Chapter 13 Payment Question - Need Help

[98daffodils]

Hi Everyone! So I am in the early stages of a Chapter 13. My payment for September is only my 3rd one. I have had the Meeting of Creditors, and my case has an October 15 date for confirmation. My payments are pretty high because I have two jobs. I am a single mom and I have been scraping by trying to make these. This month I ran into a situation and I am not sure what to do.

So for this month's payment (due at the end of Sept) I cannot afford the payment. It is $1400 per month. The reason I can't is because I had higher than normal child care expenses owed to my husband (we have joint custody) and also my car was in the shop and that repair was expensive. On top of this, I was not slated with any hours in my second job, so I did not get any paycheck for the last month.

I asked my lawyer if we should contact the Trustee and tell him that I can pay him half of the $1400 by the due date this month, and then on October 10th when I get paid again, pay him the rest. Since my second job has started back up, I can pay the October 30th payment on time (so it wouldn't be late or only half paid). My lawyer doesn't think I should mention it, just pay what I can. But since I am new, I am not sure.

Do you guys think the Trustee will dismiss me if I can only pay half of this month's payment? If I pay him the entire amount then I can't pay rent and my landlord doesn't allow late payments... they are a corporate office that will file legal action if you pay after the 6th of the month.

Thank you all for any advice!

[justbroke]

Do you guys think the Trustee will dismiss me if I can only pay half of this month's payment? If I pay him the entire amount then I can't pay rent and my landlord doesn't allow late payments... they are a corporate office that will file legal action if you pay after the 6th of the month.

No matter what always pay what you can. Your attorney is thinking that if you can make up the other half in 30 days, then it's not going to be an issue. Many Chapter 13 Trustees wait until a debtor is 60-90 days behind before moving to dismiss the case. Even then, a judge is sympathetic with attempting to catch up and another chance is usually available.

The key is that you immediately contacted your attorney. Many people don't take that step and get into a serious hole. If your expenses don't catch up, then your attorney can work with your to adjust your payments and/or get a break in payments (lumping the missed payments into the remaining payments).

Hang in there.

[Carmella]

Follow your lawyer's advice and try not to worry. I know we all worry a lot and usually more than necessary. It's a very stressful time.

[flashoflight]

This is one area I'd be careful. Your attorney does not get paid until a few weeks after confirmation. It may not be in the best interest for you to stay in the 13 while it is in the best interest of your attorney to string you along after confirmation to get the two payments you did make. My concern would be the viability of maintaining income in the 2nd job for the entire five years. For example, if it is a rideshare/instacart/amazon flex app, I don't think you have a prayer of surviving the 13. I'm concerned that you are already in arrears at the 3rd payment out of 60.

That being said, your attorney is likely correct you can catch up with your current plan. Most trustees won't file the motion to dismiss until you are two months behind. Some trustees don't want sob stories so early and feel you'd be better off voluntarily dismissing early if you can't get to month 3/60. That might be the reason why your lawyer is hesitant at mentioning anything so early.

I'm not sure what you should do. Your catch-up plan is viable. But the rest of the 13 seems questionable. You can't have your income decrease and expenses increase like this throughout the 13. If you dismiss prior to confirmation, you can get a refund of the payments made to the trustee. Can you get rid of the 2nd job for six months and do a 7? Are you trying to save a home from foreclosure? On top of that, you need to start saving an emergency fund to address issues such as unexpected car breakdown or you will never get through the 13. I know it's very hard to save a dime during the 13, but you really, really have to save money by cutting your expenses even further in order to survive the 60 months.

[Carmella]

flashoflight brought up some good points.

It made me think of some questions.

How old is your car? Is it a car that is going to last and just needed a major repair at this time. Will it need other repairs or was it just costly for example my car needed new tires and it was a huge expense for us, but my car is newer and I know I won't have to dump money into often. Versus the car my husband had which needed so many repairs we cannot afford to fix it. We are now a one car family until BK is over.

