Donate some of your time to help some of those organizations...

If we got through a 13 anyone can and what we learned from it still stays with us. I will never get deep in debt again (we made a lot of money and when the job loss hit, it was a huge wakeup call what can happen) and have learned not to live beyond our means and learned how to say "no" to credit offers or anything that will cost money and we don't need it.

Others will chime in with other ideas for you...

[jange]

We filed ch 13 in January 2010. Prior to filing we had not used a credit card in almost a year, so we had gotten pretty used to cash/debit card only policy. It is easier once you break that cycle of having to use credit cards because all your money is going to pay the credit cards.
We have been saving as much as we can because I know that big item is going to happen, as it always does and for us it has already happened. We need to get my husband's car fixed and will probably cost $2500. Fortunately the car still runs, but it does need to be fixed.
I received a bonus in February so I have the money to fix it, but of course I had to tell the TT at the 341 meeting that I received the bonus and a small raise. our lawyer has to redo our numbers now so I don't know how much our payment is going to increase. We also have a new expense that will offset some of the payment increase, but we didn't know about the car until after the 341.
I did tell our attorney about what needs to be fixed on the car, so hopefully he can work he numbers and I won't lose the entire bonus.
I take my lunch to work, we don't eat out much and when we do it is a treat. I use coupons, Sam's club etc to save extra money. I only buy clothes and those types of items on a good sale, get my books from the library. I try to underspend on the allowed budgeted items.
I contacted my cable company and got them to reduce my bill for 6 months. When that's up, I'll probably ask them again. it's not a lot of money but the extra $50 is better in my pocket than theirs.
there are ways to save money out of your budget, you just have to keep looking for them.
filed ch 13 1/2010
341 meeting 3/29/10
confirmation scheduled for 5/18/10
$917 for 60 months