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Unrealistic Chapter 13 Payment?

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Unrealistic Chapter 13 Payment?

Has anyone else ever had a Chapter 13 payment that was just completely unrealistic?

 

I've sat and stared at sites like legalconsumer.com's means test for hours.  I've completed and re-completed schedules I and J.  I just don't see what I am missing.  

 

Situation:  Married, but I am the only one filing.  4 person household.  Median income in our state is $85k and some change.  Means test puts our gross income of almost $170k, but its only due to a couple of large side jobs my husband completed in late Summer.  As it sits, our attorney is figuring a Chapter 13 payment of roughly $2,144.56 (assuming all claims are filed).  Of course, we would opt to wait until the side jobs "fell off" the 6 month look back period...but that still likely wouldn't land us under the median income.

 

Here's where my issue comes into play.  Taking into account what is actually deposited into our bank account each month (because I can't pay things with money that isn't there), our income minus our debts leaves us about $645 each month.  This figure is removing my debt from the montly equation, but does not take into consideration money for groceries or gas (which would bring us close to zero).  I have to be missing something.  Where would I possibly come up with an extra $2,100 a month?  Is there a different site I can use to run this means test?  I know that we don't qualify based on the initial income portion, but is there a site that runs through the whole thing??  I don't want to start down a road that I know is going to lead to failure, it just doesn't seem like a realistic approach.

 

Thanks in advance for any input, I appreciate it so very much!  

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Message 1 of 11
10 REPLIES 10
Valued Contributor

Re: Unrealistic Chapter 13 Payment?

I am confused by your post. You say "our income minus our debts leaves us about $645 each month" what debt are you talking about?
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Message 2 of 11
Established Member

Re: Unrealistic Chapter 13 Payment?

House, car, insurance, utilities, etc etc
Starting Scores:

EQ: 673
TU: 675
EX: 687

Wallet:

Chase Marriott Rewards: $8500 // Cap One Quicksilver: $1000 // Discover IT: $5100 // Cap One Platinum: $3800 // Cap One Platinum: $1280 // Credit One: $1000 // Victoria's Secret: $800 // Lowes: $6000 // Merrick: $3750
Message 3 of 11
Valued Contributor

Re: Unrealistic Chapter 13 Payment?

I would consider talking to an experienced BK attorney and see what they have to say.

 FICO 8
Message 4 of 11
Regular Contributor

Re: Unrealistic Chapter 13 Payment?

My advise is to sit down with your attorney and make him or her explain it all in detail.  Remember, that is what you are paying them for, and this a HUGE decision.  I'm wrapping up my final 4 months on a 5 year CH13 and let me tell you, it is critical that you get this payment to something reasonable.  

 

Now, reasonable doens't mean it won't be difficult, but you are 100% correct in that your numbers do not appear to be realistic.

 

Let me give you an example, and my payment is around $900 per month.  When we started the plan our joint annual income was around $110K gross.  Now, there are MANY factors in the means test, but that gives you some reference.  

 

Communicate with your attorney, that is so important!  If they run the numbers, when they sit down with you to review everything and you have a concern about the payment being too high, tell them up front. The truth is, they have things they can tweak on the forms to change how much you pay. Be realistic about your budget, and you have to have some wiggle room to succeed in the payment plan. Life happens, you can't pay every penny into the plan.  

 

I met with a couple of attorneys before I selected mine, and BK is all he does.  I think that is important because he had the experience to know in the real world what is reasonable based on his years of working with others.  He can leverage that knowledge to know what he thought the lowest number could be put forth to be approved.

 

This is just my expereince and opinions. I hope that helps you.  Good luck!

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Message 5 of 11
Regular Contributor

Re: Unrealistic Chapter 13 Payment?

