Will this work-re: payments in 100% plan

[murph996]

My lawyer and I will be working on our payment plan - I will be in 100% plan.

As posted in my other thread--I suspect that a bunch of my creditors wont make a claim or that their claims will be disallowed (illegal-offshore-unlicensed payday loans). So the payment based on all of these creditors may be alot more thatn is necessary to pay my 100% plan in 5 years. Im great with paying it off quicker as long as the payment is manageable.

Would it possibly be reasonable to structure my payment plan to account for reduced child care costs in the 2nd half of the plan? I have 2 children - ages 3 and 1-1/2. I pay $1350 a month in childcare. In 2 years that will go down to about $1000, in three years to $600, and in 4 years that expense will be gone--or minimal to account for school fees, etc.

My thinking is to try and schedule lower payments -$900 or so the first 2 years, and bump it up by the savings later. The plan will still go in with a payback of under 60 months, and with some unfiled claims will even be shorter.

My lawyer had said previously that they wont likely push for my full disposable income since we plan on going in with a 100% plan less than 60 months off the bat.

[indy4wins]

My guess would be from my experiences now learned that if you're in a 100 percent payback plan, given all creditors have or have not reported one way or another, that you can't pay more than 100 percent; If you're not paying back 100 percent, than yes, as your DMI increases over the 5 years, the Trustee might insist on you paying back more in the plan, as time progresses; My advice would be to get into something that you can afford now for 60 months, given your proposed pay back plan, and how that works in conjunction with your family budget; No worries with a 100 percent plan, but beware of anything below that, as again, if your DMI goes up, the Trustee could come knocking at the door, especially when given the fact that the Trustee will probably take all of this in consideration when you meet with the them, and discuss this situation; You also can adjust for this with your proposed budget, but they're only going to let you get away with so much; Good luck to you and your family;

[murph996]

Indy,

I know I cant pay more than 100%. Being that I will be in a 100% plan..unless every single creditor make claims, the proposed payments will result in a plan of much less than 60 months. Not trying to get away with anything. Trying to frame it so that I am proactively offering to make higher payments when I know that expenses will decrease over the life of the plan. So maybe I will be making $800 or $900 payments early on, and $1200 payments the 2nd half of the plan until payed off.

The higher proposed payments on the back half would be based on real and explainable budget reduction. Yes, I will be proposing a slightly ligher payment at the beginning, but I wouldnt have been proposing full DMI anyhow since its a 100% plan and 60 months of full DMI would result in more than 100%.

[Pjmax]

Sorry, not an expert, but I think I've seen graduated payment plans mentioned here somewhere. Have you tried a search?

[indy4wins]

I'm sorry, but I'm not an expert either on this subject of a graduated payment, and I'm not sure what you're trying to accomplish in doing so; If you're trying to get into a 36 month plan instead of a 60 month plan, great; When I filed in 2007, my objective was the lowest payment possible, for me, so I could eventually get back on track, and have food in the refrigerator, and have a little money set aside, in case of an emergency; That scenario didn't work, by the way, as living strictly on cash was really tough and I've exhausted everything in the process, and the situation continues to be really tough even though I'm almost at the end of my plan; You never know what will come up in five years, car and house expenses, someone getting sick, etc...... I don't understand why you want to increase your payment over the course of 3 - 5 years; I've seen many threads with coming up with a plan you and your family can live with; Have a nice evening;

[SMinGA2]

That is probably doable - depending on your district/trustee. Step-up/down plans are common when known things will change, such as a car loan or 401k loan is done mid-way thru a plan.

[murph996]

indy,

Here's my thought process..

I am going to be in a 100% plan. We are going to base my plan on 100% payback. So my total amount divided by 60 months roughly would be my monthly payment on a straight line plan. That payment will be a bit less than what we will likely calculate my initial DMI.

We are fairly certain that the claims will be much less than my total debt..so the plan we submit will likely end up paying the plan off in about 4 years.

I KNOW my childcare expenses will decrease after roughly 2 years in the plan, as my oldest goes to kindergarten, then 1st grade, and then the youngest enters school.

If I can get it approved, I would rather have a lower payment the first 2 years, and have the payment increase in line with my decrease in childcare expenses. That would give me a steady--maneageable cashflow with some wiggle room--and would not affect the time I'm in the plan.

[kornellred]

Why don't you just plan on 60 months of payments at a fixed amount to cover all possible claims. Then if the claims do not materialize, file a motion to increase the plan payments to finish the Chapter 13 earlier than 60 months.

[murph996]

Am I really this bad at explaining things? ;)

1. The plan will pay everything 100% in 60 month if every single cresitor files a claim and gets 100% of what they claim they are owed.
2. If some creditors dont file claims, the plan will payoff in less than 60 months.
3. I am not looking to further accelerate the plan. I am seeking out advice on how to build the best possible plan--one that the trustee can accept that is the easiiest for me and my family to handle.

2 simplified options for payment plans

Plan A Year 1-5 : 1200 per month

plan B
Months 1-12 - 900 per month
Months 13-18 1100 per month
Months 19-36 1200 per month
Months 37-48 1300 per month
Months 49-60 1450 per month

Plan B, for me would be more manageable--and hopefully in the eyes of the Trustee will improve the odds for success. The plan payments go up at a slower rate than my expenses will go down. In either plan, I still expect that it would be completed in around 4 years.

[TheBajan]

Murph996,
I understand what you are saying and it sounds like a reasonable and well thought out plan. I don't know what a trustee would say but it certainly couldn't hurt to make the proposal. Since you are in a 100% payback, it may be doable. If you were in anything less, I think you would have to give up all of your DMI. Please keep us updated about this. I'd love to know how it turns out.
The Bajan

[toojerm]

The oonly thing is, your asking the trustee to get less fees in the beginning and higher fees in the end (since fees are based on the amount paid in, mine is roughly 7% on average). He/she may not agree to that since, if your plan fails or converts to a CH 7, then your trustee loses out on more than if you paid a stright line amount. Can't hurt to ask though. Another thought: While it may be certain that your childcare cost will go down, it is also likely that other expenses will go up during the duration of your CH13. It may be better to bite the bullet in the beginning, then the back half will be smooth sailing if it plays out as you expect. I know my current payment is more than double my initial payment in a 100% plan. I would have given anything to have paid straight line and have more left over near the end, to ease the strain and fatigue caused by the 4+ years I've been in this. $87k paid in thus far (In addition to the mortgage), about $20k to go.

[murph996]

good thoughts toojerm. It really depends on what the initial payment comes to. Im prepared mentally to be able to handle a $1200 monthly payment. If that's what it comes out to I can live with the straight line plan. Much more than that I would like to use something similar to the plan outlined above.

[indy4wins]

Good Luck on whatever you decide to do;

[indy4wins]

Now I see what you're wanting to accomplish; I hope this works for you and that the Trustee will agree; My former trustee didn't want to hear anything I had to say that day; Anway, Good Luck with the plan; I hope it works out for you;

[LadyInTheRed]

My former trustee didn't want to hear anything I had to say that day

These kind of plan details are not worked out at the 341. While it is possible the trustee may ask murph996 some related questions at the 341 (he may ask about expected changes in childcare expenses, for example), if the trustee doesn't like the plan submitted with the petition, the real negotiation will happen between the trustee and the attorney, not at the 341.