Chapter 13 bankruptcy question..

Factual Questions
1

Mr Kitty and I filed chapter 13 in January of this year.* Since then we’ve been diligently following the terms of the bankruptcy, but it’s really, really difficult- they take all but $400 of my check each month, and all but $350 of his disability check each month. That $750 has to cover all of our living expenses, and it’s just not really possible- I can’t imagine doing this for the next 4.5 years. He can’t work (actually just got out of a two-week hospital stay) and I’m already working way more hours than I should be. So I’m looking for a job that pays more.

The question I can’t get my bankruptcy lawyer’s assistant to answer is this: If I get a job with a better salary, can they increase the amount of the bankruptcy payments? They discharged everything but our state/federal taxes, the house, and my student loans (which are in deferment until the bankruptcy is done)… can the other debts be somehow re-instated if I start bringing in more money?

We’re in AL if it makes a difference… and I realize no one else out there is my lawyer (which is a good thing, considering how difficult it is to get a straight answer from those folks…).

Thanks in advance!

[sub]* Before anyone points at us and calls us idiots who can’t handle our finances, it was primarily due to his terminal illness (CF) finally rearing its ugly head, resulting in the loss of his job in May 08, a $350,000 bill from his 38-day hospital stay from June-July 08 (eight days on a vent), and him being declared disabled but unable to be approved for SSD until December while we tried to get by on my $34,000 per year that sort of pushed us over into ‘perhaps this is the only choice’ territory. [/sub]

2

I’m sorry to hear of your bad situation.

Is there anything in your bankruptcy papers which speak to this issue?

3

As a general statement - If your “disposable income” goes up, and you’re paying less than 100% to your unsecured creditors, then they can raise your payments.

Wether or not they actually will is completely independant on wether or not they can.

However, somehow I think you shouldnt even be in a CH13 plan - you are not in a liveable budget (assuming that your housing and utilities arent also part of your payments to the ch13) and you should really consider ‘other’ options. (Converting to a Ch7, etc) - of course, I don’t know your full situation, etc. If your attorney isnt responsive to your situation - seek out a different one.

Modifying your payment - or even your plan - does not change which debts will be or wont be paid - those are already in your plan - what changes is how much money the ones that are getting paid, get.

What you dont want to do is fall behind on your ch13 payments - because if your case is dismissed, THEN all the creditors that are kept at bay (or possibly not getting anything at all) could resume collections, etc.

So, keep up the fight - and keep hounding your attorney for the help you need.

4

I don’t want to come across as a shill for another board but I’ve found the folks at creditboards to be helpful with these types of questions.

5

Hm… will definitely have to take a look at that link- thanks!

The only way it’s addressed in the paperwork is the admonishment to let the trustee know the very second anything changes financially- positively or negatively- or job-wise. I know the lawyer made a big deal out of making sure the trustee knew of any raises, bonuses, etc., but frankly the whole process had me a bit in information overload (we filed the bankruptcy literally 18 hours before our house was auctioned off the courthouse steps, so to say there were a lot of other distracting things in the mix is an understatement) so I didn’t think to explore that aspect of things further.

They actually tried to talk us out of a 13, but we’d have lost the house which is a huge problem… the house was built specifically to cater to Mr Kitty’s health issues, we’re located halfway between two of the major transplant hospitals in the south (he’s in process of getting on the list for a double-lung/possible heart transplant), and he’s not someone we can just pick up and move. Also, I think that psychological blow, on top of everything else, would have been too much for him. But yeah, we’re very conscious of not falling behind on those payments- we’re living pillar-to-post specifically so that we don’t.

If I’m reading this right, it goes to the heart of my question. The only creditors we’re paying through the trustee are the mortgage folks (regular monthly payment plus the late payments) and the IRS (state, state, and federal- and yes, we pay two state taxes each year). All the CC/hospital debt got… well, they got screwed, basically- all that got discharged 'cause no one showed up at the hearing to protest otherwise.

I guess I have this picture in my head that if at any time in the next five years our financial situation changes for the better, that all those folks that got screwed are lined up in order of importance, just waiting in the wings twiddling their thumbs, ready to charge in and say “Well, you have the money now! Gimme, gimme, gimme!” But this implies that the only people who can come after us for more money are the ones we’re actually paying now. And the IRS can’t take more money from us than what we owe, and the mortgage folks can’t randomly increase our payments, so… they actually couldn’t change the amount of the payments? Which would be awesome, because then maybe we could buy gas for the winter… :wink:

Thanks for the input so far, folks!

6

1st - nothing is “discharged” until you make the final payment and the case is “finished”. If those creditors did not make any claims, they are, in effect, “screwed” - but ONLY if you finish the plan. If they made claims, and you find that you have more “discretionary” or “disposable” funds, then yes, they ‘could’ get some of it - but that depends on the trustee - it is not up to the creditors at this point - it is up to the trustee to decide.

So, to sum up - if they made no claim - your change in income would make no difference at all - if they did make a claim, then your change in income ‘might’ matter.

Based on your statement about the house - then yes, the 13 makes much more sense to me, and sounds like the ‘right’ plan for the situation you were in.

Basically, at this point, if you are able to increase your income, then you also want to allow for a more “accurate” statement of expenses such that your disposable income doesnt really go up - and somehow, I dont think that would be a problem. (Just an opinion, this is where a real lawyer comes into play - it is thier job to argue your case to the trustee and the judge if needed).

(the point about when things are “discharged” is important - if your case is dismissed - ie ‘never completed’ - nothing is discharged and those debts go back to the status they were before the bankruptcy - so they are not ‘discharged’ yet - its nitpicky, but very important)

7

I currently in a 60 month chapter 13 plan. I was scheduled to pay $1696 for the first 35 months and then $2740 for the next 25 months. I am current on my payments (I have paid 42 payments/months so far). The payments went up b/c my child support ended. The dismissal letter states I must produce a letter with status of Child Support. I also had to give my lawyer 2012 tax return, last 4 pay stubs along with proof Child obligation is complete. I am current on my payements and I will have paid back 100% to all crditors that filed by payment 59. Is there any chance they will dismiss my case or paymnets raised? I have already paid over 78K into the plan

8

This one was a zombie and would have been in IMHO these days. Since it starts a new case, I think closing this one is for the best.

marine1369–If you want to open a new thread about your case, post it in IMHO rather than General Questions.

samclem, moderator