How steady is your second job? Was it something unusual when you didn't have any hours or does it happen frequently/occasionally? I am going to assume since your payments are higher you probably have had steady hours. I also have a second job that I lost during Covid since it is in a nursing home and they did not allow people to travel to more than one building. That made it tough on us because I lost that income for about 14 months. My husband picked up overtime, but it was less than what I would have made. My hours are up and down with my second job it can be anywhere from 0 to $800 a month, usually closer to $300 a month. I was sick this weekend so I could not go into my second job--if you have cold symptoms (even if it's not covid) you cannot work. I wasn't thrilled with it being incorporated into the BK as "my income," because I knew it could change suddenly, but never expected a pandemic.

These are things to think about and what will you do if you lose hours in the future and can you still make the payment?

Or was it just a freaky month because the car needed repair, the childcare was higher than expected and you didn't have hours? Does this happen often or just on occasion. If it's on occasion will you be able to set aside an emergency fund? Go over your expenses and see what you can swing. I still do not have an emergency fund because it seems there is always some sort of expense lingering.

If you feel you can swing the payment in the future definitely don't sweat it and make the payment as you can afford it for this month.

I think most of us have some anxiety with it being a 60 month plan that we can survive all the ups and downs that life gives us. Just take it one day at a time.

[98daffodils]

Thank you all so much. Before this all happened I was a person who not only paid my bills on time, I paid them early. But unfortunately a nasty divorce and the death of a parent really shakes life up. I sincerely appreciate all of you. My attorney always seems too busy to talk to me and everything I have learned about how this works has been on this forum.


flashoflight and Carmella- The second job is a teaching job at a college. Usually it is pretty steady because I have a contract that guarantees at least one class per semester. The issue is I don't get paid when I am not actively teaching. I did not have the hours for the month of August, because summer session ended in July and fall didn't start until the last week of August. So, that meant no extra money at all in August, which put me down already. Then, my ex billed me for more expenses than normal. For example, my plan lists an average payment to my ex of $183 a month. However, it is only an average, because I am responsible for a certain percentage of whatever expense my ex incurs. So, one month that might only be $150. But, with summer camps for example, it was $1600. I explained all this to my attorney but it is like it is going unheard. I keep saying "hey, what happens when I get hit next summer with the camp bill?" My attorney says we can revisit etc., or I will figure out. I am like what???

Also, the Trustee initially rejected my first plan, citing he wanted more money. (My other job is a FT corporate job with a much higher salary) so they are counting both incomes and asking for more. I put my foot down and said look I can't hardly pay the $1400, and now you want more? So my attorney proposed an amendment where it stays where it is for 3 years and then goes up to $1700 at year 4. My attorney said that is based on if I get a raise. And I am like - what if I don't?

Sadly, even if I drop the second job, I still don't make the means test for a 7 in my area.

As for the car, it was an unusual expense. The car is only a couple years old (still in a loan, but it is not in the plan) and it needed new brakes and rotors on front and back, so that is what got me.

You guys are absolutely right on saving - I am trying so hard but it is hard when both my kids play sports and my ex hits me with these bills. I keep telling my attorney because it is a percentage, it is uncertain what the amounts will be. I don't think putting an average in there was smart or fair, but that is what I was told needed to be entered. I did tell the Trustee when asked about it in my 309 meeting that it is a percentage and that is an average, but he just said thank you. After that he asked for more money so I have no idea what anyone is thinking.

I am wondering if I can pick up like a door dash job when my kids aren't with me and earn money for saving? Or does that count against me in terms of making more money?

Thank you guys!

[flashoflight]

I'm feeling a lot better about your 13. Your second job seems pretty stable.

Almost everybody gets an objection to the first plan. If you didn't, your attorney wasn't aggressive enough.

Averaging the expenses is routine. Some months you win and some months you lose. You have to sock away money during the months you win. My electric bill is like that. Summer is very bad but winter is very good in California. Many of my other bills are like that. I'm going through a time period where I don't have to put anything into the car other than oil and gas. But I know in a few months or a year, I'll have to put more than I'd like into the car. Or maybe I'll get lucky and put nothing in for five years because it's a Toyota Corolla. Over time, you'll learn to cut corners in your budget when coming up short with the same tricks that folks on welfare and food stamps use. In terms of priority, you pay your rent, then car, then the trustee payment. I don't know the consequences of being in arrears to your ex, but I'd be tempted to put the trustee in front of your ex and make payment arrangements with the ex instead. Then food and household. Yeah, I don't eat if I'm running short but I feed my pets normal just like you would never let the kids know you are in BK. I haven't starved in two years but I'm willing to do it if necessary.

