screw-up near end of the plan, plus owe extra $

[woeisme]

We are 8 months away from the end of our 60-month CH 13 plan, which is definitely the good news.

The bad news is that when we had our lawyer make a motion to incur debt several months ago to get a vehicle when my son totaled our truck, (almost 200K miles on it so just liability insurance) the trustee denied it saying that 1) the vehicle we lined up to buy to replace it was too high of mileage (hey trustee, I wanted to get a vehicle we could afford and it's not like you have a ton of options when in an active BK for financing!) and 2) that according to his projections, we would have a shortfall in our plan payments at the end of our 60 months so he couldn't approve new debt when he was already anticipating a deficiency.

He didn't say how much we'd be short, or why we're short $, or give any suggestions for how much extra we should be sending in to make up the deficiency. We did have a 3 month suspension of payments when my husband became disabled a few years back, but we modified the plan due to the big change in income that resulted so when we resumed payments at the new rate I thought things were taken care of and the deferred months included, but maybe not?

Our trustee has been real reasonable in the past, and to continue the saga, our second vehicle bit the dust while we were waiting to hear back on our motion to incur debt to replace the 1st vehicle, and at this point we had no options since we live in a rural area and I have to have a way to get to work, so I knew I shouldn't do it but really didn't see what else I could do and seriously thought our motion would be approved, so I went ahead and bought the car so we'd have at least 1 vehicle and then the letter from the trustee came saying no....

Ok, water under the bridge, can't undo that damage, just hoping trustee doesn't run a vehicle title search when closing out the case and decide to punish us for buying the car without approval by failing to discharge us. But i'm even more worried about the extra $ he says we owe. I've e-mailed his office to see if I can find out an amount, but no response, and calling his office just bounces you through an automated system that eventually ends up with a voice mailbox.

My plan payments were originally $1100/month then reduced to $400/month when my husband got disabled and couldn't work and we had the suspension in payments and modification. Do you think sending three extra payments of $400 is what is needed here? I could swing that with my income tax refund (he lets us keep any refunds under $6000), but no way could I pay $3300 if he wants three additional $1100 payments since I'm only getting $1525 in refund. My modified plan says my % payback is 40%, which then tried to use to calculate how much I'd be short based on claims, but using that to estimate has me about $1500 short, which doesn't seem to match owing three payments of $400 OR 3 payments of $1100.

I guess I'm going to have to contact my lawyer since I'm not getting any info from the trustee's office, but they are slow and unresponsive most of the time too. And I really didn't want to have my lawyer ask me what I ever did about a car since the motion to incur debt was denied and have to tell her that I bought it anyhow...

Any thoughts, advice, reassurances? and yes, I already know I screwed up on the whole car thing and don't see a way that can be fixed, I'm just planning to keep my head down and pray that flies as long as I've paid the plan everything that needs to be paid in the end.

Thanks!

[shark66]

Find your case on 13 data center and re-calculate...take the amount you'll be paying for the next 8 months from the total, and you should have an idea how much in arrears you're looking at.

As for the car, presuming you bought it for cash...I wouldn't sweat too much about it.

Good luck to us all.

[SMinGA2]

A change from $1100/mo to $400/mo is big. Were there any debts that HAD to be paid in full in the plan? Such as mortgage arrears? Were you paying off one or both of the vehicles in the plan? If so, then it could be a situation where $400/mo was not enough to pay those items.

[woeisme]

I guess writing about the problem helped, the trustee finally got back to me last night to tell me that I don't have to send in any additional payment now, but that my plan payments would continue for 65 months to get the total plan paid off. They said that was permissible because the law is no plan can be longer than 60 months but they are counting it from the date of confirmation not the date of filing. So that means I won't get finished until Feb instead of Sept as I was hoping, but I do get to keep my tax refund now and pay the deficiency over about 5 months, so kind of mixed feelings about that. I did finance the car at one of those buy-here-pay-here places, so that could still be an issue, but I will just cross my fingers and hope for the best on that since there's not much else I can do about it now. We're a family with 3 drivers using one car, and will have still paid all our planned payments so it was at no expense to our creditors, and frankly we were just on the CH 13/CH 7 borderline after my husband had to go on disability, so I'm hoping the trustee will just be happy that we paid all secured and 40% of unsecured instead of trying a CH 7 conversion.

Oh well... one more year!

[woeisme]

Our only priority debt was the lawyers fees, all debt was unsecured and mortgage is paid outside the plan because we weren't behind on it. We had no car loans when we filed (hence the cars that couldn't last the entire plan length) because we didn't pre-plan the 13 the way we should have. My number one advice to those thinking about CH 13 is to get newer vehicles first! That would have also really brought our disposable income down if we were making car payments, which might have made it more feasible to do the CH 7 conversion when we had our big income drop. As it was, we were right at the median, but because our actual expenses on things like mortgage and other allowed expenses we still had the $400 disposable income that my lawyer didn't think we'd be successful with a CH 7 conversion. We were living well below our means the few years before we filed, but past debt plus big medical expenses landed us in the CH 13.

