MasConcepts Incorporated

TLDR: variable income due to small business income fluctuations, complicated financial situations during Chapter 13, haven’t been paying all our disposable income to plan because original plan included $2000/month estimated tax payments based on how much we owed in federal taxes when we filed, but now we’re an Scorp and we pay much less in taxes. Afraid plan can get dismissed if bank accounts are scrutinized after sending bi-annual P&L. In a 32% Ch 13 plan.

We have a good bit of anxiety about our current plan. We’ve been in our Chapter 13 plan for 2 years this month, and a lot of unfortunate life circumstances have taken place during this time.

On top of this, we changed my sole-proprietor LLC to an S-Corp for tax purposes starting January of last year. This obviously affects how much we pay in taxes every year as I now pay myself a “reasonable wage” as a W2 owner, and then take the rest as shareholder distributions.

With this change, as well as the recent inheritance from my dad’s passing (which I was allowed to keep, happened after the 180 day threshold) and a litany of other life changes, we’re concerned about the scrutiny of the trustee of our payments. Since we haven’t been making $2000 monthly payments to taxes as allowed in our plan because we don’t owe as much in taxes (we owed $10k last year, and actually ended up getting a refund this year), we’ve spent that on other household items, moving expenses, child care expenses, etc.

We’re due to send the trustee our bi-annual P&L for the business by the end of this June. Our business was Q1 & Q2 income heavy this year, as a majority of our bookings took place in the first half of this year versus the second half, and are concerned the trustee will see the influx of income and scrutinize this, and request bank statements.

We’re on track to continue paying our plan as it currently is and are not anticipating any late payments, but are afraid the trustee can/will scrutinize bank statements and dismiss our case since we haven’t been paying all of our disposable income to the bankruptcy.

Is dismissal by the trustee something we should be worried about? Or, will the trustee just require a plan amendment and increase our monthly payments? Would an amendment to our schedule I&J make sense? Our rent has increased as well as many other bills, and our income fluctuates from year-to-year making budgeting very tricky.

Admittedly, we haven’t been budgeting properly. My dad dying took the wind out of my sails and my mental health has been in the dumpster ever since. I know that’s not an excuse for improper spending during the bankruptcy, but, alas.