Question Re: increase in $ from new job offer..

[Pandora]

Good lord, it seems like its never ending - I searched the forums but no definitive answer so have to ask.

We are not confirmed yet - go to court for confirmation *supposedly* in the next 2 weeks but have to battle out the 2nd as they are contesting the lien strip, so are facing yet another court date in front of the judge who will say yea or nay on the strip, but that wont be until around September. Guess we wont be confirmed until after then...I'm assuming. We have a base plan of 36K according to 13data and our paperwork - paying in 600 a month. Now comes the fun part - hubby was potentially offered a position making 20K more a year than he does now (its pretty much in the bag - so I will say...its a done deal if he accepts it). I know the plan would have to be amended along with schedule J - Where I am confused is I've read some people's postings where they state base plan doesnt matter - that ALL DMI would have to go to payback. However, then I've read that the base plan is it - it cannot go higher and the only thing that will go higher is your payment, thus making your plan shorter (We are in a 60 month). So if thats correct, we would go from 60 to 36..just increasing the payment - right?

So many different answers on here - so I dont know which one is right. I'm hoping its that our base plan amount will not increase because ours is based upon our assets and exemptions we went over, we have only 1 secured creditor (property taxes) and our 2nd mortgage is supposed to be stripped, thus becoming unsecured.

Right answer is...??

[Pandora]

anyone know the correct answer to the ? above?

appreciate it - thanks

[SMinGA]

As far as I know - base plan is subject to change. Even in cases where the plan is confirmed, one could end up paying more in than the base. If income increases, if the district takes refunds, etc.

One thing to be careful of, in the sense of looking out for your best interest, is to assess how your expenses will change. First of all, a $20k/year gross increase will NOT be a $20k/year net increase. Might be worthwhile to discuss with your atty the need to adjust withholdings to meet the higher earning level, and perhaps even to increase slightly 401k contributions to prepare better for the future. A major increase there would probably not fly, but something small/moderate might.

And then, will the new job be at the same location or would it involve a further commute? If so, be sure and account for extra transportation expenses. Would it require a different wardrobe, more dry cleaning, etc.? Would it be more hours and therefore more expense in the way of childcare?

[Pandora]

Hey SM - thanks.

Yeah - we would adjust our schedules and holdings, accounting for what we need to here and there, already thought of that as we definately could use more $ on some areas, like groceries - as we're under the median for our family size on what is allowed for our area. So we'd be okay there, but it would still leave quite a bit left over a month - enough to change our 60 month plan to a 36 month plan if they didnt change the base amount, but only the $ payment by increasing it.

I dont understand how the base plan can change though - if you only have X amount over your exemptions as well as what amounts come out to be if assets were liquidated in a CH. 7 - how can they go above that dollar amount? That doesnt seem right by any means - I shouldnt have to pay more than what our "overage" is, essentially (for lack of a better word). Do you know where in the BK law that is noted? I've searched but cant seem to find the exact area to where it would reference it.

If thats the case, then I'd just dismiss our Ch. 13 and try to settle our 2nd on our own at some point I guess... we'd end up having to pay it all back in a 60 month plan. Only benefit there would be it would be paid off in 5 years vs. 15 at 0% interest, in the end.

Thanks.

[SMinGA]

Here is how I see it:

Payment Amount X # of months = Base Plan

So if you change payment amount or # of months, the Base Plan changes. It is the end result, and changing the data changes the end result.

You may have a minimum amount that needs to be paid in. SUch as mortgage arrears, atty fees, car loan being paid in the plan, taxes or for non-exempt assets and the 'liquidation test'. And of course a % of all you pay in goes to the trustee. If you're under median (aka eligible for 36 months) and have a minimum based on those things, and you are doing a 60 month because your DMI was not high enough to resolve in 36 - then yes you could probably do a 36 month with higher DMI.

If you were over median income when you filed, you cannot do a 36 month plan.

The difference is that unsecured creditors get more. Ch. 13 is supposed to be that all your disposable income goes into the plan, paying first those things that MUST be paid and anything left goes to unsecured. Unsecured may get more or less depending on what your DMI is. But if your DMI goes up, you don't get to keep it for yourself* forget the unsecured.

*Assuming DMI already accounts for your necessary bills & expenses.

[julsmom]

Ours has become a mess...

Will let you know how ours works out...we have had something similar, we are filed but hubby got a new job, basically doubling his income; we were honest & let atty know that up front before we filed & it has been a royal mess. Everything has changed so our amt of our payt and our payback amt went up considerably....add to that he is a consultant, I really don't know what his true "paycheck" will be...I'm almost wishing we would have just filed & then had everything re-done. Uggh!

