Filing 13. Self-employed and need help!

[tinkandgoofy]

Due to the economy, we are considering a ch 13.
Anyone file that is an owner operator that could share with us their experience?
Am an owner operator. Am not incorporated nor an llc. So 13 is option.
Talked once with an atty and still have more questions than answers.
Besides figuring out the normal expenses, mortgage, car payment, semi/trailer payment, car insurance, etc. In Ohio, utility budgets are reviewed every few months and normally increase depending on the season. How is that figured in to the payment plans?
How often is the income reviewed to adjust the payment plan? Income is NOT steady and changes weekly.
We owe almost $15,000 in taxes from last year and looking to owe for this year also. I know we need to wait to file til we have this years taxes done. If we file, how do we save money starting next year for 2013 taxes? Is that added in with the monthly expenses? What about the maintenance expenses that are unforeseen?
I know there are many other questions that we have but these are just some of them that are a starting place.
We are going to start getting our last 8 months together and get an idea where we are at but we just have sooo many questions.
We just are not sure of what a ch 13 really entails. What if more income is made one week and less another?
What do we do to prepare for filing? Do we stop making payments a month or two ahead? Ch 7 is not an option at this point.
I am sure I have not made a lot of sense here, but hopefully someone will have some insight and can shed a little light on this cloud of confusion!
Thanks a bunches!


Also, do you make any payments once you actually file in court or do you wait until you get a definite decision? What do you do if you don't make payments and then is not allowed?

[HHM]

If income varies more than 10% within a year, chapter 13's can be tough.

Chapter 13 payment plans are usually NOT periodically reviewed to make adjustments. If something "big" happens, you can go in an make an amendment (i.e. replace transmission on your rig), but once a chapter 13 is set, it is set for all intents and purposes. Chapter 13's are not designed to be reviewed or tinkered with every few months.

Having said that, it doesn't mean you shouldn't do a 13.

For utilities, and other widely fluctuating expenses, you need to calculate a 1 or 2 year average. So, you need more data than a typical 13 debtor. So, instead of the last 6 or 8 months, you really need 12, 18, or 24 months worth of expense data.

As for taxes, you need to start making your Estimated Tax Payments. And that will be tough for you because it sounds like you haven't done it for the past couple years, because you have had your head in the sand as to your finances. You CAN budget for taxes in the chapter 13. If you accrue a new tax debt within a chapter 13, especially for owner/operators, you will pretty much sink your chapter 13. So, you will need an accountant to get you a spot on calculation as to what you will owe each year and actually make the estimated payments accordingly.

For owner/operators, a chapter 13 is usually a budgetary wake-up call (think, bucket of cold water poured on you at 4:00am wake up). YOU will probably need to make some serious lifestyle changes to make it work. You either have the fortitude to do it, or you don't. So, the question you really need to ask, how badly do you want a sustainable and prosperous financial future?

[LadyInTheRed]

tinkandgoofy, why do you say Chap 7 isn't an option? I ask because many people come here thinking they can't do a Chap 7 and learn differently. Just want to be sure a 13 really is your only option.

[tinkandgoofy]

Yeah, 13 is the option with the income.
Our 2011 taxes is where the tax debt came in. Our acct did some pretty sad stuff and didn't show us what would happen if she did/didn't do a couple of numbers. She got our tax payment down the year before but neglected to tell us that what she did would cost us the next year. So, we were totally blindsided and, yes, we do have a different acct. As for this year's taxes, no we haven't saved any or made the est tax payments. Due to some things that were totally out of our control, money has been very tight and then add in the repairs on the truck. Work slowed way down and had to be off for an engine rebuild. Once off, it is hard to make up that lost income. Not exactly the step we want to take but we are getting behind and just barely hanging on as it is. We have cut some expenses but with unforeseen engine repair ($15000.00), $4500 in tires before and after the engine rebuild, getting caught up is hard to grasp. Then the cost of fuel on top of that....Well, you can see where that leads us.
We also had to walk away from our house last May and that is in foreclosure process. No, we don't want it back. We couldn't afford the upkeep due to being annexed in and the cost of sewer and septic demolition plus the increase in taxes to pay for that. (bank refused to work with us on a short sale plus we were underwater on it because of the bursting bubble) We were lucky enough to be able to buy another house that lowered our payments several hundred dollars. Just in time to have the work slow down and the truck to need expensive repairs.
Yes, a 13 is a wake up call. Would never argue with that. If there was a way to be able to handle all this plus the penalties, interest and still keep our head above water, would be happy to do it. If we could get rid of our vehicle payment, that would help a lot. We are upside down so selling is not an option. As we get things together and get numbers figured out, then we can decide if 13 really is the best option or if we can just struggle thru it and do it on our own.
Like I said, not what we want to do but is looking at the protection it will give us while we get back on our feet and that is a little bit of a breather.

[despritfreya]

I just wanted to add. . .

1. You are self employed. As such you will be filing with the Court, monthly business operating reports (basic profit & loss statements) so that the Court, the Trustee and your creditors can track your income. This is not a big deal.

2. Think outside the box. You know your income fluctuates. Is it seasonally predictable? If so, there is nothing wrong with fluctuating your Plan payment. For example, you could set your payments at one level each month for the spring and summer months and at a different level for the fall and winter months. I have used this technique for accountants, seasonal long haul drivers, school teachers who have no income in the summer, etc. Basically, you will have a set dollar amount that needs to be paid over 60 months. You just have to figure out how to pay it.

If your income is not predictable then you average it over the entire year. You put $$ away during the good months to cover the slow ones.

3. To repeat the obvious, you must start paying quarterly estimated taxes. The court is not going to allow you to proceed in the bk if, at the end of each year, you have to stop making Plan payments due to some large tax bill.

Des.