Newbie with questions

[silverlotus]

My husband and I have decided that it's probably the best solution to file a chapter 13.

We have debts we can no longer afford pay due to 2 job losses and an expensive medical issue in this year. They started piling up on us in August and we haven't been able to get out from under that. Some of our minimum payments now exceed $1000.

However, I have a few concerns and I was wondering if anyone could help us with it before we see a lawyer.

First, can we keep two cars? One is paid off and worth less than 3K. The other is not paid off and we owe more than what the car is worth BUT without such big credit card payments, we can make the car note. It's just a Nissan Xterra, not a Mercedes. In fact, we are current on the car note and never been late. One is used for work and the other I drive to school. I'm a full time college student and I graduate in May so I'm not willing to quit and go to work... especially when, with a degree, I could make double what I would make if I went out and got a job right now.

However, I will also have 120K in student loans to pay off after that. We have 65K in unsecured debts. We rent and have no assets. We have stuff like anyone else but nothing that should go over our personal exemptions allowed by law. We don't own alot of valuable things at all. My wedding ring is the only thing of value besides the cars.

Anyway, second question is, should we wait and file when I'm done with school in May and have a job and the loans come due? Because having the extra income suddenly would change the budget and then the loans coming due a few months later would change it all over again. But that's a year from now and we don't want to deal with judgments in the meantime.

How far do they really peek into your finances? I know you have to have a budget approved but, if you decide one month that you need a new outfit for work and you take out of savings to pay for that, are they going to have a problem? I can live on a budget, but having my finances micromanaged scares me a little. I really enjoy my simple, inexpensive weekend getaways every few months and it would make life so stressful to give those up for the next 5 years because someone doesn't approve of that use of money even if I saved for it and budgeted for it properly. I have this impression that a BK means having nothing and no life between now and the discharge date.

Last question is, I want to be as prepared as possible for our consultation. I don't want to leave anything out and I can get really nerdy with spreadsheets if I need to! lol. So what should I bring to save on time so the lawyer can tell us exactly where we stand?

[isitreal]

First of all... I think a lot of us were in the same situation. Think of bankruptcy as starting over. I've said before that I was surprised what we were really doing without (clothing allowances, grooming, etc) when we went over the finances with the lawyer. You are given a budget to live on. That in itself relieved so much stress for me. I didn't have to worry about having money for groceries... it was in the budget.

Anything you can do for the lawyer will help out. I would suggest getting information for all of your debts - Name, addresss (not where you send the payment), amount you owe, monthly payment, interest rate, etc. You will have to have all this information anyway and you might as well start now.

I felt better and had much less stress the moment I left his office. It's a big weight off anyones shoulder to know that the debt relief is in progress.

[rrockinggramma]

I would file before graduation. Your income will only increase your trustee payments.

[silverlotus]

But if there's changes in the income, wouldn't I have to report it and adjust the budget for it anyway? Also, why would the trustee be paid more, rather than it going to pay off debts quicker?

I would file before graduation. Your income will only increase your trustee payments.

[silverlotus]

Thank you.

I wanted to clarify... did you mean you had no clothing allowances or grooming allowances in your budget for bankruptcy? If so, was that a personal choice or a rule?

I'm pretty good with budgets and we've lived on them. I like them for the same reasons you do. In our case, we had some debt before this past year but it was manageable and we could have paid it off very quickly after I went to work. But, after having to live off cards twice in a year due to my husband being laid off (and then we he did find a stable job it was a big pay cut) and then having to pay over 30K on a surgery (I'm uninsured), it was too much. That's what did us in. All this happened starting last February, so it hasn't even been a year since the top of our world fell in. He lost the first job then, the second job in July and my surgery was in May. August is when it started and by October, we were too behind to catch up. We're still kind of in shock at the sudden devastation. We haven't really lived above our means or spent alot of money shopping. We don't eat out hardly ever because it's against my medically prescribed diet (I have to meet certain nutritional requirements or I get sick and malnourished). The car we're paying on is basically it and even it is a low cost car note for being a 4WD SUV. We got the most inexpensive one we could get that would still be useful in the mountain terrain and heavy snow here. Although I don't know if that would be considered in the BK because we owe about 3K more than it's resale value. The other car is worth about 3K at best and it's paid off.

In any case, I look forward to some kind of relief.

First of all... I think a lot of us were in the same situation. Think of bankruptcy as starting over. I've said before that I was surprised what we were really doing without (clothing allowances, grooming, etc) when we went over the finances with the lawyer. You are given a budget to live on. That in itself relieved so much stress for me. I didn't have to worry about having money for groceries... it was in the budget.

