Pre vs Post Bankruptcy Expenses

[aa06a47]

I have been to the attorny and she worked up my chapter 13 plan. No way for a chapter 7 because of means test and some equity in my home.

My question is related to disposable income. For example, my interenet is 49.95/month, my cable tv bill is right at 100/month. (lawyer told me they are allowed, and she had even seen higher amounts go through).

After I start my Chapter 13 payment plan, if I cancelled my cable, got rid of my internet service. ect., would I get to keep the money or would I have to amend my payment plan. Cable is one I am really looking hard at, that bill seems to go up 25% a year.

There are numerous expenses that are allowed but generally not really necessary. Example are cell phones, cable tv, high speed internet access, ect. What are the implications to the BK court if you really do some belt tightening to help you financially while in the payment plan. If you give up these things, will you also give up the disposable income that goes along with them?

[13inOR]

I have some experience with this. For example, our car insurance payment
was almost $400 when we began the plan, and after about a year, dropped down to $150. (accident went off the record). This gave us more disposable income, but the trustee didn't care and didn't know for that matter.

In fact, our attorney told me that once your plan is established, the trustee
doesnt care what you do with the money over and above your payment to him, as long as he is getting the payment that is required by your chapter 13.

She even advised us to set aside as much as we could as a safety net for emergencies. The ONLY time you are required to report it to the court or the trustee is if you get a pay raise OVER 10%, or a windfall or payment of some type that is MORE THAN $2500. (if its $2499, the secret is yours!) If you are able to tighten your belt here and there and squeak more out of your budget, the trustee is not concerned with that.

Unless you ask for a modification, they don't just randomly do re-checks on your disposable income. Now, if for some reason you asked to modify, and because you got rid of your cable and your cell, and other things, you did have a few hundred more in disposable income, they would probably take that from you. But they are not concerned otherwise, as long as they are getting their money. They would have no reason to know, or to care.

[SinkingFast]

You know what, Aa. I'm all for what ever you gotta do to survive at this point.

The Court here wants to see 7 months of bills, so you can't just go changing, boosting your service to get a bigger amount now. But if you cut back on service after you file, I don't see the harm in picking up a few extra bucks each month that way.

We lived outside KC for 13 years with just the regular TV stations. No cable available in our neighborhood. Out in the country. And we never got a satellite dish either. There's a fair number of channels available on antenna. And when you have those days where there's nothing good on to watch, at least you aren't looking thru 100 stations of nothing like cable or satellite. Pick up a DVD now and then of movies you want to see. Bag of popcorn, and you've got movie nite for the family.

We wouldn't have gone cable when we moved except we're too far from a major city to get any TV without a huge antenna. And locals tell me, on a good day, that's 2 channels at best.

[aa06a47]

Thanks for the information. I apprecaite it. I set and look at things right now, and am a bit scared due to the lack of a safety net. There will be no credit card to put some big time emergency item on. If the fridge goes out, it's cash or dry goods I guess.

Another question, do you put that emergency fund in a savings account, or in a pickle jar buried in your back yard?

I'm 2 weeks from giving my attorney a check to start the process. Anything I purchase now would not be discharged. It is scarey, I'll be going the first month with basically no money (lawyer gets a big a$$ check). I figure my first Chapter 13 payment will be due when I get my next pay check (I get paid monthly). I will have to look at ways to cut corners at least initially (like living without cable for a couple of months, not using a/c in the summer at least initially....brother, this could get rough)

Sinkingfast, I have the same services now that I had a year ago. So that should not be a problem.

[13inOR]

yes, I would leave things like they are now, and cut back after the payment is set, that way you can benefit from cutting back after the fact if you decide to.
As far as keeping money in the bank, there is no reason to worry about that, according to our attorney. As long as you report the things I mentioned in a previous post, it doesnt really matter how much you accumulate.

If you squeak $100 bucks a months out of your groceries and stockpile it in the bank, it doesn't bother the trustee. As long as you are making your payments to him and not taking on new debt, reporting raises over 10% and any amounts over $2500, they couldn't care less. Our attorney told us this, and it proved to be true in our case. Oh, also you usually have to cough up your tax refunds too. But other than those things, not to worry.

[aa06a47]

yes, I would leave things like they are now, and cut back after the payment is set, that way you can benefit from cutting back after the fact if you decide to.
As far as keeping money in the bank, there is no reason to worry about that, according to our attorney. As long as you report the things I mentioned in a previous post, it doesnt really matter how much you accumulate.

If you squeak $100 bucks a months out of your groceries and stockpile it in the bank, it doesn't bother the trustee. As long as you are making your payments to him and not taking on new debt, reporting raises over 10% and any amounts over $2500, they couldn't care less. Our attorney told us this, and it proved to be true in our case. Oh, also you usually have to cough up your tax refunds too. But other than those things, not to worry.

I will adjust my withholding amounts soon to try and eliminate a tax refund. I normally get about 1500 federal and 500 state and some years they kinda even out....get 1000 back from federal and pay 1000 state...kinda weird some years.

Is the 10% raise in any one year, or if you get a raise 6% one year and then another 6% the next year? I doubt I'll even get 10% in 5 years at my company, but who knows.

[13inOR]

My understanding is the raise would have to be all at one time.

Also, adjusting your withholding is exactly what our attorney advised us. She said come as close to breaking even as you can without owing. That way you benefit from the money each month instead of losing it to the trustee.

