Repayment Questions

[tmr76]

What is the name of your state?What is the name of your state? IL

It looks like we have a good case for bankruptcy from what I've read. The problem is, I believe they are only going considering this year's wages and I believe they are going to say we make too much and should enter a Chapter 13 instead of a 7. I wish they would look at the past several years, which is how we got into debt but anyway... We're supposed to meet with an atty in two more weeks but in the mean time, I had a question.

He mentioned something about $0.10 on the dollar toward the total debt. So excluding our car loan, it is not very much money compared to the total amount. I'm wondering, if I can come up with the total amount that is going to be spread over the 4 years (exc my car - can that even happen? can you reaffirm on a 13?) will I be allowed to pay it off and it be discharged or do we HAVE to be stuck in it for 4 years? If we can pay it off, will our credit still reflect the payment plan for 4 more years or not since the debt is gone? I'm just confused... I'd rather just be able to settle and not to the bankruptcy but I think since they one creditor is suing us, the biggest debt, they will not take that offer and will only do it if forced to by the court.

Any suggestions, comments, advice? This whole thing is really just overwhelming. Thanks

 

[Ladynred]

How much you MAKE is not the deciding factor in Ch 7 vs. Ch 13, its what you have LEFT at the end of the month after paying all your normal living expenses, your mortgage, and your car loans (provided you're keeping the secured property).

If you're left with close to zero disposable income after all normal expenses are paid, then there's not much reason to file a Ch 13 if you're not behind on any secured debts.

Here is an expense calculator, check your expenses with it:
http://www.ca-bankruptcy-attorneys.com/calculators/expense_calculator.html

Ch 13 lets you keep your assets, you would not have to reaffirm your car because its a secured debt and secured debts get paid back at 100% in a Ch 13.

The MINIMUM term for a Ch 13 is 3 years and you'll be stuck in it for at least that long.

 

[tmr76]

Thanks again for your response to my question. I contacted an attorney who, at first, mentioned paying this .10 on the dollar. Now, he says according to the general monthly expenses we provided (not even half of the items on that expense calculator you put the link to above), we'd have to do a Ch 13 and repay 80%. I don't see how considering we have very little left at the end of the month after expenses. I added up the payment he suggested we'd have and it totals what appears to be more than 100% of the debts I said we'd need to include in the filing.

Does that sound right? And why would he change from 10 cents to paying 100% on all of them, even unsecured (which most of them are)? I'm starting to question his knowledge of bankruptcy but my legal plan has only him in my area that I can use for this service. Otherwise, I have to pay someone which I can't afford right now. I want to be knowledgeable on this subject so I can question his reasoning behind what he's saying we should do.

Also, on that calculator, when you have something that is not done monthly but maybe every other months or once per quarter, you add up for the year and then average it, correct?

 

[Ladynred]

First of all, lawyers get a LOT more money for a Ch 13 than they would a Ch 7, so this guy is waving red flags all over the place (to me) if he hasn't even SEEN your expenses and income. There is really no way he can say you should be in a Ch 13 w/o looking at actual numbers.

My best suggestion for you is to go get a copy of the Nolo Press book "How to File Chapter 7 Bankruptcy" and read thru it. I'm not saying you should file by yourself, but this is an excellent book if you want to learn what's involved and how it all works as well as what goes into all the forms and WHY. Then you can be much more prepared to ask this guy questions and not be bulldozed into a Ch 13 when a Ch 13 may not be the direction you need to go in.

Also, on that calculator, when you have something that is not done monthly but maybe every other months or once per quarter, you add up for the year and then average it, correct?

That is correct. You add up what you spend in a year and average it all out to get a monthly figure.

Here's what you should do - make lists. If you can do spreadsheets on the computer, even better.

1 -a) list ALL your assets, everything you own, each on its own line. Put down when you purchased it, how much you paid for it then, what condition its in now, and the garage sale value you're giving it today. You don't have to list every fork and spoon or every pair of socks, lump small stuff together like : kitchen utensils $xxx, clothing $xxx, jewelry $xxx etc. You won't need ALL the detail on the schedules, but this is for your lawyer to see what you've got. Include bank accounts, your home, and vehicles.

b) List your income. Since variable income could be a problem for you, take pay stubs it it will help show how it varies. Break out all the deductions from your Gross pay.

