Plan to open a new savings account to save for future unforeseeable expense

[johnjan2009]

Guys,

After filing chp13 3-4 mos ago, I plan to open a new savings account to start saving for an emergency fund that I can use for unforeseeable expenses. Now, my atty told me that any future savings will be ok but he never told me exactly about any limitations or maximum amount I can put in. Any thoughts if what is a reasonable maximum savings I can save without being questioned? I plan to use chp13 work for me by saving as much $$ as I can but I'm also reluctant that while I'm in the plan, there maybe some issues with creditors/trustee once they found out I'm saving a lot which will force me to surrender my savings later on.

I would love to hear from you guys on whatare your thoughts are on how to wisely handle future savings.

[justbroke]

A Chapter 13 doesn't work that way -- punishing you if you save! You can save since that would come from your allowed expenses. You actually should be saving during a Chapter 13. Budgeting is very important; a rainy day fund being even more important. Hopefully your attorney will get you a great budget that you can actually save at least $100/month with. (I think $100/month is the bare minimum; it really should be proportional to your expenses and probably should be 5%/month.)

[jetsfan2010]

that rainy day fund is essential, especially early on in a 13. If you arent accustom to living on just cash, or living within a budget, you will HAVE to have some money saved in case something goes wrong.

[IamOld]

Forgive for sounding dense, but I guess having had no available credit for the last...oh...almost year and being able to - HAVING to live already w/out credit cards...I hope that's good...practice...

[justbroke]

Iamold, it's good practice, but you did not have a court enforced budget. It's a little different going from living off of cash, and having "disposable" income, to living off cash and all your "disposable" income is taken away from you. You have no cushion anymore.

When you're under a Chapter 13, you can no longer rob Peter to pay Paul! My Chapter 13 included a wage deduction order which took the plan payments straight from my employer. When I had tough times, I'd just pay my mortgage 15 days late. Sure there was a penalty, but I could move the payment to my other pay check (I get paid twice a month... not bi-weekly). In a Chapter 13, you no longer have that luxury.

I'm just letting you know that it is a different thing to be in a Chapter 13 and living on cash, than not being in a Chapter 13 and living on cash.

[IamOld]

Iamold, it's good practice, but you did not have a court enforced budget. It's a little different going from living off of cash, and having "disposable" income, to living off cash and all your "disposable" income is taken away from you. You have no cushion anymore.

When you're under a Chapter 13, you can no longer rob Peter to pay Paul! My Chapter 13 included a wage deduction order which took the plan payments straight from my employer. When I had tough times, I'd just pay my mortgage 15 days late. Sure there was a penalty, but I could move the payment to my other pay check (I get paid twice a month... not bi-weekly). In a Chapter 13, you no longer have that luxury.

I'm just letting you know that it is a different thing to be in a Chapter 13 and living on cash, than not being in a Chapter 13 and living on cash.

Thank you! Well, of course I hope that the atty I have can craft a FORWARD looking budget which takes into account one PT job going away...the way I look at it is this - if Ch 13 is less than (or even equal to) what I'm paying (was paying) it's doable. If it's LESS THAN what I had been squeezing out each month then it's even better! But we'll see of course...realistically, since seeing the atty, I gave up repayment plans with most creditors (I just had ONE a-hole that wouldn't work with me who is suing) so I really haven't any other choice...

[1dayatatime]

We filed in April 2009 and were confirmed for a 36 month plan. Our only assets were an 8 year old car and a neighborhood electric vehicle. Our attorney advised us to get a new car prior to filing, which we did. Our house was $80K+ underwater and we no cash, no savings, no nothing. Our first concern after filing was creating an emergency fund. We were and are obsessive about it. We started by selling everything we had that we could do without. We shopped for best food prices, we bought clothes at goodwill. We turned in bottles, I canceled one term life insurance policy (it was pretty small). You get the idea. Without fail, any additional income. or decrease in cost goes to savings, it does not go to improving life style. Every expenditure is evaluated on need not want. Being this obsessive has allowed us create a pretty good savings account in just 2 years. This year, we have an unexpected tax bill in excess of $5K. We can handle this and still have a good emergency fund. The peace of mind is worth every effort. I highly recommend it!

[justbroke]

Very well said, 1dayatatime.