Annual Bonus Lower Than Expected - Plan Modification?

[junquemayle]

Short version: I am 3 years into my 5 year plan. I receive a large bonus every year based on company performance, but it varies significantly. In addition to my monthly payment, my plan requires me to forward the annual bonus to the Trustee, but uses a fixed bonus amount each year (that was based on an average from the previous 5 years). In the previous 3 years, I was permitted to keep the amount over the average.

This year, I just found out that the bonus is $4,000 less than the previous year. This means that I will be short $4k. I guess I have no choice other than to submit a request for a modification. Will this trigger a full review of my expenses again? Just trying to figure out all of the implications.

[justbroke]

If I'm reading this correctly, you're just concerned that the bonus is less than normal? I am also assuming that you intend to surrender the entire bonus check.

Given those two things, nothing should happen. You have pledged to surrender "all" of your disposable monthly income (DMI). The fact that the inconsistent bonus amount is significantly less than normal, should not affect anything. When you surrender the check (or the proceeds) to the Trustee, your or your attorney can just attach a letter indicating that the performance bonus was significantly less and you are tendering the entire amount per provisions in the confirmed plan. If you need to provide proof, you may want to do that at the same time.

Unfortunately, only your attorney can help you with this. I do not know if this requires a modification unless the amounts are already included in the "Base Plan" amount. If they are not included in the base plan calculation, then no plan modification would be necessary. Again, you and your attorney would need to look at your confirmed plan and figure out where to go from here.

Do not worry about an audit. You are being very above board.

[junquemayle]

The issue is that instead of requiring us to "pay your bonus" every year, the plan requires us to pay $8400 into the plan. Because a fixed amount was used, the $8400 x 5 was included in the base plan. The amount under $8400 is a shortfall (~$3600 after tax), so I would be behind by $3600. I am worried not just because of this shortfall, but because in prior years, my actual bonus exceeded $8400, but I was permitted to limit my payment to $8400 and keep the difference. I am expecting a response of "you should use the overage from previous years to offset the the shortfall". However, that overage has long since been spent on unanticipated car repairs. I will reach out to my attorney this week.

Thanks for your help

[justbroke]

In that case, where the "bonus" has been calculated and included in the Base Plan (amount), you would need to file a Motion to Modify Confirmed Plan.

It's a shame that this was done that way. I would have just had a provision to surrender any extra income or bonus pay up to $X. This would be in the same way that you would surrender a tax refund for which you don't know the value until tax time.

Your attorney will have the better answer.