Chapter 13 Not Confirmed Yet

[simplelife]

Hi! I am new to this forum, and glad to have found it. We filed our Chapter 13 Petition in September 2011, and started making payments in October. It hasn't been confirmed yet, and our attorney said that the Trustee has a backlog of about 8 months.

My question is related to 2011 taxes. We definitely owe...but, don't have a final amount yet. We filed a timely extension with a partial payment. (Our accountant of 5 years passed away, so it's taking a little longer for new accountant to sort through things. We have a small business.)

My concern is that this will hinder the confirmation of our Chapter 13. I haven't wanted to contact our attorney, yet, because every question costs us more money! Has anyone had this experience? We should be able to pay it in full within a month or two because I am getting some commission income soon.

[BKAttyMI]

What?! Not confirmed and you filed the case NINE months ago?! That is unheard of, at least here. I'm shocked the case hasn't been dismissed yet. IMO, you need to have a major sit down with your attorney to figure out what the heck is going on.

[despritfreya]

With all due respect to BKAttyMI, the length of time OP has been without a Confirmation Order is nothing compared to how long it can take in my district. From the get go, I tell my clients at least 8 months from filing but it could be as long as a year. . . and, if there is litigation, the sky is the limit.

Simplelife, owing taxes for 2011 will not impact your ability to confirm your Plan. However, while you state you should be ok within a month or two, having to make payments on the tax debt may impact your ability to fund the Plan. If you find it too tough to pay both over the next few months you can seek a waiver of Plan payments. You will have to catch up any missed Plan payments but that can be done by either tacking them onto the end of the Plan (if you are not already at 60 months) or raising your going forward payments slightly to compensate. Discuss this with your attny if you think you will get into a pickle.

Des.

[simplelife]

Thank you both for your responses. As I mentioned in my initial post, our attorney did tell us that it was taking about 8 months in our district. I sent him an e-mail to ask if he's heard anything recently regarding the confirmation hearing, and to update him about this tax issue. Des, I am relieved to hear that this shouldn't effect the confirmation of our Plan. We are already in a 60-month plan, but should be able to pay most, if not all, of the tax debt within a couple of months and still fund our Plan. Also, we make our final truck payment next month, so we will have extra money in the budget if our payments do have to increase. However, we were planning to put the money from the truck payment towards estimated tax payments for 2012 so that we don't face this issue again in 2013!

[Pandora]

... Also, we make our final truck payment next month, so we will have extra money in the budget if our payments do have to increase. However, we were planning to put the money from the truck payment towards estimated tax payments for 2012 so that we don't face this issue again in 2013!

Are you saying you'll put the truck payment aside and use it OR are you saying you'll adjust your withholdings the amount of your truck payment? There's a big difference between the two from a Trustee standpoint, which is why I'm asking.

You should adjust your withholdings now, having more $ set aside (we have to do this also due to SSD) so that you wont owe taxes every year. Your accountant (new one) can print out a paper based on last years income as well as projected income for this year, telling you what you need to take out in order not to owe / break even.

I'd recommend doing that now (consult with attorney first so ensure Trustee is good with it) to avoid any future problems. If, however, your plan is to set the truck payment aside (envelope system) then there is a good chance the Trustee will take that money and put it towards creditors if you're not in a 100% payback, especially since you're not confirmed yet.

FWIW, it took us 7 months before we were confirmed (filed 3/10 confirmed 10/10) so seems to be standard (we're in VA)