New here with a question

[Michellehope]

Hello. I’m new to this forum. I wanted to say hello and i’m so happy I found this place. My husband and I have found ourself looking at chapter 13 as our only way out of tax debt. We are a family of 5 with two teenagers and one grade schooler. My biggest question is, what happens if there is an emergency within the 5 year plan? I’m thinking big unknown expenses like a medical expense, loss of employment, drain field goes to crap (literally lol) etc. Its all the “what if” scenarios that go through my mind as we begin this journey.

[justbroke]

Welcome to BKForum.

A Chapter 13 is generally flexible in that your attorney can have the payment suspended (abated) for a few months, change the amount in the plan for an emergency (a "step" plan), or convert the plan.

A plan that has a lot of disposable monthly income (DMI) is more likely to survive those little hiccups than a plan that has $0 in DMI. For example, I had to replace a septic line in the middle of my plan which included removing portions of a concrete driveway and then repaving the concrete. I had enough DMI so that I could ask the court to abate payments for three months and then resume payments at a higher amount spread over the remaining months of the plan (a step plan). Now, please know that I still had to pay my secured debt, so only my DMI was removed from the plan payment for those three months. I was still making over $7K a month in plan payments for vehicles and my home payment (plus Trustee fees).

If you have major expense and your Chapter 13 can't survive, then you could be able to convert or seek a hardship discharge.

It's best to concentrate on the positives rather than the "what-ifs". You should create a rainy day fund. You do this by reducing your expenses even further than the Chapter 13 forces you. For example, if you get $400/month for entertainment, try to spend only $100 and save the rest! If you have vehicles, the ownership allowance is probably much more than you actually spend. Save that money! I had to put on 4 new tires to my vehicle very shortly into my Chapter 13. Trust me, the rainy day fund is more like a "it's going to happen" fund.