Bankruptcy question for the lawyers (1 Viewer)

ghostguy123 · Oct 5, 2021

A friends mom filed chapter 13 bankruptcy last year. Since then she has made a lot more money. Probably double. However, all this extra money has been from picking up extra shifts for overtime. Her base rate is the same and her contracted hours are the same.

Would this cause her monthly payment to change? She has about 4 years left. This is in Ohio.

I would tend to think no, her payment would not increase.

-fish- · Oct 5, 2021

ghostguy123 said:
A friends mom filed chapter 13 bankruptcy last year. Since then she has made a lot more money. Probably double. However, all this extra money has been from picking up extra shifts for overtime. Her base rate is the same and her contracted hours are the same.

Would this cause her monthly payment to change? She has about 4 years left. This is in Ohio.

I would tend to think no, her payment would not increase.

There's a lot of "it depends" to this and what her plan says. At the most basic, if her increased earnings have increased her disposable income, she may need to pay more. She should talk to the attorney that did her bankruptcy.

ghostguy123 · Oct 5, 2021

-fish- said:
There's a lot of "it depends" to this and what her plan says. At the most basic, if her increased earnings have increased her disposable income, she may need to pay more. She should talk to the attorney that did her bankruptcy.

She has a meeting with him in a couple days.

If the payment would significantly increase that would sort of defeat the purpose of picking up extra shifts.

Dezbelief · Oct 5, 2021

ghostguy123 said:
She has a meeting with him in a couple days.

If the payment would significantly increase that would sort of defeat the purpose of picking up extra shifts.

If she has to pay more, will she get out from under her obligations sooner?

ghostguy123 · Oct 5, 2021

Dezbelief said:
If she has to pay more, will she get out from under her obligations sooner?

I highly doubt it because her 5 year payment plan would not pay off all her debts

-fish- · Oct 5, 2021

ghostguy123 said:
She has a meeting with him in a couple days.

If the payment would significantly increase that would sort of defeat the purpose of picking up extra shifts.

If she makes significantly more money it sort of defeats the purpose of creditors having agreed to accept less than they were owed.

ghostguy123 · Oct 5, 2021

-fish- said:
If she makes significantly more money it sort of defeats the purpose of creditors having agreed to accept less than they were owed.

Well, from what I can gather, the creditors HAVE to agree per bankruptcy law. They dont really have a choice in the matter.

Again, she is making more right now because she is picking up every extra shift she can. She is motivated. These hours are NOT guaranteed and could dry up any day.

I will assume you are just trying to make a point and also assume you understand that working a bunch of extra hours for "free" would be a bit silly.

-fish- · Oct 5, 2021

ghostguy123 said:
Well, from what I can gather, the creditors HAVE to agree per bankruptcy law. They dont really have a choice in the matter.

Again, she is making more right now because she is picking up every extra shift she can. She is motivated. These hours are NOT guaranteed and could dry up any day.

I will assume you are just trying to make a point and also assume you understand that working a bunch of extra hours for "free" would be a bit silly.

Since you now claim to know bankruptcy law, I'm going to bow out.

ghostguy123 · Oct 5, 2021

-fish- said:
Since you now claim to know bankruptcy law, I'm going to bow out.

Please do

-fish- · Oct 5, 2021

This is why lawyers don't do free advice.

General Malaise · Oct 5, 2021

Odd strategy to ask the FBG lawyers a question about bankruptcy and then take a giant poop on the only lawyer to attempt an answer.

Chemical X · Oct 5, 2021

i am no eggspurt, i do commercial workouts and am familiar with BK. iirc, bk 13 involves an impartial trustee and a submitted plan, for either 3 or 5 years, depending on circumstance. the plan is obviously for less than creditors would want, that’s the point. plan is submitted to the court and, if accepted, confirmed. payments based on the plan are made to the trustee, who then administers funds. at the end, if the plan is met, the bk is dismissed. the plan is called a wage earner plan because you usually need to be making some money in order to pay in to the plan. so, if wages increase, there is no way for the plan to be adjusted accordingly. once confirmed, i believe, it is what it is. just don’t default it…..

-fish- · Oct 5, 2021

Chemical X said:
i am no eggspurt, i do commercial workouts and am familiar with BK. iirc, bk 13 involves an impartial trustee and a submitted plan, for either 3 or 5 years, depending on circumstance. the plan is obviously for less than creditors would want, that’s the point. plan is submitted to the court and, if accepted, confirmed. payments based on the plan are made to the trustee, who then administers funds. at the end, if the plan is met, the bk is dismissed. the plan is called a wage earner plan because you usually need to be making some money in order to pay in to the plan. so, if wages increase, there is no way for the plan to be adjusted accordingly. once confirmed, i believe, it is what it is. just don’t default it…..

