Will trustee raise any issues with my budget?

[jacket]

Hello all…needs some advice and/or recommendations. Here are my info below… (Sorry it is bit long; just want to provide as much info).

After going thru our budget and giving up lots sleep finally came up with the conclusion to file Chapter 13 because of over state median income in GA. We haven’t consulted any Atty yet but trying to educate ourselves thru this forum beforehand. We’re 2 income families with two parents to support (not living with us).

House worth = 340-350k (Owe total = 480k)
1st = 390k
2nd = 90k
Failed to make modification by bank.

CC/Loan debt = 210k (All unsecured)

Here is my question to all knowledgeable people out here is that; will this list below give us any issues with the trustee?

Grand Expense Total = 16,882.00

INCOME
Payroll 16,010.00
Total of INCOME = 16010.00

Total Savings = -875.00


Any help will be appreciated.

[SMinGA]

I think you will have issues. I don't know how many are in your household - that will be an important factor on things like food, etc.

First things first - you'll strip the 2nd in a ch. 13 so will no longer make that payment. But the remaining seems awfully high. Are the HOA dues, insurance, taxes under "housing" part of the timeshare or primary residence? I don't think you'll be able to keep the timeshare...

Your car payment of $850 is high, as the standard is $489. How long remaining on the loan/lease?

Personal care also seems high, I believe the guidelines for a family of 5 is ~66 per month though I'm going from memory. I don't see how many are actually in your household? I doubt the $200 travel fund will be allowed.

Entertainment is high. "Other" seems a bit vague. Your discretionary income must go into the plan, so having a random 'other' seems like easy pickings for the trustee.

Stripping the 2nd and removing the timeshare gives $1468. Your student loans should go into forebearance while in a plan - so there is $430 more to fund a plan. This, without adjusting for other questionable expenses puts you at a plan payment of $1023. Cut personal care & entertainment in half, and you're up to $1280. I have NO CLUE how the court would view needing to support family members not in the household-best to consult an atty on that as the atty will know how your district handles such things. My initial thought though is if you offer a plan paying in ~$1280/mo you would be paying a decent amount of debt. There are 3 districts in GA, and for mine the trustee fee is only 5.4%. PRetty good on the range of 5-10%. So that would leave over $1200x60 for creditors which adds up to quite a bit.

Keep in mind: you're bankrupt. You must cut back, learn to live within your means. I don't know what brought you here, but since you're posting a budget where you spend more than make then at least part of that journey involved living beyond your means. Best to fix that now, and you truly can get a fresh start.

[NoTomatoCan]

Typed up a long response, copied my response and hit refresh to see if anyone else posted, and SMinGA hit basically the same points that I had.

The only other major item I noticed was medical. $763 is a lot. Is that above and beyond what you pay for health insurance through one of your employers? If it is all documented, you may be ok, but without knowing any of the detail, it seems high.

[LadyInTheRed]

Since you are over the state median income, your budget will mostly be determined by what is allowed on the means test. The following links provide the national and local standards used on the means test:

National standards for food, clothing and other living expenses: http://www.justice.gov/ust/eo/bapcpa..._standards.htm

Georgia housing and utilities: http://www.justice.gov/ust/eo/bapcpa..._charts_GA.htm

Transportation expense standards for South Census region: http://www.justice.gov/ust/eo/bapcpa...xp_Stds_SO.htm

Any expenses above what is listed at these links must be reasonable and necessary and you must be able to document them. What is considered reasonable will vary by district.

I noticed your first mortgage is very high for any family size anywhere in GA. I'm not sure, but I think your actual mortgage payment will be allowed even though it is above the local standards. Edit: Never mind on the following bracketed stuff. I somehow read your gross as $6k, not $16k. [It is also more than 50% of your gross income. You really need to consider whether you can afford to keep your house, even with the 2nd mortgage stripped. I believe a common guideline is that your housing should not cost more than 1/3 of your gross income.]

To get an idea of your DMI, you can play with the means test at http://www.legalconsumer.com/bankruptcy/means-test/. After entering your zip code and family size it will automatically fill in the figures from the above links. But, keep in mind that how certain sections of the means test are filled in can be confusing and vary from district to district. Your result will likely differ from your attorney's result.

Speaking of attorneys, the best way to know where you stand is to get free consultations with 3 or more attorneys experienced in handling Chapter 13 BKs.

[momofthree]

Ditto SMinGA. The trustee will probably question a lot of these expenses, as it sounds as if you're a household size of 2.

Do you pay bills for your parents, or just send them cash? I'm not sure how the trustee will handle that.