[Skipper]

Will let you know how ours works out...we have had something similar, we are filed but hubby got a new job, basically doubling his income; we were honest & let atty know that up front before we filed & it has been a royal mess. Everything has changed so our amt of our payt and our payback amt went up considerably....add to that he is a consultant, I really don't know what his true "paycheck" will be...I'm almost wishing we would have just filed & then had everything re-done. Uggh!

Did the new job affect the 6 month "look back" for income (36/60 month plan), or did it strictly affect the plan that you filed?

Skipper

[julsmom]

not the look back but...

he said it would explain what we would pay forward which i understand but it surely made it a heck of a lot harder to figure it out. seemed that it would have been easier to file as it hadd been and then change it

[mynameainttracy]

My husband got a higher paying job between the time we filed and our 341. We couldn't turn it down no matter what the consequences were at the time.

We had called our attorney's office before hand to tell them and they didn't seem to care and we mentioned it again when we met with our attorney on the day of our 341. He still didn't seem to care. When we sat down with the trustee we told him and he asked who the new employer was, wrote it down, didn't even ask about the salary and we just kept on going. I believe it all depends on where you are and who your trustee is. Fortunately for us it wasn't an issue.

[Pandora]

Here is how I see it:

Payment Amount X # of months = Base Plan

So if you change payment amount or # of months, the Base Plan changes. It is the end result, and changing the data changes the end result.

You may have a minimum amount that needs to be paid in. SUch as mortgage arrears, atty fees, car loan being paid in the plan, taxes or for non-exempt assets and the 'liquidation test'. And of course a % of all you pay in goes to the trustee. If you're under median (aka eligible for 36 months) and have a minimum based on those things, and you are doing a 60 month because your DMI was not high enough to resolve in 36 - then yes you could probably do a 36 month with higher DMI.

If you were over median income when you filed, you cannot do a 36 month plan.

The difference is that unsecured creditors get more. Ch. 13 is supposed to be that all your disposable income goes into the plan, paying first those things that MUST be paid and anything left goes to unsecured. Unsecured may get more or less depending on what your DMI is. But if your DMI goes up, you don't get to keep it for yourself* forget the unsecured.

*Assuming DMI already accounts for your necessary bills & expenses.

Ok - here's our deal - our 341 was done in April - our next hearing is next week - and our final for secured to file is around 10 August. Our base plan is set at 36K - we are currently under the median, but because of assets and over the alloted exemption amounts, we have to enter into a 60 month plan to pay back the 36K. That includes the trustee's fee of 6.4% (the 36K). So - right now, the only thing we're missing on filings is personal property taxes, and that is our only secured debt - our sole reasoning for filing was to strip the 2nd, which they have filed claim already and we're in the process of an AP for contesting the value of the house (I already posted on that in a previous thread).

I understand our number of months can change based upon a pay raise, but for the actual base to change - I just do not see HOW that can change by any means. The timeframe can, absolutely, but where in BK law does it say that the plan can change "just because"? If our DMI increases, then the plan shortens - but how on earth can they require us to pay more than the 36K when that is what we are over? THAT is the part I am not understanding and havent found the answer anywhere - which begs me to the very first post I did - whereas I've discovered 2 different answers to this particular situation. Several people say the base plan can change and become higher no matter what - and others are saying no..it cannot change, only the timeframe will change, therefore increasing your payment, but not the actual base plan. Increasing the payment isnt an issue as we will have that... its increasing the 36K to over and above what it is now. THAT is the issue... how can they do that? I dont want to pay more for our vehicles that we own than what they are worth (that is where the 36k has come from - we own them outright) - and is our only assets.

Someone please show me where in BK law it says that the base plan can change over and above what your assets are if they were liquidated in a CH. 7 - since that is the rule of 13 if you want to keep them when you are over your allocations, please.

And...what happens if this occurs after we are confirmed? I believe if this happens, our payment will go from 600 to 1K a month, therefore going from a 60 month to a 36 month plan, with the base remaining at 36K (making necessary adjustments to our schedules of course), and we will be over the median at that point in time. I'm 95% certain this job offer is coming through... but am 100% uncertain how this all plays out.

Thanks.

[SMinGA]

BK law says in a 13, you pay all disposable income into the plan during the commitment period. Your current 'base plan' is written around DMI of $X. If $X changes, so will your base plan. BK law does not say that in a 13 you only have to pay your liquidation value of non-exempt assets, but that the liquidation test sets a minimum that must be paid. Creditors must get at least as much in the 13 as they would have gotten in a 7. Does not say they cannot get more if your DMI allows for more.

