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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
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Experience:  Bankruptcy professor.
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In February 2012 I filed Chapter 13 Pro Se. I recently had

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In February 2012 I filed Chapter 13 Pro Se. I recently had my 341 hearing. The trustee commented about several details in my plan that may need to be amended.

First, the amount I had listed as the value of my household furnishings. I had $15,000 which the trustee said is questionable. The trustee, "If you were to sell the assets at fire sale prices, would you get $15,000 for them?" I replied, "probably not". "Then you have overstated the value and you should adjust the value and amend the plan, otherwise I will object to the plan", was the trustee's reply. I plan to file an amended plan to reflect $5,000 as fire sale value. Is this more realistic? What effect will this have on my plan?

Second, the median income for a family of two I had listed as $64,288.00 and the trustee commented the amount is incorrect. I said I did not think it is incorrect and that I would double check and amend it if I found an error. I double checked at the following link and found the $64,288.00 is correct. http://www.justice.gov/ust/eo/bapcpa/20111101/bci_data/median_income_table.htm. Can you confirm this is correct for VA?

Third, prior to the 341 the trustee had asked me to send my two most recent months pay stubs. I had earned a good deal of unexpected overtime during this period due to setting up a new market area. The trustee used these to forecast my annual income for 2012 and said it appears I will have more income than I forecast in my plan, exceeding the median income listed and I assume would require me to amend the plan and make it a 5 year plan as opposed to a 3 year. I told the trustee my income varies from month to month and the most recent two months pay stubs would not reflect what my annual projected income will be. The trustee asked, "do you have new information about your job regarding your income?" My answer was no. Actually, I may have misunderstood the question. I do have relatively new information (I used this new information to forecast my annual pay of $62,400 for the plan). My schedule for April shows my hours will be substantially less than Jan. and Feb. with no overtime.

My question is: I thought I was required to use the six months prior to filing Chapter 13 as the basis for proving my annual income. I am certain the six months prior income supports the $62,400 annual that I forecast I will earn this next year. My Federal income tax filing for 2011 is about the same. My employers have indicated my job situation will change from previous years. There will be less overtime, however I will be given a $2.00 per hour raise. With this new information I extrapolated to forecast my income for the plan and I arrived at $62,400.00. Do I need to write a more detailed explanation of how I arrived at the $62,400.00 and send it to the trustee? Should I provide a spreadsheet forecasting my next twelve months income showing slow months vs. busy months? What do I need to do if anything to show I have not underestimated my annual income so my plan will be accepted?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 2 years ago.
Hi JACustomer,
How many rooms does your residence have?
Customer: replied 2 years ago.
Living room, kitchen, office, two bedrooms and a loft/TV leisure room. Six rooms in all.
Expert:  cfortunato replied 2 years ago.

1) The general rule of thumb is $500 per room, unless you have particularly expensive furnishings, or particularly shabby furnishings.

2) According to the US Justice Department website, which is the official source for all state medians, you are correct. Here is the website:

http://www.justice.gov/ust/eo/bapcpa/20111101/bci_data/median_income_table.htm.

3) The Chapter 13 plan payment is supposed to reflect your income going forward, and can be modified with a change in income, so yes, if you can prove to the trustee that your future income will be less than in the past 6 months, then your plan payment should be less.

However, the length of the plan depends solely on the average monthly income for the 6 months prior to filing. The length of time for the plan repayment cannot be changed with a change in income.

 

I think this is what you wanted to know. If not, please let me know.
Thank you.

 

 

 

Customer: replied 2 years ago.
So just to be clear about question 3, the trustee intimated they might reject my plan because they think I might be under estimating my disposable income based on recent pay stubs? Do I need to argue or should I agree my income might be higher than what I first forecast and amend my plan?

While I agree that I might make more money this year than I forecast, I also might have under estimated my household expenses as well. For example I might need to budget more money for unpredictable and rising medical expenes, fuel prices, food prices, etc. If I do amend my plan to show a higher income than my first projection, is it unreasonable for me to increase my buget amounts for some of my household expenses and amend the plan for increased expenses at the same time?
Expert:  cfortunato replied 2 years ago.

Your plan payment is supposed to be based on what your income will be going forward - if you can provide proof of what your income will be going forward. If not, a trustee has to approve the plan based on what the income has been before filing.

Most expenses are pre-determined amounts that, like the state medians, vary according to where the debtor lives, and are not based on the actual expenses of the debtor - unless there are special circumstances. If you listed your expenses as less than the amounts allowed for your area, or if you have special circumstances that require you to spend more than the amount(s) allowed in your area, you can amend your plan to increase your expenses.

cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
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