How does income need to be input? Bonus & O/T

[FishersMike]

Okay here is the deal. I get paid every two weeks. My base GROSS pay is $1802.35 per check so I multiplied this by 13 pay periods and then divided by 6 to get a MONTHLY Gross of $3905.09.

Now during my last 13 pay periods (6 months) I have received O/T of $1063.44. Also during this same time I have had UNPAID time (due to unpaid intermittent FMLA that I did not use vacation for) of $436.59. So I get a net extra income of $626.85. So if I divide this by 6 I get overtime average at $104.48 per month.

Also I got a bonus that was paid in March for $2926.00. Our bonuses are not guaranteed annually (though likely we will get one) and if we do get one the amount can change based off individual and company performance. Since this was not paid in my last 6 months do I need to list it on the 22C on line 2 as it ask for gross wages, overtime, and bonuses? Because it was not in last 6 months.... if I do need to list it, do I divide the $2926.00 by 12 and add $243.83 to my gross monthly pay??

Also in regards to bonus, if it does need to be listed on the 22C does it need to be listed on the Schedule I as it does not mention bonus at all?

So what I would like to list on the 22C if allowed on line 2 is: $4009.57 ($3905 base gross + $104.48 O/T average). And I would like to list on Schedule I line 1: $3905.09 and then on line 2: $104.48.

Please give me your input on this as it will really affect my numbers. Thanks for your help everyone -- I appreciate your wealth of information.

[LadyInTheRed]

If the bonus was not in the last 6 months, it does not go on form 22c. Remember that the 6 months you include is not necessarily your last 13 pay periods. You include the last 6 calendar months before the month you file. So, if you file in October, the last six months is April thru Sept.

Schedule I is supposed to be your projected income. If you were guaranteed a bonus, you would definitely include it. Since it's not guaranteed and even if you get it you don't know how much it will be, you could leave it off. But, a trustee may not agree. This is an area where an attorney who is familiar with the trustee and the customs in your district can best advise you.

[NowImDownInIt]

I can't speak to the bonus but I think that LadyInTheRed summed that up pretty well.

As far as OT.. If it's regular, you will need to include it.. I was made to include my 10 hr a week OT in all of my schedules.

[kornellred]

It's really simple (and unfair in many cases, but that is another matter). All of your income for the last six months is taken into account in the determination of your monthly income amount. If you happened to have worked a lot of overtime or received a large incentive/bonus payout during the 6 months under consideration, that will tend to skew the numbers and your DMI will show as more than it actually is after all of the allowable deductions are made.
The simple solution to this common problem is to wait to file until the inflated income months are no longer under consideration.

[FishersMike]

Okay thanks for clarification on calendar month vs true 6 months. Sounds like the way to calculate average is right just need to make sure using the correct pay-dates. Sounds also like the calculations in the boxes will be easy just a little bit of altering.

Okay well I sent off the paperwork to attorney after last pay date of 10/8/10. I just got paid today. Now I am quite certain that it will be filed in November. So I guess I need to restructure my calculations to pay periods in May - October then? This might help a "little" as I would eliminate the 4/23/10 pay date that had $27.52 O/T as adding today's had no overtime

Plus I do not think I should have to include the bonus anyway, since based off what I am reading the Trustee will probably take it from me anyway..... so I would hate for them to rack of more now and still take it if I get another one....

Thanks for your help!!

[enginegirl]

It's really simple (and unfair in many cases, but that is another matter). All of your income for the last six months is taken into account in the determination of your monthly income amount. If you happened to have worked a lot of overtime or received a large incentive/bonus payout during the 6 months under consideration, that will tend to skew the numbers and your DMI will show as more than it actually is after all of the allowable deductions are made.
The simple solution to this common problem is to wait to file until the inflated income months are no longer under consideration.

kornellred - I hate to say this but you are completely incorrect... there is new legislation that has come into effect that allows the trustee/filer to do a look forward.. I had a large pay-cut 2 weeks after I filed .. here is the info. it is posted under the stickies!
GREAT NEWS FOR CHAPTER 13 DEBTORS, U.S. Supreme Court
The US Supreme Court upheld the ruling out of the 10th circuit of In Re Lanning

http://www.supremecourt.gov/opinions/09pdf/08-998.pdf

Hamilton v. Lanning 08-998

The Supreme Court has adopted the Forward looking approach for determining disposable income for the chapter 13 plan payment. In a nutshell, no more stupid objections from Chapter 13 trustees if you have a bonus, severance, or other 1 time income event in your prior 6 month look back that eschews your monthly payment calculation. Chapter 13's are to be based on a common sense understanding of "projected" disposable income.

