New here...need help please

[switch625]

Mac, I'm in a similar "boat taking on water" as you. My wife and I have both a BOA HELOC and a home equity loan, the HELOC's interest only "draw period" expires two years from now and the last time I checked the HELOC contract, I have a five-year repayment period after the draw period ends. While better than a balloon payment, the new payment is gonna be steep, but I still have an option to convert it to a loan. Then I get a letter indicating that I may be eligible for a second lien extinguishment due to a mortgage settlement between BOA and DOJ. Before I filed my 13, I had close to 3k in unsecured credit card debt too. My Ch 13 repayment is about 40% of that 3K that and I'm not 100% payback, but probably will be if the extinguishment (and the end of a car payment this year) occurs.

[Macdad123]

Income question....I am a teacher and my wife is a teachers aide, we don't get regular pay checks in July and August, our pay goes down drastically during those two months. My question is, if I wait until say September to file, will these two months count towards my 6 month look back for DMI? Or will the trustee have to figure my income a different way to show what would be my average income for those months? The reason I am curious is because there is close to a 1500.00 per month difference per month when those two months are factored in to my pay

[LadyInTheRed]

Income question....I am a teacher and my wife is a teachers aide, we don't get regular pay checks in July and August, our pay goes down drastically during those two months. My question is, if I wait until say September to file, will these two months count towards my 6 month look back for DMI? Or will the trustee have to figure my income a different way to show what would be my average income for those months? The reason I am curious is because there is close to a 1500.00 per month difference per month when those two months are factored in to my pay

If you wait, then the means test will use the lower income and your commitment period will be based on that. If it makes enough difference to bring your income below median, your commitment period would be 36 months instead of 60, but you can propose a plan that is as long as 60 months. But, your schedule I and J will be based on your projected average income and expenses during your Chap 13 and that is what will determine your plan payment.

[Macdad123]

If you wait, then the means test will use the lower income and your commitment period will be based on that. If it makes enough difference to bring your income below median, your commitment period would be 36 months instead of 60, but you can propose a plan that is as long as 60 months. But, your schedule I and J will be based on your projected average income and expenses during your Chap 13 and that is what will determine your plan payment.

So if I wait and use those two months my 6 month average is around 6500 per month, but If I file before and don't include those two months then my average is around 8,000 for a six month average? Do they ever just look at your tax return and divide your income by 12? seems like that would be the best way to really get a picture of someone's yearly income? I don't make 8,000 a month for 12 months...I have to save in order to get through the summer months. My average income per month for 12 months is closer to around 7300. BTW the I am using net income and not gross? Is that right? The only thing that comes out of my pay check is your normal tax assessment and our health insurance.

[LadyInTheRed]

The trustee will look at your income tax return to make sure the income you are reporting is accurate or that there is an explanation for any discrepancy.

It is your average projected monthly income for the entire year that will be used to determine your plan payment, no matter when you file. Just like with your other expenses, you will have to save in the months you get paid in order to make your plan payment in the summer months. If you don't think you can do that, and you have the option to be paid a lower amount year round, you may want to change to that option.

The means test and schedule I/J start with your gross income and then subtract payroll deductions and other living expenses to determine your DMI. For determining whether you are above or below median income in order to determine your commitment period, you use your gross income in the 6 months before filing and double it.

Note that we tend to use "means test" for both Chap 7 and Chap 13 to describe one part of form B22A for Chap 7 and form B22C in Chap 13. But, in Chap 13, there really is no means test. Instead, what is for the most part the same as the means test, is called "Calculation of Commitment Period".

Don't waste too much time trying to figure out on your own what your plan payment will be. You will provide your attorney with your pay check stubs, tax returns and a list of your expenses. Tell him/her everything you spend. It is your attorney's job to prepare the petition and determine what your plan payment should be. You can then look through the calculation of your payment and discuss with your attorney anything that doesn't look correct.

Also, talk to your attorney about whether there is any advantage to waiting until after the summer to file.

[Macdad123]

How often will my payment get deducted? Right now I get two extra pay checks per year and I save Those to make it through the summer...will my plan payment come out every time it get paid? My wife because she is at the top end of the pay scale gets her cost of living raise in the form of a bonus twice a year. This is already included as part of her earnings. This would not be considered an actual bonus that I would have to give up would it? Our plan payment would already be figured based on that amount cause it comes every year

[dmc-2008]

Payment is once a month. :-)

[Pandora]

How often will my payment get deducted? Right now I get two extra pay checks per year and I save Those to make it through the summer...will my plan payment come out every time it get paid? My wife because she is at the top end of the pay scale gets her cost of living raise in the form of a bonus twice a year. This is already included as part of her earnings. This would not be considered an actual bonus that I would have to give up would it? Our plan payment would already be figured based on that amount cause it comes every year

This is why I mentioned how you get paid (24 vs 26 pay days), 9 months vs 12, etc...you will have to budget accordingly during those months you are not paid as you must make monthly payments every month to your plan.

LITR has it spot on in her post as to how it's all calculated out

[Macdad123]

My question though is will be there a deduction on every pay check that I get? Can I set it up so that they take the payment out of just one check a month so that on the months that I get 3 checks I don't pay more on those months? Lets say I owe 2000 to my plan and I get 3 checks in November that would equate to 3000 paid in for that month, but I don't get checks for July and half of August and I have to save on for those months. Basically we have 20 pay periods a year.