[SMinGA2]

Amen to that! Vehicle issues is what made our first attempt at ch. 13 a failure. Filed in 12/09, intending to pay off a 2002 Taurus & 2004 Avalanche in the plan. 3 weeks later the engine died on the Taurus and by February the Avalanche was needing transmission work. Dismissed the 13 in March.

My thought, and of course its worthless in the overall scheme of things, is that if you were only paying attorney + trustee + unsecured debts, then there shouldn't be a minimum $# to pay into your plan. That a change in income/expenses would just change the plan. I wonder if when your income changed, your attorney missed a step? Was your plan actually modified in July/09 (looking at your siggy)? Maybe make an appointment to sit down with your attorney and figure it out?

ETA - just saw your other post about talking to the trustee. Accepting the 5 payments may be the easier way to go.

[shark66]

My number one advice to those thinking about CH 13 is to get newer vehicles first! That would have also really brought our disposable income down if we were making car payments, which might have made it more feasible to do the CH 7 conversion when we had our big income drop.

While this is an excellent piece of advice in its own right, many people who are contemplating filing a Ch. 13 have no credit left to speak thereof, and are not able to get financing of any kind...

I've got ways to go with two old (albeit in very good shape) vehicles and am just keeping my fingers crossed...

Good luck to us all.

[booradley61]

Woe, I think you'll probably be ok. Just pay the extra payments and breathe a little easier. And I want to be quick to acknowledge what we all know - that all property and financial affairs are part of the bankruptcy estate, and we are under their jurisdiction while in a 13 and we should do nothing with our property - don't sell property and don't incur new debt without permission.... BUT HAVING SAID THAT....As far as the car, don't lie if asked, but I think you probably won't be asked, and Trustees are generally too busy to be running credit reports and vehicle title reports. I have a friend who bought a car DURING his 13 with no permission. He was in the same situation as you. He made sure his plan payments were always on time, etc., and he bought a car at a "buy here, pay here" place. He had no car to trade in (it had completely died a little while after he filed and was never part of the plan), he used his income tax refund as a down-payment and he paid the car dealer directly. His trustee never found out and never asked, nor did his lawyer. He got his discharge 2 years ago.

All cases and trustees and districts are different, and I would never advise anyone inurring debt with no permission, because it could definitely get your case dismissed if they wanted to. You had no car loans as part of your plan and IN GENERAL, most trustees don't exactly do a lot of follow-up stuff during or at the end to see if you've done something like this unless prompted to because you haven't made payments or a creditor alerts them for some reason.

Even I got an unsecured (low limit) credit card to run my business with and didn't have permission. That, too, could have gotten me dismissed, and I didn't even realize that till the last 4 months of my case and I found out just by accident. Then it dawned on me - duh, idiot! I worried about it those last 4 months. I knew I couldn't buy a car or house, but didn't even think about a credit card. I used it to buy business supplies and would pay it off when I got paid. It helped with my very limited cash flow. I should have asked first, and it was a total brain lapse on my part, but no one ever found out. My case was discharged without it ever coming to light and without anyone asking whether I had done it.

So what I'm saying is, it's unlikely the car will come up - not impossible, but unlikely. Trustees have thousands of cases and they can't follow up on everything everyone does. Just make sure all of your payments are ON TIME and call no attention to your case. At the end, they do a final audit which is simply making sure all creditors in the plan were paid according to the plan. If by chance you are asked, DON'T LIE, but just fly under the radar and get to the end and I think you'll be okay.

[seanp951]

i just saw this thread.... and just posted a very similar question.... my cars are NOT super old.. but I fear if I have major car repairs during my 13 that it coudl screw stuff up... do they permit a car repair allowance or just a car *payment* allowance dduring a 13?

if I can ONLY get the payment a llowance..it woudl seem to make sense to just buy a newer car pre-13. now my credit is messed up... so maybe I can't even qualify to ge ta car loan... but if I could..maybe it woudl make sense to buy a newer car?? even a new low mileage Civic might be better as it would be reliable AND it would be covered by a warranty...

[lrprn]

i just saw this thread.... and just posted a very similar question.... my cars are NOT super old.. but I fear if I have major car repairs during my 13 that it coudl screw stuff up... do they permit a car repair allowance or just a car *payment* allowance dduring a 13?

When you file, the Means Test has pre-determined values for car payment and maintenance for what is average in your area. The Schedules are where you list actual costs that your lawyer feels will be accepted by your trustee. Some trustees are more lenient than others. Just depends on your trustee's customs and practices. As you've discovered, there are wide variances between Ch 13 trustee practices across the country.

it woudl seem to make sense to just buy a newer car pre-13. now my credit is messed up... so maybe I can't even qualify to ge ta car loan... but if I could..maybe it woudl make sense to buy a newer car??

This is a discussion you should have with your lawyer who is most familiar with your specific situation.

In general, it's a bad idea to go into a five-year Ch 13 with a car that isn't likely to make it through five years without needing major repairs. Having the cash to do big car repairs is very hard to come by in Ch 13, especially the first year before you hopefully are able to get an emergency fund built up. Getting a loan for a new car while your 13 is active is very difficult as many members here stuck in that situation have shared many times before.

Talk to your lawyer and see what he or she says is the best thing for you to do about cars before filing. Believe me, you'll still get better financing before filing that you will after filing.