Less money to live on?

[tic1975]

We went to an attorney who pushed for us to pay back 100%. That would have left us with $200 a week for food, gas and other living expenses(utilities, dr's, property taxes etc). I told home that wasn't possible for a family of three to live on. I am seeking another attorney (apt on Thursday) but my question is, can a 13 leave you with less money? And do you regret filing? Is the fear of filing worse than the actual process?

[dmc-2008]

There are schedules that he has to follow and your plan must be reasonable. I would get another opinion, it's free and you need to go in on the right foot.

I regret filing at times but my situation is stressful because of my health. If I could bare the stress I would be a lot better but in 2.5 years when it's over I bet I wont regret it! I do think the fear is worse! I know many people here that filed and felt a huge wave of relief so it depends on what your situation is.

They say if you can't get out of the debt in five years on your own you should file.

That cinched it for me! I am sure you will learn lots here! Good luck!

[sophieanne]

I would definately get a second opinion. As DMC said there are schedules that are followed to calculate your monthly payment. Those calculations include allowances for all of the items you mentioned in your note. I'm in a 100% plan and my plan allows me fair amounts for food, etc. Of course those amounts are based on guidelines for living expenses for a family of my size (only 2) and expenses for insurance, doctors, etc. are based on documented amounts I provided my attorney when he calculated the payment. Do I regret filing? No...I regret that I got myself in a situation where I felt the need to file, it's stressful at times but when it's done I'll be glad I did it. There will be no more debt and I have learned to live without credit and that in itself is a wonderful feeling. Good luck.

[LadyInTheRed]

tic1975, why did the attorney think you should be in a 100% plan? Do you have priority debt that needs to be paid off during the plan (taxes, mortgage arrears, child/spousal support)? Do you have non exempt assets that need to be paid for during the plan? Or, do you simply have a high enough income to support a 100% plan?

A Chap 13 plan should be tight, but should provide enough money to live on. You need to understand how the attorney is calculating your plan payment. With more information on your situation, we may be able to help you understand.

For me, filing Chap 13 put more cash in my pocket. That seems to be a pretty common experience. While there are exceptions, it seems that most people who find things more difficult after filing Chap 13 are either unwilling to budget to live within their means, are trying to keep assets they can't afford or have priority debt that is so high that a Chap 13 is very difficult. If priority debt is the issue, a Chap 13 may not be the best option, unless it is filed only to buy some time without the goal of a discharge or even getting a plan confirmed.

[Lixxie1982]

I was bringing home less than $250 a week for five years. But I also had to move back in with my parents in order to make 250/wk go very far living in Southern California. I was incredibly fortunate, and I recognise not everyone has my parents.

[tic1975]

I truly do not know why he was pushing the 100%. We do make decent money, but again, would have only had $200 a week to live on. I asked another attorney about it and he kind of laughed and said if we pay 100%, our attorney wouldhave little work to put in it and felt our attorney was taking the easy way out. Appointment with new attorney tomorrow!

[LadyInTheRed]

If this attorney tells you something that doesn't sound right, ask question so you understand the reasoning.

[justbroke]

I would still like to hear whether or not there is priority debt, mortgage arrears, domestic support obligations (DSOs), administrative debt, high DMI, or another issue, such as the "best interest of creditors" test, that makes the attorney believe in a 100% plan. When people are in a 100% plan, it's for a reason.

The means test is a pretty good first pass look at disposable monthly income (DMI). Most attorneys use BestCase and that software calculates the payment based on what is input. If you have a special case, high mortgage arrears, DSOs, tax and other priority debt or are keeping property which is not in the "best interest of creditors", then expect a higher payment to the Plan and maybe even a 100% plan.

I have never discovered any way that the means test would give a family only $200/week for the national standards for "food, apparel, and services..."! A family of three gets $1,249 a month as an allowance just in that area. Utilities for a family of 3 in California averages over $550/month.

I would definitely shop around and have any attorney walk-through and explain the numbers.

[switch625]

Yeah, I'd move quickly onto your next attorney consult. My Ch 13 payment includes mortgage, heloc and tax arrears, is north of $1000 and I'm still not at 100%.

With only $200 wouldn't the trustee consider the plan not feasible and ask to have the plan reworked? Remember that the trustee wants you to complete your plan.

Besides, you will not know your true percentage payback until your Proof of Claim submission deadline passes, since not all your creditors may file claims to your 13 and the plan base will then be reduced accordingly.

[LadyInTheRed]

In another thread, tick1975 mentioned a decrease in household income and that an attorney recommended waiting 6 months to file. It is unclear whether that is the same attorney who recommended a 100% plan. Sounds like income has decreased in the last 6 months making DMI on the means test higher than current income. I wonder if the drop in income is significant enough to qualify for Chap 7 after 6 months.

[justbroke]

I wonder if the drop in income is significant enough to qualify for Chap 7 after 6 months.

That's a perfect question and would be the best strategy. I'm also wondering if tick1975 went back to the attorney, in question, and told them the income changed. After the Lanning decision (Hamilton v. Lanning, 130 S.Ct. 2466 (Appeal from 545 F. 3d 1269 (10th Circuit 2010)), this should not even be a question!

[LadyInTheRed]

That's a perfect question and would be the best strategy. I'm also wondering if tick1975 went back to the attorney, in question, and told them the income changed. After the Lanning decision (Hamilton v. Lanning, 130 S.Ct. 2466 (Appeal from 545 F. 3d 1269 (10th Circuit 2010)), this should not even be a question!

He was going to see a new attorney today who will hopefully be more knowledgeable:

I asked another attorney about it and he kind of laughed and said if we pay 100%, our attorney would have little work to put in it and felt our attorney was taking the easy way out. Appointment with new attorney tomorrow!

tick1975, how did the appointment with the other attorney go?

[tic1975]

It went good I would say! Just an FYI, we were one month in to my husbands paycut so yes, it looked like the 6 month average was was high. We told the attorney that this was the "new income. I'm not sure that he believed us hence the 100%? Well, now hubby's pay has been cut for 6 months and our new attorney actually thinks it's worth it to try for the chapter 7. I am not optimistic, but am grateful he seems to at least want to try. He said if we have to go the 13 route, it's his job to make sure we have enough to live on. Funny how a different attorney can make all the difference!

[LadyInTheRed]

He said if we have to go the 13 route, it's his job to make sure we have enough to live on. Funny how a different attorney can make all the difference!

Yes, it is very important to have a good attorney who will work to get you a Chap 7 discharge if possible and, if not, a livable Chap 13 plan.

I am glad it went well and that you appear to have found a good attorney.