[Macdad123]

I just completed a schedule J and I used my W2 to help with this. I just averaged my income over a 12 month period based on my w2. Here is what I come up with..
My combined average monthly income is $8095
Actual Expenses:
1450 Mort
588 Car Loan
245 Car Lease
450 Electric
120 Water/Sewer
65 Internet
500 Car Insurance Includes our college sons car
200 Cell Phone
150 Cable
210 Student Loan payment
70 Home Security
77 Life Insurance
123 Braces
84 Vocal Lessons for Daughter
1000 Monthly food budget Total = 5332.00

IRS Allowable Expenses
1249 Food Allowance
180.00 Health care
1432 Home
553 Utilities
1050 car allowance total
70 life insurance Total: $4534.00


I will owe also 65,000 to HELOC which will count for another 1100 per month or so. This would leave me about 1600 per month left over to pay creditors and trustee/legal fees etc. Do you think it is possible to get a plan approved that would narrow the gap between my two budgets that would allow me to survive a chapter 13?

Also I figured calculations based on myself my wife and my daughter. Would we need to include my 20 year old son as well if he lives at home? He works part time and goes to school.

Also my mom lives with us she is in her 70's and the only income she has is her SS. Would we count her? Would the income that they make impact us at all?

[LadyInTheRed]

You are getting to a point in your questions that they are best discussed with a BK attorney with experience working with the local trustees.

Schedule J is supposed to be your actual expenses, not the standards used on the means test. But, the standards are a good indication of what will be considered reasonable. If you spend less than the food allowance, then you should probably increase that expense.

Is $8095 your net income, after deduction for health insurance, taxes, etc? If it is your gross, then you need to subtract the dedcutions when determining your DMI.

Your student loans may or may not be allowed as a deduction. You may have to let them go into deferment. This varies by court.

Who is included in your household also varies by court. Some use "heads on beds" other use who is a dependent for tax purposes. If your mother or son contributes income to the household, that income must be included in your budget.

Again, you really need to let your attorney deal with the numbers. Forget the local and national standards. Make a list of all of your actual expenses and let the attorney make any adjustments if he thinks anything is too high or low or not allowed at all. When your petition is ready to file, review the schedules carefully and discuss anything that seems too low.

[Macdad123]

LITR...I know I am at that point, unfortunately I can't get in to see one for a few more weeks, and I am the type that can't sleep at night when I don't have answers or I don't understand something...I really appreciate all that you have done to try and educate me

The 8095 is my net income after all payroll deductions...including mandatory 3% for retirement for all state employees in Florida. As far as contributing income, my son pays his own insurance and his own car payment, but the car payment is not a part of my debt. I have an older son that has helped me out quite a bit through the years since he has been working full time but he is getting married and has been saving diligently to pay for a wedding. He no longer will be able to help me. Another reason why making monthly payments have become hard. When I say help since most of my bills come due at then beginning of the month he would spot me the money so I wouldn't be late on anything until the end of the month pay date when I would have extra funds to cover.

[keepsmiling]

MacDad, cease to fret. Regardless of where you wind up, you WILL be in a better position afterwards then you are now, and may very well have better cashflow right off the bat as you will almost surely be paying less than you would otherwise. The beauty of a 13 is that what you pay is determined by what you CAN pay. It will be a huge relief for you provided you go with the right attorney-- one who knows how to craft the right plan to fit you.

Deep breath, and do contact at LEAST 2-3 attorneys. You may be very surprised at how widely their opinions/experience/knowhow can vary.
Hang in there and good luck!

[LadyInTheRed]

MacDad, cease to fret. Regardless of where you wind up, you WILL be in a better position afterwards then you are now, and may very well have better cashflow right off the bat as you will almost surely be paying less than you would otherwise. The beauty of a 13 is that what you pay is determined by what you CAN pay. It will be a huge relief for you provided you go with the right attorney-- one who knows how to craft the right plan to fit you.

Deep breath, and do contact at LEAST 2-3 attorneys. You may be very surprised at how widely their opinions/experience/knowhow can vary.
Hang in there and good luck!

Well said, keepsmiling!

[Macdad123]

MacDad, cease to fret. Regardless of where you wind up, you WILL be in a better position afterwards then you are now, and may very well have better cashflow right off the bat as you will almost surely be paying less than you would otherwise. The beauty of a 13 is that what you pay is determined by what you CAN pay. It will be a huge relief for you provided you go with the right attorney-- one who knows how to craft the right plan to fit you.

Deep breath, and do contact at LEAST 2-3 attorneys. You may be very surprised at how widely their opinions/experience/knowhow can vary.
Hang in there and good luck!

Thank you keepsmiling So, something that I am really confused about is the national and local standards for determining available income. Are those standards the maximum that you get to keep? Or are you allowed to keep more based on your actual expenses as long as they are not considered excessive? This is where I am really confused...Will my lawyer use those standards as a guide and then work to get me to be able to keep more of my income to pay my bills that are not in the plan? Or should I just consider the national and local standards as the income that I will be able to keep?