I feel your pain, my payments are currently $2696.02 until June 2019 then for the last 39 months my payments will be $2448.  I am not on a 100% payback, but it covers mort, mort arrears, IRS, car payment, and trustee as both my lawyers have been paid in full.  It's been very hard but I'm retired/disabled vet so I had no choice.  Luckily for me I was just approved for SSDI so it will allow me to breath again since SSDI is not considered income.  While I know most folks do not have a large payment, mine was so high because my first attorney kept saying I could do a Ch 7 only to find out in the end it had to be a Ch 13.  Then I had family emergency and had to skip 2 payments and do a modification before being dismissed.  So it went up again hence the current payment of $2696.02 was to catch up to the plan.  I'm looking forward to June when the payment stabilize to $2448.  Still high but that's because my car payment was high as well and could not be crammed down.   I guess I'm lucky it's just me I have no idea how I could have made it if I'd had kids or a pet (my dog died in 2017) a month after I was confirmed.  I miss him dearly but would have been even harder with vet fees and his food.  One things for sure I NEVER WANT to go through this again!!!  Best of luck to you hope you can find a good attorney from the start and not have to end up like me paying a second attorney just to get back in the plan.

Filed Ch 13- 8/29/17
Message 6 of 11
Established Member

Re: Unrealistic Chapter 13 Payment?

I have an attorney who came very highly recommended and who has great feedback on a variety of forums.  I was just very surprised at the amount of the payment. 

 

I have not yet had the opportunity to sit down and discuss what is included in that payment, however.  After doing some more reading, I am hoping that it includes everything but our house.  I know for sure our house is not included, but if everything else that is either a joint debt or is just my debt is included then that would at least make more sense to me.

 

Also curious - does anyone have any experience with expense reimbursement being counted as income?  I cannot find anything that says one way or the other.  My husband will sometimes have to stop by a Lowe's or Home Depot to purchase things for work.  He turns those receipts in and is reimbursed.  Its included in his paycheck, and is marked accordingly.  The reimbursement makes our bank account "whole" again for money used for the company, it isn't extra income.  That is inflating our income by about $3k for the 6 month period.

Starting Scores:

EQ: 673
TU: 675
EX: 687

Wallet:

Chase Marriott Rewards: $8500 // Cap One Quicksilver: $1000 // Discover IT: $5100 // Cap One Platinum: $3800 // Cap One Platinum: $1280 // Credit One: $1000 // Victoria's Secret: $800 // Lowes: $6000 // Merrick: $3750
Message 7 of 11
Contributor

Re: Unrealistic Chapter 13 Payment?


@MommaOnTheMove wrote:

 

Also curious - does anyone have any experience with expense reimbursement being counted as income?  I cannot find anything that says one way or the other.  My husband will sometimes have to stop by a Lowe's or Home Depot to purchase things for work.  He turns those receipts in and is reimbursed.  Its included in his paycheck, and is marked accordingly.  The reimbursement makes our bank account "whole" again for money used for the company, it isn't extra income.  That is inflating our income by about $3k for the 6 month period.


Discuss it with your attorney - I have a similar situation, in the end it wasn't an issue and isn't being counted as income but you/your attorney just might need to explain it to the trustee 

Message 8 of 11
Regular Contributor

Re: Unrealistic Chapter 13 Payment?

I would call another attorney. I went through the same thing. I changed attorneys and the whole process became 10 times smoother and realistic to say the least.
Message 9 of 11
Regular Contributor

Re: Unrealistic Chapter 13 Payment?

New attorney (as said).  They are the people that can work the magic on your numbers.  They know what the trustees will balk at and what they will let through in terms of totals for expenses.  The only successful 13's are the ones that dont leave you broke for 3-5 years.  Incidentials will happen every month.  You will need car plate stickers, insurance copays, kids bday gifts and so on.  You need to make sure your expenses are properly padded to allot for what might happen.  The trustee wont care if your car needs work.  They will just dismiss your case and screw you if you miss payments.  The attorney is KEY here.  Their relationship with the trustee can make or break your 13 in these initial stages.  Its wise to get a few consultations and see what each comes up with after they fill our your expenses.  Trust me, this is not necessairly an exact science.  Dont let them doom you with an unrealistic payment.   

Message 10 of 11
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