Owing Taxes in a CH 13.

[spidge]

We are four payments into our Ch 13 and it looks like this tax season is not going to be friendly to us. Its my own fault as I changed my withholdings to late last year and am looking at about owing 2,200 including state taxes. This year I am set to over pay by a couple hundred at most. 2009 taxes are already in the plan and they were substantial.
Even though I may be able to pay this it will cause problems for the summer when my wife does not work for 2 months. The trustee considered the summer but averaged the payments over the entire year. April brings an extra paycheck as I get paid 26 times a year and I am maxed out on my wages at work and will receive a lump sum equal to the raise most others will receive. My plan was to use these to replace the lost wages from my wife to get through the summer.
I am 3 weeks ahead on my trustee payment and pay my mortgage on the last business day of the month, but it sure would be nice to be able to get the mortgage a couple weeks ahead to.
So, should I speak to my attorney to see if the trustee would give us a brake in the month of April? I hate to put the BK at risk and am enjoying the relief I feel from it, but the summer already looks like a rice and bread period that is no fun for the family. We can make it but it would be tight. How common is it to ask for a payment to be deferred?
I guess I am looking more for other shared experiences as I know the answer is to simply ask the attorney or suck it up.
Thanks.

[Pandora]

Hi spidge,

Actually, I dont think your extra pay period actually IS "extra" - it should've been calculated into your Ch. 13 as you have to state how pay periods fall (bi-weekly, twice a month, monthly, etc). In our plan, hubby gets paid twice a month (24 pp - military dates 15th/30th) so that means we will have 2 months with 5 weeks basically. This makes a huge difference when trying to take out money for things to be paid monthly as we have to factor in 2 extra weeks essentially based on pay periods. I think the bigger question is if the trustee averaged out your wife's income and you still have to rely on your bonus and what you perceive to be an "extra paycheck" to get you through when she doesnt receive pay, perhaps you need to amend your schedules. What percent of your payment is going to unsecured vs. secured? That will make the difference on if you can amend or not.

As far as deferring - if you're this early into your plan and are looking to defer, then again, you need to take a hard look at your expenses / schedules. I dont know if the trustee will allow a deferment due to "no fun for the family this summer" type of scenario. On another note - you should do a projected tax return for this year based on what you're paying in now for taxes a pay period, using the same exemptions you used this year; it will tell you if you're going to owe, break even, or get any $ back. We do this every year to ensure we will not owe any money.

How are you ahead on your trustee payment? I'm assuming you mean you mailed it in earlier than the due date, i.e., payment due on 1st of month, you mailed it out 15th of previous month to ensure it arrived in time. ??? Thats how our payments are done (albeit we have it done via payroll), but its not considered being "ahead" on the payment, as the trustee simply holds it all until the date he pays out to creditors (usually the 28th of the month).

[spidge]

My plan is for 12 monthly payments per year with the 2 extra paydays calculated into the overall income and therefore the plan. I squeezed my budget even further to pay everything based on a 12 month calender (24 paydays) so that when these extra paydays come up we only need living expenses like food and gas for cars out of those checks leaving the remaining amount to build on an emergency fund which turns out to be about 2/3rds of the check. Although this time around it will all go to taxes it seems. Every situation is unique and I do work hard to take advantage of the opportunity of paydays not dedicated to mortgage, trustee payments, or bills. So the plan was to have it take us through summer but will now go to taxes.

Is what I intended by my idea of being ahead on the payment is my ability to have the funds available to pay the trustee or the mortgage. If I let it sit my wife tends to think its fair game so off it goes to where it is intended. Next month the trustee payment will be done through payroll deduction and I may just open a separate account to insert enough of my payroll check into it to cover the mortgage and use the auto pay method through the banks software.

My "no fun summer" absolutely does not mean we normally expect to take a full on vacation or go to Disneyland it simply means that there will be no wriggle room for going out to dinner or to a movie. Extra snack foods and such will be rare in the house during this period. I think I can say with confidence that we all have different standards as to what a tough financial time would be. For instance a friend of one of my daughters is going through the same BK issues with her family and when the girl complains about going without my daughter can tell her how much worse it can get. Her family still has twice the house and many more comforts than we do.

The good news is that my 401k loan matures at the end of June (no pay for wife) so July (no pay for wife) looks a little better as the sum of the loan payment is more than half of her monthly pay. At the end of August we should almost be golden as long as there are no major issues. We all dream of that.

Signed,

Still dragging anchor but very close to speeding toward the light.

Why? We have been making my 401k loan payment for 5 years and it is the same as the trustee payment so we are already accustomed to paying it out.

[spidge]

If I have some extra money to apply toward my 2010 taxes and I send it to the IRS will it effect their claim on my current ch13 BK. This would only pay a portion of what I owe. I know I could have them simply modify the claim, but I prefer to try to pay them myself.

[spidge]

Still hoping for some advice or shared experiences here. When I filed on time I owed a little less than $1200 and I may be able to put a few hundred toward it. How should I approach this?