Low payment on high income?

[TexasEx]

Isn't that strange? The perception of having a "luxury" vehicle makes all the difference in the world. I have an 09 Mazda 6 that we had to roll a lot of negative equity from another vehicle. The payment is $558 for 72 months (!). We did not include the vehicle in the plan because it was only 9 months old at the time and the payments will outlive the 13. The only question the trustee had was if we would be paying the car outside the plan (which we are) and if our insurance was current. I guess because its not a "luxury" vehicle the trustee did not care a single bit (mind you that this car has more options than some other luxury vehicles I've seen).

[debtinohio]

I'm sure it's nicer than our base model C-Class!

[researchnerd]

Ouch. Unfortunately limited options on changing that.

If not already filed, ou could try for financing on a different vehicle? (Not likely to go thru, as they would they see you have a $680/mo payment... And saying you're going to default on that loan would not help!) That would be about the only way to get rid of it, just letting it go in the BK, unless you can do without the vehicle. And I'm guessing if you could do without the vehicle you would have already decided to give it up.

Yeah, we have already filed so I don't really have any options at this point - a new loan is out of the question. I live in the boonies and absolutely require a car to get to work. If I let it go in the BK then I won't have a car, nor any disposable income with which to buy one (even a beater). They can't force me to give it up in the BK, can they?

TexasEx, I think you're right about perception. With a low interest loan I could be driving a Mercedes for less than my Mazda is costing me. People hear "Mercedes" and automatically decide it's extravagant.

[debtinohio]

Technically, the trustee could object that this is too high of payment and force you to give it up. Your attorney can fight the objection. If this is your only car payment, it should be fine. Heck, I have 1 at $599 and 1 at $600 and they were fine.

[researchnerd]

Actually my husband's truck payment is about $600, but he only has about another year to go on the loan. Over the next 5 years, it probably evens out OK, especially at the lower BK interest rate.

If the Trustee objects, hopefully my attorney will fight it successfully. We hired him because he claims to be a shark in court and fight for every last penny. I'm hoping that is true because he's not proving to be particularly accurate with paperwork nor generous with communication. But that's a whole other thread...

[Fallonedward]

Regardless of income, your plan payment is supposed reflect the amount you have left over after all your reasonable living expenses are paid. If you have high income and high expenses, you may not have much left. However, the trustee may challenge (or at least question) some of those high expenses if they are over what the IRS considers reasonable and/or do not count as necessities...which may be something your attorney observed in your paperwork. What is reasonable/necessary according to the court may be much lower than what you're actually spending. Just as an oversimplified example -- if you're living in a McMansion, driving a new Mercedes, and paying private school tuition, they might ask you to tone down your lifestyle in order to pay more into the plan.

You can find the IRS allowable amounts for your area here: http://www.legalconsumer.com/bankruptcy/means-test/

We are a family of 5 (including our college son that we declare 100% on our taxes) and by using the IRS allowable amounts, some of the amounts we are even lower on and our DMI comes out to $4.56 a month.

However, if the trustee challenges this when we do file, how can we pay more when we do not have it. We are living on just my income and we are below the median for a family of 5

[momofthree]

We are a family of 5 (including our college son that we declare 100% on our taxes) and by using the IRS allowable amounts, some of the amounts we are even lower on and our DMI comes out to $4.56 a month.

However, if the trustee challenges this when we do file, how can we pay more when we do not have it. We are living on just my income and we are below the median for a family of 5

You would either file a chapter 7, or if you are needing a 13, then you have to "make room" in your budget for a plan payment. That's what we had to do in order to cover trustee fees & attny fees....

[SMinGA]

If you are under median & have $4.56 DMI, is there a reason you want a ch. 13 rather than a ch. 7? If so, like to pay mortgage arrears thru a plan, then you must find room in your budget to make a reasonable plan payment. For mortgage arrears, you'd have to pay enough to resolve the arrears + any trustee fees + atty fees that are being paid in the plan. That means getting in more income or cutting back on some expenses.

We are a family of 5 (including our college son that we declare 100% on our taxes) and by using the IRS allowable amounts, some of the amounts we are even lower on and our DMI comes out to $4.56 a month.

However, if the trustee challenges this when we do file, how can we pay more when we do not have it. We are living on just my income and we are below the median for a family of 5

[researchnerd]

However, if the trustee challenges this when we do file, how can we pay more when we do not have it. We are living on just my income and we are below the median for a family of 5

This is what I attempted to say (probably not well) in my earlier post: If you have no money / not enough money to fund your plan based on your existing expenses, you need to cut back on those expenses so you have enough to satisfy the trustee. Cutting back may include giving up your home and renting for less, etc. If you are at bare minimum and cannot cut back any further, then you won't be able to file Ch13. If you're below the median, though, Ch7 might be a good option for you.

[debtinohio]

This is what I attempted to say (probably not well) in my earlier post: If you have no money / not enough money to fund your plan based on your existing expenses, you need to cut back on those expenses so you have enough to satisfy the trustee. Cutting back may include giving up your home and renting for less, etc. If you are at bare minimum and cannot cut back any further, then you won't be able to file Ch13. If you're below the median, though, Ch7 might be a good option for you.