If there is a significant increase in disposable income without an accompanying increase in expenses, it can get adjusted. It depends on the terms of the agreement and how significant the increase is.

-fish- · Oct 5, 2021

General Malaise said:
Odd strategy to ask the FBG lawyers a question about bankruptcy and then take a giant poop on the only lawyer to attempt an answer.

We keep a secret list.

Chemical X · Oct 5, 2021

-fish- said:
If there is a significant increase in disposable income without an accompanying increase in expenses, it can get adjusted. It depends on the terms of the agreement and how significant the increase is.

i did not know that. i wonder what the significant increase is defined as…..?

-fish- · Oct 5, 2021

Chemical X said:
i did not know that. i wonder what the significant increase is defined as…..?

As far as I know it's subjective and I can't point to a particular benchmark. But when you're dealing with the commercial side, you're usually not going to see a significant increase in income without an accompanying increase in expense. With individuals, a sudden jump in income makes it look like the disclosures relating to ability to pay in the course of the process were intentionally understated, which would potentially work a fraud on the creditors. Those can get reworked, but there is some room for reasonable increases in income without reworking the plan.

General Malaise · Oct 5, 2021

Chemical X said:
i am no eggspurt, i do commercial workouts and am familiar with BK. iirc, bk 13 involves an impartial trustee and a submitted plan, for either 3 or 5 years, depending on circumstance. the plan is obviously for less than creditors would want, that’s the point. plan is submitted to the court and, if accepted, confirmed. payments based on the plan are made to the trustee, who then administers funds. at the end, if the plan is met, the bk is dismissed. the plan is called a wage earner plan because you usually need to be making some money in order to pay in to the plan. so, if wages increase, there is no way for the plan to be adjusted accordingly. once confirmed, i believe, it is what it is. just don’t default it…..

What happens if they default? I don't understand how bankruptcy works. At all.

I do enjoy Eddie Izzard's bit on declaring bankruptcy, which I think The Office totally ripped off.

Gilroy34 · Oct 5, 2021

-fish- said:
This is why lawyers don't do free advice.

This is why lawyers have a bad reputation

CletiusMaximus · Oct 5, 2021

General Malaise said:
What happens if they default? I don't understand how bankruptcy works. At all.

I do enjoy Eddie Izzard's bit on declaring bankruptcy, which I think The Office totally ripped off.

If a Chapter 13 debtor defaults, the case is dismissed and there is no discharge. The Court will give the debtor a chance to cure the default, sometimes a second or third chance, but the case will eventually be dismissed if the default is not cured. The creditors get to keep whatever they were paid (applied to the debt), the lawyer and trustee get to keep whatever fees they were paid, and the debtor is back at square 1 with the lawsuits, garnishments, power getting shut off, etc. I do commercial insolvency work only, not consumer bankruptcy, but my understanding has always been that a large percentage of chapter 13 cases default. 5 years is a long time to live under a tight budget, sending those checks to the trustee every single month. Most people can't do it.

CletiusMaximus · Oct 5, 2021

ghostguy123 said:
-fish- said:

Since you now claim to know bankruptcy law, I'm going to bow out.

Click to expand...

Please do

Really, you're both right. If she's making significantly more money, it is possible she'll have to modify her plan. This is highly fact specific, so @Fish first reply is spot-on - talk to the lawyer. There's a good chance nothing will change. At the same time, its also obviously correct that she has little incentive to work additional hours if it all just goes to her creditors. In many cases, no one will care enough to make her go through a modification. If she has to do that, she can probably bury most of the increased income through increased (necessary and reasonable) monthly expenses, putting it in a retirement plan, upgrading her car, etc.

ghostguy123 · Oct 5, 2021

Up to this point in the repayment process nothing has changed with expenses. The income has changed because she has been working like 20 extra hours per week for the past 5-6 months. Her income for this year is going to be at least 50% more than last year. Maybe more if she keeps picking up extra shifts at that pace.

Side note. I just learned her car is crap and needs a lot of work. I imagine buying a car during the bankruptcy process can get a bit tricky.

Juxtatarot · Oct 5, 2021

ghostguy123 said:
Side note. I just learned her car is crap and needs a lot of work. I imagine buying a car during the bankruptcy process can get a bit tricky.

She should talk to the lawyer about the increased income and the need for the car. It’s possible they will allow her to get the car since she now has more income and can afford it. Maybe a win for everyone. Of course she or a dealer will have to find a willing lender too.

ghostguy123 · Oct 5, 2021

Juxtatarot said:
She should talk to the lawyer about the increased income and the need for the car. It’s possible they will allow her to get the car since she now has more income and can afford it. Maybe a win for everyone. Of course she or a dealer will have to find a willing lender too.

She is going to see him in a couple days.

I swear a few years ago she had a car loan that was like 15%, maybe higher. She has been......bad with all things money.

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