[nk29]

I find it interesting how different each person's experience is with Ch 13 and what advice they are given from their attorney. I live in NJ and did not have to give up my tax refund, it was for about $800. I also did not have to provide any W-2's or anything like that. I pay $200 a month to the trustee, rent an apartment, and make my car payment directly to Honda Finance, so for me, this plan was heaven! I was used to paying about $1,000 in credit card payments before filing the Ch 13, so I am MUCH better off now. I have been in the plan for 7 months (36 month plan) and so far no problems, in fact I never even hear from my attorney or the trustee. I did call them to check about the tax refund and whether I could keep it, and they seemed to think I was crazy for thinking I had to give it up. They said unless I owed back taxes that were included in my BK, the refund was mine to keep (they didn't even ask how much it was for).

In my opinion, if you are only paying about $200 or less per month to your trustee, that amount of money per month wouldn't make the difference between scraping by or being well-off. It's a small price to pay considering the amount of debt we started with

[aa06a47]

I find it interesting how different each person's experience is with Ch 13 and what advice they are given from their attorney. I live in NJ and did not have to give up my tax refund, it was for about $800. I also did not have to provide any W-2's or anything like that. I pay $200 a month to the trustee, rent an apartment, and make my car payment directly to Honda Finance, so for me, this plan was heaven! I was used to paying about $1,000 in credit card payments before filing the Ch 13, so I am MUCH better off now. I have been in the plan for 7 months (36 month plan) and so far no problems, in fact I never even hear from my attorney or the trustee. I did call them to check about the tax refund and whether I could keep it, and they seemed to think I was crazy for thinking I had to give it up. They said unless I owed back taxes that were included in my BK, the refund was mine to keep (they didn't even ask how much it was for).

In my opinion, if you are only paying about $200 or less per month to your trustee, that amount of money per month wouldn't make the difference between scraping by or being well-off. It's a small price to pay considering the amount of debt we started with

I agree with you on the differences I see people in chapter 13's. It is obvious to me it that is must be a combination of how good your attorney preparing your plan is and the trustee (maybe based on what the judges think).

When my attorney told me what my payment would be (I still think she made a mistake somewhere there), I was very happy (Under 200/month). She asked why I was so happy and I said I figured it would be alot more. However, when I was figuring things really well this weekend, I figure damn, I still won't have much money left over for emergency types of things, unless I scrimp a little on the allowed but not necessary expenses. 5 years is alot of time.

Thanks for your input.

[SinkingFast]

I have gotten so cynical lately, Aa, I'd keep the excess in a pickle jar, or envelopes, or whatever. Hide it in the mattress so nobody knows about it. It's there when you need it, and that's all that matters.

I know we need a bank acct in this day and age. But I don't think we're gonna keep much there after having gone thru this. I feel strongly that Big Brother knows too much about me already.

A thought for you about the A/C. Set the thermostat up higher than normal. Like 80 degrees or so. And use fans around the house. That way you keep the humidity down and the electric bill down as well. But you aren't uncomfortable where ever you happen to be in the house.

This old house that we're renting, the upstairs bedrooms don't cool real well when the A/C was running in the warmer months. It was almost like trying to sleep with no A/C at all and no breeze coming in 'cause the windows were closed. We got small fans for both those rooms to run at night to sleep. It was amazing the difference just having the air moving over the beds. And fans are cheaper to run than the A/C is, that's for sure.

[aa06a47]

I have gotten so cynical lately, Aa, I'd keep the excess in a pickle jar, or envelopes, or whatever. Hide it in the mattress so nobody knows about it. It's there when you need it, and that's all that matters.

I know we need a bank acct in this day and age. But I don't think we're gonna keep much there after having gone thru this. I feel strongly that Big Brother knows too much about me already.

A thought for you about the A/C. Set the thermostat up higher than normal. Like 80 degrees or so. And use fans around the house. That way you keep the humidity down and the electric bill down as well. But you aren't uncomfortable where ever you happen to be in the house.

This old house that we're renting, the upstairs bedrooms don't cool real well when the A/C was running in the warmer months. It was almost like trying to sleep with no A/C at all and no breeze coming in 'cause the windows were closed. We got small fans for both those rooms to run at night to sleep. It was amazing the difference just having the air moving over the beds. And fans are cheaper to run than the A/C is, that's for sure.

Thanks for the advice, I definatly hate a hot bedroom (unless ... well you know) LOL!!! Wonder if I can afford a fan in my chapter 13.

[quickteg]

I agree that as long as you don't show up on the radar, you probably won't hear from the trustee. I got a new job for a signifigant raise almost immediately after we were confirmed, and the trustee still doesn't know about it 19 months later. They've never approached me for any tax records other than when we initially filed.

My lawyer advised me to keep my mouth shut about ANYTHING concerning more money coming in, including pay raises, inheritance, etc.

The downside is that I'm in a higher tax bracket now, and don't own a home, so I have to cough up about $5000 for taxes this year. It hurts, but it is totally worth it to have the extra money the rest of the time.

Then again, I'm paying back 100% over 36 months, so I'm not sure they'd take extra money even if they knew about it.

I'm in California by the way. Your mileage may vary.

[Jenny]

When it comes to small savings there's nothing wrong with a pickle jar or envelopes, but if you're saving for the big stuff like retirement you have to accept big brother. You just won't beat inflation. You have to earn interest or dividends to make it. Besides, big brother is in your life anyway. If you've ever given any personal info to anyone in your life, it's wide open. There are hundreds or thousands of background checking websites that can find out a whole bunch of stuff about you with only a few bits of info.

[SinkingFast]

Thanks for the advice, I definatly hate a hot bedroom (unless ... well you know) LOL!!! Wonder if I can afford a fan in my chapter 13.

The little ones I got for the bedrooms just sit on top the dresser and blow right across the bed.

They were less than $10 each. Maybe right at $10.

If I set the thermostat for our rooms to be decent, everyone else was freezing. So I set the thermostat for the rest of the house, and our rooms were HOT. That's when I got the fans. Everyone was more comfortable, and the electric bill went down as well.