It makes perfect sense if you think about it. If you want to keep the secured items you must have money in your budget to pay for them and any arrears otherwise you will not be able to keep them. No sense in going through any bankruptcy and not solve these budget issues. If there's truly no room in the budget for that particular car or house or whatever then you have to give it up and get something cheaper. There's always a cheaper house/car/whatever.

[indebt00]

I am sure its different for all States but for us here in AZ...

our income is in same range as yours and our payment is $1400 per month....but our unsecured was a lot more than yours.
We don't have kids so that may help you a lot.

Any car LOAN had to go in Bk...no choice....but we are happy about that because we own it in 5 yrs instead of 6. Lease car is outside bk.

You must have some legit high living expenses to get your payment that low....but your lawyer should know what the Trustee will accept as deductions and what he won't. Our lawyer really knew the ins/outs of our Trustee and I think that is why our payment/dmi all was approved as is.

[Fallonedward]

If you are under median & have $4.56 DMI, is there a reason you want a ch. 13 rather than a ch. 7? If so, like to pay mortgage arrears thru a plan, then you must find room in your budget to make a reasonable plan payment. For mortgage arrears, you'd have to pay enough to resolve the arrears + any trustee fees + atty fees that are being paid in the plan. That means getting in more income or cutting back on some expenses.

Our mortgage is not in arrears. I have to wait till November to file if I would to try for a chapter 7. Because of severance payouts it makes the numbers look better then what is actually happening right now.

We are current on our mortgage, car payment, car insurance, house insurance, and RE taxes.

Listed below is my budget.
I reworked the numbers yet again taking money out of food. any ideas are welcome

Family of Five

House
1401
RE Taxes
371
Car Payment
375.02
Electricity & Heating Fuel
290 (budget fixed plan)
401K Repayment
603
Water & Sewer
50
Garbage
17
Telephone
45
Home Maintenance
100
Cell Service
181
Food
640
Cable/Internet
86
Clothing
75
Laundry/Drycleaning
30
Hair Cuts - 5 people
20
Medical & Dental Expenses
75
Transportation - (gas +auto repair)
350 ( I drive 83 miles round trip for work)
Recreation, Newspapers, & Magazines
75
Homeowners Insurance $1530/yr
128
HOA Dues $60 / year
5
License Plate Renewal - Jan & July ($250 yr)
21
Car Insurance
308

$5,246.02 Total Expenses


Current take home
3727.56
Unemployment
1540

5267.56
Total

$5,246.02 (expenses)
Disposable Monies
21.54

[momofthree]

Our mortgage is not in arrears. I have to wait till November to file if I would to try for a chapter 7. Because of severance payouts it makes the numbers look better then what is actually happening right now.

Your budget looks reasonable--low even. You should be a chapter 7...

[Pandora]

Our mortgage is not in arrears. I have to wait till November to file if I would to try for a chapter 7. Because of severance payouts it makes the numbers look better then what is actually happening right now.

We are current on our mortgage, car payment, car insurance, house insurance, and RE taxes...........



$5,246.02 Total Expenses


Current take home
3727.56
Unemployment
1540

5267.56
Total

$5,246.02 (expenses)
Disposable Monies
21.54

You mention about the severance and unemployment. Unless your salary alone can sustain a Ch. 13 repayment plan - unemployment will not count as income for the plan going forward, it will only be counted for the 6 month look back period (as will all severance pay).

We went through the exact same thing, and let me tell you, its been touch and go through it all. We were told that hubby had to have a job in order to file our plan as paystubs would be required, otherwise, it would be a Ch. 7 and we'd have to let it all go. Luckily he found a job after 8 months of being let go of his old one and within 2 weeks of us filing.

I dont believe you have enough money to do a Ch. 13 plan that would be feasible; you say current take home pay - so assume you're using your net vs. gross. You have to use gross, then deduct true deductions and make allowances where they can be made. Do you have health insurance that you have to pay as well? I dont see it anywhere on your list.

[Fallonedward]

You mention about the severance and unemployment. Unless your salary alone can sustain a Ch. 13 repayment plan - unemployment will not count as income for the plan going forward, it will only be counted for the 6 month look back period (as will all severance pay).

We went through the exact same thing, and let me tell you, its been touch and go through it all. We were told that hubby had to have a job in order to file our plan as paystubs would be required, otherwise, it would be a Ch. 7 and we'd have to let it all go. Luckily he found a job after 8 months of being let go of his old one and within 2 weeks of us filing.

I dont believe you have enough money to do a Ch. 13 plan that would be feasible; you say current take home pay - so assume you're using your net vs. gross. You have to use gross, then deduct true deductions and make allowances where they can be made. Do you have health insurance that you have to pay as well? I dont see it anywhere on your list.

I am using net vs gross. My health insurance comes out of my paycheck.

So should I re do my budget using gross pay and use all of the numbers above and add in my cost of insurance, state taxes, federal taxes, fica, etc?

We got our severance pay outs mid April, so from everything I have read here, I would need to wait till November to file.

We were told the exact same thing by the first attorney that we consulted. He wanted us to sign up for the 13 on the spot. He stated that hubby had to have a job in order to file our plan and that he would use unemployment as income. Until I put the breaks on that whole experience and at the time hubby was going for a 3rd interview with a company that latter decided to fill the position with an internal candidate.

Since I do have a job, if I try to do a 7, it sounds like I would have to give up my car and this is the only way I can get to work, so depressing this is