[debtinohio]

Who gets to submit a budget to the trustee to this level of detail? I had one just like this and it was narrowed down to a few items before being submitted and approved.

I have appliance filters, shoes, lawn and garden supplies, extermination, etc. to purchase too, but, like me, it will have to come out of your other budget areas as you can't list that stuff but it could possibly be combined under "house maintenance" at like $75-100 or so a month.

Sorry - it's a tough pill to swallow but life is going to change if you want to receive the protection of bankruptcy.

Be prepared to get a lot of crap on the car - I had 2 $600/month cars with one a Mercedes and I heard a lot. But - you could and should argue that you only have 1 car payment and it's under the limit for 2 since technically you would be allowed 2 @ $489.

A lot of trustees won't allow the Student Loan Payment either since your loans would be on hold (not interest free though) but some do - mine was allowed.

[Universal]

I think the short answer is......... yes, the trustee will probably have some issues.

[Lissy]

I agree with all of the above. Your personal care is quite high (I am assuming 2 people in your household as well). I can tell you that $100 per month for each person in clothing will not fly. Or at least it didn't for me. I had the same amount down originally and my atty reduced it to $30 per month. Your medical is also very high. Are those actual amounts spent every month? If you have medical issues that in fact do require you to actually pay out that much every month, I think you will have to provide proof. And the Yearly Parent Visit Fund is essentially a vacation fund and I doubt very highly it will be allowed. You don't get to budget for vacations in a 13. If you can swing it by cutting back in other areas, great, but it's not considered a need.

[debtinohio]

With that sort of income as only a 2 person household you'll be lucky not to be in a 100% payback plan.

The $2000 alone to support your parents is 60% of your unsecured debt/60 add a few other items from your budget and you're easily at $3500 which would be your 210K unsecured debt/60.

You may successfully strip the 2nd mortgage though and then there's more budget available for payback.

[jacket]

Hello debtinohio and all...if I have that much of money left over each month, I wouldn't consider filling for bk at all. I would just settle directly with all creditors in less then 60 mos. You guys gave me very good informations up here to educate myself before I meet with Atty next month. Thank you all very much!

[jacket]

Hello debtinohio...did you get to keep both cars in your final plan?

[debtinohio]

Hello debtinohio and all...if I have that much of money left over each month, I wouldn't consider filling for bk at all. I would just settle directly with all creditors in less then 60 mos. You guys gave me very good informations up here to educate myself before I meet with Atty next month. Thank you all very much!

I know how you feel - Trust me, I didn't think I had $2000/month available either.

It's just that when adding up:

Total of ENTERTAINMENT = 165.00
Time Share Property = 210.00
Time Share Maintenance = 33.00
Total of PERSONAL CARE = 250.00 (I left $100 in for this)
Disable Parents Allowances = 2,000.00
Total of MISCELLANEOUS = 218.00

That's $2876/month on easy things that won't be allowed. If you're not paying the 2nd anymore than that is $1225 more for a total of $4101/month or $246K over 5 years. Also, with that high of a house payment you have to be trippling the IRS allowance on that alone.

If your parents lived with you and you were you had full POA over them then the care allowance may be allowed - who knows.

Best to consult with an attorney on this since it's fairly complicated.

[debtinohio]

Hello debtinohio...did you get to keep both cars in your final plan?

Yes - only because one was up on lease 1 year into the plan (the Mercedes) so they reduced my payment allowance to replace it at that time from $600 to $460 which brings my 2 car payments to a total of $1060/month for the final 4 years and the trustee felt that was "close enough to IRS limits" -- this is what he told the judge anyway.

So, basically I pay in an additional $140 into the plan once the lease is up but my payment goes down by $460 so I can use that to get a car and pay it on my own outside of the plan.

[jacket]

Ditto SMinGA. The trustee will probably question a lot of these expenses, as it sounds as if you're a household size of 2.

Do you pay bills for your parents, or just send them cash? I'm not sure how the trustee will handle that.

Hi momofthree...I send the money thru the wire transfer and I have all of the copies. I don't know it'll work for me. Just to get an idea from this forum. Thanks so much.

[NoTomatoCan]

Hi momofthree...I send the money thru the wire transfer and I have all of the copies. I don't know it'll work for me. Just to get an idea from this forum. Thanks so much.

This will need a lot of explanation to the trustee and will be heavily scrutinized.

Look at it from the perspective of the Trustee... You are doing a wire transfer of $2000 each month to a relative instead of paying back your creditors. (Wouldn't we all love to do that!)

On its face it looks suspicious. Might be totally legit, but will require plenty of explaining, and even then it still might not fly.