[FishersMike]

I do not mind including the O/T at all. Problem is in the first three months of the year I did A LOT of O/T (like another $1500.00 worth) which is not normal. I did not want to include that.

Now on my OP should I list my O/T as suggested where I take my UNPAID time out of the O/T total or would you deduct the UNPAID time from the regular pay and add all the O/T?

[FishersMike]

It's really simple (and unfair in many cases, but that is another matter).
The simple solution to this common problem is to wait to file until the inflated income months are no longer under consideration.

I agree very unfair! Luckily timing worked out for me on it's own. I was thinking of filing over 2 months ago but held off thinking I would get a big job promotion... which I didn't -- but at least it kept that $3k from having to be input plus the more aggressive O/T I had in 1st Quarter.

[NowImDownInIt]

Now on my OP should I list my O/T as suggested where I take my UNPAID time out of the O/T total or would you deduct the UNPAID time from the regular pay and add all the O/T?

I don't fully understand this question. If the only check in the lookback that has OT on it only has $27.52, I wouldn't worry about it.

[FishersMike]

I don't fully understand this question. If the only check in the lookback that has OT on it only has $27.52, I wouldn't worry about it.

What I mean is if I change it to show calendar month the numbers would look like this:

GROSS wages per month: $3905.09

O/T made in 6 months: $1035.92 (as I got to remove $27.52 from this) which would make the O/T monthly average $172.65

UNPAID time (due to FMLA) in 6 months: $436.59 which would make the UNPAID monthly average go down $72.77

So would you suggest when I put in my overtime on Schedule I line 2 - I put the O/T of $172.65 minus the unpaid $72.77 making it show monthly O/T average $99.88 -or- would you have it show the O/T monthly average at the $172.65 and then have me deduct the UNPAID total of $436.59 from my regular wages, making it show my new monthly average on line 1: $3832.33?

I mean it works out to be the same amount, I just want to make sure it is input correctly, especially since Trustee probably will not be happy that bonus gets to be left out

[LadyInTheRed]

As enginegirl said, the Lanning case ruled that Schedules I and J should look forward. So, once you are done with form 22C, forget the last 6 months unless you think they are representative of what your future income will be. If you expect to get overtime pay at the same rate as before, include it on Schedule I. If you don't include overtime, it is possible the trustee will ask about it when he sees it on your pay stubs. But, maybe not. I'd rather have some back and forth with the trustee then overstate my income and end up with too high a payment. If you can't stomach the idea of the trustee asking questions, be more conservative. Do you expect to take unpaid leave in the future? If so, your income on Schedule I, Line 1 should reflect what your regular income will be if you take unpaid leave. But, that is something else a trustee may question.

Since you said in another post that you are doing this to help in reviewing the future work of your attorney, I suggest you fill out the forms in a manner that would be to your advantage, but mark areas where you are not sure what would be appropriate and ask your attorney about them.

[FishersMike]

Thanks for your response. Yeah I know I will not make $172 a month in O/T on a go-forward monthly average - I am thinking about $100.00 (or 1200 a year) would be adequate - that's why I am not sure how to list - I get on the 22C it will be easy I will put in the 6 month gross wages with OT and UNPAID --- but on Schedule I - since it is forward looking I will put my gross without the unpaid time (I will be hopeful I won't have to use much if any) and put 100.00 for O/T on line 2.

[kornellred]

Since the future is always uncertain, any income figures used in the bankruptcy filing would be based upon assumptions, reasonable or not. In looking back, there is no question about how much a debtor has earned.
When I filed for bankruptcy, I waited until all of my overtime months and incentive pay were past the look back period. My income was calculated to be what it would be on a bottom-line basis. It worked like a charm. As a matter of fact, when I went to my 341 meeting, I had just gotten my incentive pay check for the previous year. I was ready to hand it over to the trustee, but my attorney told me to keep it in my pocket and shut up.

That was three years ago - I guess times have changed. The corporate business practice of awarding incentive bonuses to employees based upon the previous year's results is fairly common. It is a strategy developed to control costs - if that money was folded into an employee's base wages, the company would lose profits during years when the business was in a downturn. That is a dilemma for the bankruptcy system.

I guess the legislators have concluded that assumptions of future earnings are just as valid as the concrete evidence of actual pay advice when determining the numbers to plug into the bankruptcy schedules.