2- List all your debts, every creditor, name address and phone numbers (which you can usually get from the last bill you got), and the amount you owe and the monthly payments for them. If there are collection agencies, list them right after the original creditor they're collecting for and they amount THEY are claiming you owe.

3 - List EVERY expense, categorized if you can. Again, this more for the lawyer's edification than what will actually go on your schedules. List the average monthly amount for each.

4 - Dig out your tax returns for this year and the previous 2 years, the lawyer will need to see them.

5 - Have copies of the last 3 months bank statements. He may or may not ask for more but I doubt it.

6 - Get a trade-in value on your vehicles, in writing, and take them with you too. You can get one here: http://www.carquotes.com/blackbook.asp.

I know this sounds like a lot of work, but the more detail you can have ready for the lawyer the better off you'll be. Lawyers love details, so the more the better, in my opinion. There will be less questions if YOU aren't guessing and have it all laid out for the lawyer when you get there. If you read the Nolo book , you should be ready for him.

Ch 7 vs. Ch 13 is NOT about total income (well, not yet anyway), its about what you have LEFT after you pay all your normal living expenses, and that includes mortgage and car payments. If your numbers show that you have little or no disposable income (net income less expenses), then don't let this guy talk you into a Ch 13 unless he has some huge reason for disagreeing with your expenses.

Hope this helps

 

[dosumi]

We just did our paperwork last week for a BK 13 and concerning your income. Now is what they want to know, I had to show a current paystub. if you make more now that is the amount they will go by.

Your past income can help explain why you got in trouble but it is the present income and expenses that are used to calculate your BK information and any payments if you file BK13.

The BK13 payment to unsecured creditors can go from 0% to 100% depending on income & expenses.
Our Lawyer didn't give us a % until after everything was calculated, it will be about 2% to unsecured creditors. If it gets approved and she seems to be confident that it will.
The paperwork didn't seem that much different than the BK7 we had filled out, except for some of the expenses that in a 13 she said that wouldn't approve, (like entertainment).

 

[tmr76]

So you're saying that this week for instance, my husband will get a check for 34 hours because he worked almost a full week last week so the BK courts will go by that instead of what he is averaging for the year? Because he was laid off for nearly 8 months last year (combined throughout year) and 6 weeks this year plus 5 weeks of 1-2 days of work per year... one full week's check doesn't reflect our income properly and will not because he never works a full year steadily.

Even if I did use a full 40 hour check as the norm, we have only 350-400 of disposable income per month... how the hell can I afford this $800 payment he's proposing??? Is that too much income for a Ch 7?

I think this guy is full of crap. If he can't give a good reason to file the 13 like Ladynred said above, I'm going to see someone different. I don't know where he's pulling all this extra cash from but it's not me. If I had it, we wouldn't be in this position.

I am just sick about all this... and I don't have time to do much research because we are being sued and the court date is 23rd. This lawsuit is the reason for the BK in the first place. I don't know what to do.

 

[dosumi]

It does sound like you need a better Lawyer.
You did not state the facts that the income is erratic month to month. Just more this year than last year.
What you have stated now is nothing like mine. I have a steady income and they took that amount from my check times 52 and divided by 12 to get my average monthly income.

You have a completely different situation.
But I do know that if you can't make all the payments and on time in a BK 13 it will cause you problems.

You sure do need a Lawyer to figure this out. Go talk to some Lawyers who give free consultations, and go from there. Even if you don't use them you can find out a lot of information.

 

[Ladynred]

In your situation you would definitely need to take along as many paystubs as you have to show the uneven income. Ch 13 will never work w/o a steady income.

As I said before, I think this buy is full of beans and just pushing for the extra Ch 13 fees. I would definitely seek out a couple consultations with other lawyers who do nothing BUT bankruptcies.