Really concerned... We decided in september to file bankruptcy and began the process. We have older vehicles and were advised it would be ok to purchase a car. New auto loan is $390 a month and one of our 4 children needed braces which we started in September at $175 a month. So while paying our attorney monthly and extra two bills we were able to pay because we were advised to quit paying our unsecured debt. We were also told to adjust how much was being held out for federal tax answer would not be getting this money. We did not pass means test for chapter 7, we didn't expect to. Well we still haven't filed but will be in 2-3 weeks. We did drop some overtime and have less income this time around, but still over median. No problem. What Im concerned about is that our tax refund which was over $5000 will go to determine DMI?! For sure we won't get this back next year as we've since adjusted our with holding. Also should we include our new vehicle in our payments?
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An income tax refund is money that you paid in or had withheld from your wages that is in excess of what is owed. People have always used the refund as sort of a default savings method. The trustee knows that if you are able to live with the excess withholding taken out of your wages, you could probably stretch your budget to do without the tax refund. Trouble is - most people have that refund money earmarked for specific purposes, and mostly for necessities.
By adjusting your withholding to the minimum required by law, your disposable monthly income will automatically increase, because you will obviously have more cash in your hand on a monthly basis. Many trustees who require the surrender of income tax refunds will disallow withholding modifications after a Chapter 13 plan is confirmed, because that means a debtor's DMI has increased by design, and the debtor is denying creditors that money thereby.
You have no choice but to declare your new vehicle payment. It subtracts from your DMI.
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