Sometimes the trustee and your attorney will put you into a step plan where your first payments are lower than usual so you get used to the 13 and then raise you later on. Normally step plans are used when auto loans/401k loans are paid off so you can devote that paid off payment to the unsecured creditors.

I am wondering if I can pick up like a door dash job when my kids aren't with me and earn money for saving? Or does that count against me in terms of making more money?

I'd ask your attorney that because it depends on the trustee. Some trustees don't monitor tax returns carefully. My gut feeling is that your trustee will grab every last dime of that extra income for the benefit of the unsecured creditors. There may be a provision in your confirmed order that requires you to notify the trustee of any employment changes.

[Carmella]

At least your expenses this month were a tad unusual and not the common. With the summer expenses (I know how the daycare/camps go I had my daughter in them back in the day) those will happen each year I would do your best to stash money aside for that. Or if one month the average to your ex is low then save that cash so you can use it when needed.

The first few months will be the hardest, maybe the first 6 months. I know I made mistakes overspent even if it was something necessary sometimes it was bad judgement that I didn't realize was bad at the moment. There were times we literally had less than $50 to our name. But I did start budgeting better and playing games like, ok I guess I have to make a really low cost less desirable meal or eat Peanut butter sandwich at lunch this week... And then stocking up on what I could to have certain foods on hand or buying more stuff at Aldi's even though it was a pain to get there. Find whatever way to cut corners no matter how small it will help. My husband has high anxiety and I cannot discuss some of the details with him that was hard at first. I had the find the right time to discuss and felt like I was on my own most of the time.

I know it's hard with kids and your kids are younger, but not so young they won't notice differences. My daughter was in college and in a sport and then graduated college and we were still supporting her because you know graduation doesn't mean you are able to support yourself the next day...but we were told she was an adult and since our BK plan had college expenses they wanted to up our already high payment. That was our objection to the BK 13 and we won it/ didn't have to pay more since we were paying back 100% already. We never discussed BK with our daughter because she had some issues going on and didn't want to add more stress to her life since it was OUR problem not hers.

Your final papers will spell out everything that is expected like if you need to turn in tax returns or report any raises. Are you paying back 100% of the debt? If you are on 100% payback then it's very unlikely they can ask for a higher payment and get it because the creditors are being paid. If it's under 100% they could up your payment if your income increases. I have read on here if you hit 10% increase is when they really question it. Check all that out before trying to pick up any extra work. It won't be worth it IMHO if it's just going to make your payments higher.

I don't like the average thing even and my averages are probably not even accurate since I was so unsure about everything at the time we filed. I have a step plan, but like flashoflight said it's when our car loan (on the car we cannot repair) ends they will raise our payment to the trustee.

[98daffodils]

Thank you both so much for your guidance. I really appreciate it flashoflight and Carmella. I wrote out a budget, so I will keep revisiting it to see where I can cut corners to save, and I will definitely set aside for upcoming emergencies. Like when they did the brakes and rotors, I know I need new tires soon - and that will be a whopper too.

When you guys say final papers do you mean once the plan is confirmed?

Yeah unfortunately the increased payment that has been proposed isn't for my car. My car loan won't be paid off until 2026. My attorney did say that because the car loan will be paid off 4 months before my 5 years is up on the BK, that it could go up even more because the car payment will be gone at that point. But, the increased plan my attorney proposed now is because the Trustee wanted the $1700 now, and we told him I can barely pay the $1400, so give me a few years to get there. Once my car is paid for (for those remaining 4 months left on the BK) I figure it will go up to $2100 since my car payment is 400.

I believe my plan is only a 22% plan. I had a ton of medical debt and things I had signed for that were for my mom. She passed away and they fell to me. The divorce took my savings.