Income/DMI/Plan Amount

[littlemuffin]

Hi

Sometimes the more I read the more confused I get.

I understood that in a 13 as long as the creditors are better off than if you filed a 7 and you are paying all your priority debts your payment amount is determined strictly by your income - expenses.

Does the amount of your income matter in a 13? I have a relatively high house payment but without my unsecured debt I can easily pay the payment and all my bills. If my DMI is between 500 and 600 and everything else is covered, does my income level matter?

Thanks

[Pandora]

income only matters as a basis of if you're in a 36 or 60 month plan from what I recall, however in the long term - I guess it does matter as to if you can fund your plan accordingly if you go over exemption allowances (Ch. 7 liquidation vs. Ch. 13).

Make sure you account for every expense - not just your unsecured bills - to arrive at that 500-600 DMI (car insurance, gas, groceries, tags, vehicle maintenance, etc etc).

[SMinGA]

If you are over median income for your state/family size, you MUST do 60 months. If under median, you may do 36 if you can form a feasible plan in 36 months.


A
Take monthly net income - note if you get paid every 2 weeks, you need to take your check amount x 26 and divide by 12. 2 checks is not a month's pay...
Deduct bills you will pay outside of the plan. Utilities, insurance, any other bills, car & mortgage payment if you're paying them outside.
Deduct expenses... Groceries, gas, maintenance, clothing, household needs, medical, etc.
Result is your DMI.

B
DMI x 36 if under median to figure out if you can do a 36 month plan. Total that, multiply it x .90. (To account for trustee fee - yours may be less than the cap of 10% but this keeps you safe from overestimating what is available to creditors.)

C
Add up what MUST be paid in the plan. Attys fees, mortgage arrears, back taxes, etc. Car loans may be paid in the plan (but don't count the car payment above) but round up, since they get paid with some interest.

D
Calculate... If C is less than B, you should be able to do a 36 month plan.
If C is greater than B, recalculate B with 60 months. If C is still greater - you have a problem, you need more DMI to form a plan.

If you are over median, don't calculate 36. Go straight to 60.

This math assumes you do not need to meet a liquidation test...

[littlemuffin]

Thanks so much for the info.

My debt is all consumer, unsecured and I have a very small amount of assets to protect that are not covered by the exemptions.

So any amount over legal fees, trustee fees and as long as I'm over the amount that I have to pay to be better than a chapter 7 is ok. No matter what income level you are at - correct?

[SMinGA]

That is how it is supposed to work. As long as your expenses are accurate/reasonable and your plan pays enough to cover the liquidation value of the non-exempt assets, you should be good to go. Keep in mind - its not unusual to have a little back & forth with the trustee. He may question one expense or another, but that is what your attorney is for.

Thanks so much for the info.

My debt is all consumer, unsecured and I have a very small amount of assets to protect that are not covered by the exemptions.

So any amount over legal fees, trustee fees and as long as I'm over the amount that I have to pay to be better than a chapter 7 is ok. No matter what income level you are at - correct?

[momofthree]

Thanks so much for the info.

My debt is all consumer, unsecured and I have a very small amount of assets to protect that are not covered by the exemptions.

So any amount over legal fees, trustee fees and as long as I'm over the amount that I have to pay to be better than a chapter 7 is ok. No matter what income level you are at - correct?

Yes and no. In this case, there is no minimum that must be met, but you still must pledge 100% of your DMI into the plan.