There may be minimum amounts that must be paid in order to create a valid plan (such as those you're dealing with) but the only maximum would be the sum secured + unsecured that file claims + atty fees. Then the trustee takes a cut of all you pay in, of course. So you can't end up in a plan where you pay more to your creditors than you owe.

Since you're not confirmed, your commitment period can change (shorten) with a modified plan if you're able to manage a higher dmi and resolve what you need to pay in 36 rather than 60 months. Not sure if it can be shortened after confirmation. Might be good to find out an answer to that question asap from your atty. If the commitment period cannot be shortened after confirmation - then you'll want to amend your plan (will postpone your confirmation date) even if its just to buy time. Since you don't know your new/real #s yet. If/when you do file the new plan, make sure you account for all reasonable & necessary expenses.

[momofthree]

The liquidation value of your estate were you to file ch.7 simply dictates the MINIMUM amount you must pay into your ch.13 plan. However, you are still required to pay all of your dmi for the plan period until the plan period ends or until you have paid all of your debt 100%, whichever comes first.

Now, since you stated that you were under median when filing and CHOSE to have a 60-month plan, then it would make sense that you could then change it to a 36-month plan as long as you could pay the minimum into the plan within those 36 months. However, you are still required to pay all of your DMI into the plan during that time period, even if it exceeds your ch.7 liquidation value. Again, it will not exceed your total debt amount though (except to include trustee & attny fees).

Believe me, I WISH it worked the way you state. If that were the case, I'd be done already as my ch.7 liquidation value is a big fat ZERO. lol. I'd pay my attorney fees, strip my second mortgage, and be done with it, lol.

Here is the info off of the US courts website: http://www.uscourts.gov/FederalCourt...Chapter13.aspx

[Pandora]

well that just sucks

thanks SM and Momof3 for clarification and citing where it is... Mom - we didnt choose to be in a 60 month plan, it was the only option as we must pay back the 36K, so that brought it out to the 60 months vs. 36 if we wanted to keep our vehicles. So - I'm to assume if we end up paying 100% of our debt back then whatever pay raises, bonus's, and/or tax returns we get, we'd get to keep, correct? You cant pay more than 100%.....right? (god please tell me thats at least correct LOL)

dang it

Looks like I'll have to really adjust our schedules if this happens like we think it will - I dont have any real worries on that though *scared look* as we are waaayyy under currently and could use more $ a month given we arent even at the state minimum's.

Did I mention this really sucks? LOL

*heavy sighs*

ETA: Can they adjust the below median to above - i.e., we filed being under median, but if this happens, we'll be above median - and not being confirmed yet... not quite sure how that would work either. Assume it goes by the status of filing date.... ??

[momofthree]

well that just sucks

thanks SM and Momof3 for clarification and citing where it is... Mom - we didnt choose to be in a 60 month plan, it was the only option as we must pay back the 36K, so that brought it out to the 60 months vs. 36 if we wanted to keep our vehicles.

Since you're under median (or were when you filed), you had the option of a 36-month term, however, you couldn't afford the $1000 a month payment at that income, so you chose to have a 60-month term instead so that you could afford it. You did have a choice. Only those over the median do not have a choice. Therefore--and confirm this with your attorney--it would stand to reason that if you can now afford that $1000 a month, you could amend the schedules and change it down to a 36-month plan. It's at least worth asking your attorney.

So - I'm to assume if we end up paying 100% of our debt back then whatever pay raises, bonus's, and/or tax returns we get, we'd get to keep, correct? You cant pay more than 100%.....right?

You're correct in that you can't pay more than 100%, but it varies by district as to how they handle bonuses, tax returns, etc. Sometimes they'll take them and just end your plan sooner. Other times, they'll let you just keep them and pay the plan on schedule. It's up to the court's discretion as the bk law does state that ALL discretionary income be paid into the plan....

we are waaayyy under currently and could use more $ a month given we arent even at the state minimum's.

By all means, if you are claiming lower expenses to try to fund your 13 and you now have additional income, then amend the schedules to increase your living expenses. Better that than to have it go to your unsecured creditors.

[Pandora]

yes... we had an option, you're right - either give the trustee vehicles to sell, or ... go to a 60 month plan, so in that aspect, yes, there was an option, although not a good one We kept the vehicles given they were barely 3 years - 5 years old with very low mileage and paid in full.

Going to ask the attorney LOTS of questions because apparently, he's incorrect as well; he told us we'd never have to pay more than the 36K... *ahem* - obviously he's not right on that now is he? Ugh.

Hey Mom - do you know where the states' medians and allowances are listed? Only thing I can find is by doing the means test, but I dont want to have to enter all the info again (bills, income, etc). Is there a site where it has what is allowed per household in each state?

Thanks!