Question on Disposable Income

[mountanddo]

I met with the attorney yesterday and she asked me all the questions about what I spend my money on and so forth. She wrote down all the numbers and determined that I have about $150 a month in disposable income and said that would be what my Chapter 13 payment would be approximately.

She put down what was "allowed" not really what I literally spent because the truth is that I haven't been spending anything the last year on anything extra as I was unemployed twice for a month or two and played catch up the rest of the time. I've spent NO money on entertainment, going out to eat or anything like that and the $200 she allotted for groceries in reality has only been $100 or so. Granted, if I wasn't playing catch up for those months I might have spent a little more on groceries to eat better than cereal and peanut butter and jelly.

I have no idea what happens when you meet with the trustee but do you have to show some sort of proof that you are spending this amount or do they go with what the "allowable" amounts are. It seems from other posts that the trustees keep a pretty good eye on what you spend your money on when you are in Chapter 13. If they allow me $200 for groceries and I only spend $100 am I allowed to keep that or will that go to my creditors. Sorry for the ignorance, I just don't know how this all works. Not sure how "into" your finances they actually are. Do you have to provide proof of what you are spending month to month? I thought that you paid the trustee your payment each month and as long as you did that you would be fine but from reading some posts it seems that I may be missing something.

Also, I may be going from a temporary job to a permanant job. I asked the attorney if I needed to tell her when that happened and she said only if there is a significant increase in my pay. I wonder what is a considered a significant amount?

[Guest123]

No, we didn't have to show the trustee any proof that we need or spend what for food, clothing, ect. Those numbers are IRS standards for living. This helped us out alot also. Before the BK we were spending about a 1/3 of the standard for food. It is a huge releif to beable to save what we don't spend on food or clothing.

As for the incease in pay that will depend on your attoney and the trustee. We were told to just keep paying the plan payment and if the trustee warrants a higher payment he will decide that after reveiwing the tax returns.

[mountanddo]

Ok, so they review your plan every year with your tax returns? Do you know if you are obligated to tell them before the review?

[newbie2]

Ok, so they review your plan every year with your tax returns? Do you know if you are obligated to tell them before the review?

The trustee will look at your current income from tax returns, and if there is a high enough increase your plan could be increased. That may never happen though. Most trustees know that the cost of living increases during the plans, and won't increase a payment unless it is a significant pay increase. Talk to your attorney about what they typically see and how it is handled.

As far as "obligated" to tell them, this is what we did: Hubby received a pay increase during year 2 or 3 of our plan (can't remember which year!) We waited until we had 2 paychecks reflecting this increase, then sent copies of the paystubs to both our attorney and the trustees office. There wasn't an increase in our plan. We brought it up quickly though so no one could ever say we didn't keep our attorney and the trustee "in the loop" and if the plan was going to be changed we really just wanted to get it over with. One thing about a Chapter 13 for us was needing the certainty of things through the plan, and not having any guesswork involved. That's what helped keep us sane :-)

Again, ask your attorney what they see happening as typical in your district. It will ease your mind and answer your questions.