how strict is your budget during ch 13?

[hopeful316]

I was reading some articles on google regarding how life is during ch 13. Some say that your budget is really tight and some say as long as you make payments to your trustee, you can still reward yourself by using the extra money to save or buy something small. Also would you need a trustee's approval if you wanted to get a secured credit card to rebuild your credit? I read some articles stating that you can still apply for a credit card, mostly secured to help you build credit during bankruptcy instead of waiting after bankruptcy. Some people have gotten secured credit cards by depositing say 100 bucks and use it to buy small things like groceries and then paying it off to rebuild credit. I don't know if it's true or not.

[AZNoName]

I asked my atty about a SECURED card, and he said he'd never heard of needing trustee approval. UNSECURED cards are a different story. Although I've heard of banks who give a secured card, but after 6 months provide an unsecured credit limit. I would be scared of this! If I try to get a secured card, I'll make sure they know not to change it to unsecured...

Right now we're only 2 payments in, but we're not paying out mortgage so that extra cash we're banking for an emergency fund. We're trying to live as lean as possible to save up a cushion for emergencies. I believe we have a do-able plan. You know how life goes, some months it seems there's tons of bills (car breaks down, kids get sick, dog needs vet care, etc), and other months it's pretty mellow. You just have to remember not to spend too much money in those mellow easy months and prepare for the bad ones I guess!

[spidge]

Our plan was fairly tight, but it was much worse when we had been attempting to pay all the creditors along with the mortgages. We did have a couple items to adjust from the attorney's original plan, but was taken care of before filing. We are in OK shape now.
The biggest help to us was an annual financial snapshot/planner where we could all(wife and kids included) see where we stand and where the tough times would be. Even though we new the plan we had some hick-ups and missteps from time to time. I just completed the 2012 planner and showed the family what we could potentially save by the end of the year and they were astonished at a nice nest egg of 10K. Of course we have been living under a rock for so long we intend to live a little now.
If you have Excel there are online user submitted spread sheets that can be customized to your needs.

[jcj112562]

As for the credit card, secured or not, check your individual trustee's rules..the CH 13 Trustee I had would allow NO new credit, secured or otherwise, without trustee permission. That apparently varies by trustee.

John

[IamOld]

john, you're absolutely right - our Ch 13 Trustee only wants to be asked for permission if the new debt is over $5,000 (not that I want/need/will have new debt!)

[lillymarlene]

This is not exactly a credit card, but is a type of credit. Before I filed my Ch 13, I asked my attorney if I purchased something for my business on credit and paid within 30 days for example, would I have to get permission from him and the trustee everytime I did this? He said that I would not need to ask anybody, that this was just considered "normal business."

[LadyInTheRed]

My budget is tight, but not nearly as tight as it was when I was paying my credit cards and second mortgage every month. I can afford the occassional small luxury. Hire a good attorney who knows the trustee and you should end up with a livable plan. It may be tougher if you are trying to keep assets you can't afford or are dealing with a lot of non-dischargeable unsecured debt like back taxes.

As already said, whether you need permission for a low-limit secured credit card varies by trustee. Check the order confirming your plan and any documents the trustee gave you to make sure there are no guidlines about incurring debt. If you find nothing there, ask your attorney.

[booradley61]

Our budget was very tight most of the time. I can remember during the first year, I got a jar of pennies out of the closet one night which had been in there for years to roll and get through the end of one month. It was a huge jar (one of those large pickle jars you see in a convenience store), and it contained about $70 in mostly pennies and various other change. If I hadn't put that money in the bank the next day, I would have been overdrawn. I skimped for a week and a half till my husband got paid again. Most months were tight - some were okay. But you learn how to make the money stretch. You learn that really quick. My husband got some raises along - not big ones, but enough to where we could put some money back for emergencies the last couple of years.

Check your confirmation order on the credit card question. The unsecured ones are generally okay, but check with your attorney first - that's what they're there for. Each order is different just as each district is different and eachTrustee is different. So your attorney will know best.

[bkrelief22]

Just want to add one thing that helped us...as far as buying something (non necessity), it's about whether you WANT it or NEED it? Ask yourself that ? and you'll be amazed. Also, there will be emergencies, tires, car, etc. so while in Ch 13 we really tried to plan it. For us the key was sticking with the amount allocat. Gooed for groceries, etc. to make it work. It's too easy to go to the store for 2 or 3 items and come out spending $50. Good luck!
bk22

[mountanddo]

Does the trustee pull your credit report to see if you've applied for any credit? Just wondering how they find this out.

[booradley61]

Does the trustee pull your credit report to see if you've applied for any credit? Just wondering how they find this out.

Honestly? Probably not. They've got so many cases, they wouldn't have time to do that. I've never heard of them doing it. I figure the most likely way they'd know whether or not you had incurred debt without permission is 1) you missed one or several plan payments and somehow it is revealed that you were paying other debts instead of your Chapter 13 payment, or 2) a snoopy creditor alerts them to it. The chances of that happening is remote. I've known several people who have filed Chapter 13. Almost all of them got credit cards without permission and it was never discovered. My attorney's paralegal told me the same thing - it's a common mistake and many people do it not even having a clue that they shouldn't have. NOW - if a person has a full understanding of the possible consequences, should they take the chance that the trustee won't find out?? NO! That's a huge risk to take with your finances on the line because if found out, it CAN be grounds for dismissal.

[sunflower71]

Our trustee changed our monthly payment in December and now has petitioned the court to raise it again. WHY???? I had a budget set up for the first and second versions of payment and now I have to go through it all again. How much is usually left for everyone after paying all bills and paying the trustee? They say we have too much left over. Why didn't they figure that out in Oct when we filed? The numbers haven't changed. I don't understand ANY of this.

[shark66]

Our trustee changed our monthly payment in December and now has petitioned the court to raise it again. WHY???? I had a budget set up for the first and second versions of payment and now I have to go through it all again. How much is usually left for everyone after paying all bills and paying the trustee? They say we have too much left over. Why didn't they figure that out in Oct when we filed? The numbers haven't changed. I don't understand ANY of this.

Well, it's really not up to you to understand.

It's up to your attorney to understand, and fight against this attempt till the bitter end.

Was your plan confirmed, BTW?

Good luck to us all.

[sunflower71]

Confirmed? Not yet.

My attorney is effective but terrible at explaining things and, to be honest, is kind of a d*ck. I was in his office Friday trying to adjust the budget numbers. Yelling "They won't take that!" and failing to suggest an alternative amount for a particular category wasn't very helpful.

[mountanddo]

Well, it's really not up to you to understand.

I have to respectfully disagree with this. Of course it is up to her to understand! I do agree that her attorney needs to understand why they keep raising the payments but it is her responsibility if she doesn't understand why to keep on her attorney until he explains it to her so she does understand.

I find it a little hard to believe that you have no idea why your payment keeps going up when you just filed in October. You must have something unique to your case that is making this happen. Trustee's just don't raise payments because they have a few minutes before they leave work for the day and have nothing better to do. What changed in December and then again in January that is causing the trustee to raise your payments?

It sounds like the trustee isn't taking your budget numbers and you are being required to submit better numbers to support what you think your DMI should be. Is that correct?