Anything you can do for the lawyer will help out. I would suggest getting information for all of your debts - Name, addresss (not where you send the payment), amount you owe, monthly payment, interest rate, etc. You will have to have all this information anyway and you might as well start now.

I felt better and had much less stress the moment I left his office. It's a big weight off anyones shoulder to know that the debt relief is in progress.

[isitreal]

I wanted to clarify... did you mean you had no clothing allowances or grooming allowances in your budget for bankruptcy? If so, was that a personal choice or a rule?

Basically what I'm saying is that things like new clothes were pushed aside to pay bills prior to bankruptcy. I now have a budget that allows for those kinds of purchases.

[doglover]

First, can we keep two cars? One is paid off and worth less than 3K. The other is not paid off and we owe more than what the car is worth BUT without such big credit card payments, we can make the car note. It's just a Nissan Xterra, not a Mercedes.

Hi, we were able to keep both our cars (Tahoe and Lexus) without a problem and even though our car payments were up to date they put them in with our chapter 13 payment, which actually is best for us.

I'm not 100% sure but I don't think you can include all of your student loans. Not sure but I remember someone posting that on here awhile back.

I also think you should file before graduation. You have to report if you get a substantial increase in income but it's better to start paying lower then start off paying high, that's why let them use current income rather then your post graduation income. When you do report the new income they might not change your plan payment at all because your new job may come with extra expenses that could balance it out, for example, more gas for longer commute and or business trips, dry cleaning, health insurance co-pays, health and dental insurance taken directly from your paycheck from new employee. You may start a 401k or TSP with your new job....the list goes on.

Good luck and I'm sure everything will turn out fine for you guys.

[silverlotus]

Oh, I see. I misunderstood you the first time.

Basically what I'm saying is that things like new clothes were pushed aside to pay bills prior to bankruptcy. I now have a budget that allows for those kinds of purchases.

[silverlotus]

Thanks for replying. I feel a little better after everyone's help on this board!

I understand now about filing before graduation.

About my student loans, that will be part of the new expenses that come with having the job... because my student loans will come due and that'll be a great amount out of my paycheck. I know they can't be discharged or reorganized in a BK. But, they will have to be dealt with during the BK.

Hi, we were able to keep both our cars (Tahoe and Lexus) without a problem and even though our car payments were up to date they put them in with our chapter 13 payment, which actually is best for us.

I'm not 100% sure but I don't think you can include all of your student loans. Not sure but I remember someone posting that on here awhile back.

I also think you should file before graduation. You have to report if you get a substantial increase in income but it's better to start paying lower then start off paying high, that's why let them use current income rather then your post graduation income. When you do report the new income they might not change your plan payment at all because your new job may come with extra expenses that could balance it out, for example, more gas for longer commute and or business trips, dry cleaning, health insurance co-pays, health and dental insurance taken directly from your paycheck from new employee. You may start a 401k or TSP with your new job....the list goes on.

Good luck and I'm sure everything will turn out fine for you guys.

[Flamingo]

I really enjoy my simple, inexpensive weekend getaways every few months and it would make life so stressful to give those up for the next 5 years because someone doesn't approve of that use of money even if I saved for it and budgeted for it properly. I have this impression that a BK means having nothing and no life between now and the discharge date.

While Chapter 13 is hard, it is not a prison sentence. What most people are not prepared for after all the emotion is over and the Plan filed and approved, is the reality that there are no credit cards to fall back on if something happens (i.e., major car repairs, big dental bill, etc.). We had a five year plan and during years 3 to 5 our vehicles started needing repair, tires went, household appliances started to go and without savings socked away on the side, and some good family friends who could do house or vehicle repairs, I don't know how we could have gotten through it. Then in year four our hot water heater went ($600 replacement/installation) along with an emergency root canal and big car repair all occuring in a two month span. It's difficult - you will find the lifestyle change the hardest if you are having problems now thinking about giving up your weekend getaways cause you can be almost certain you will not be able to do them that often. Travel for us became a luxury and took weeks of planning to ensure gas money, etc. Besides that, filing was such a huge relief after struggling for almost a year after a job loss with 70% of our income gone due to a major tech layoff. I cried for weeks before filing trying to find ways not to file but it was absolutely impossible if we wanted to keep our house. I almost had a nervous breakdown and that's all we needed was for me to get sick and lose my job. You do get it together and work things th rough but as you will learn from others experiences on here, it is what you make it; so heed the advice given from the experiences because you will encounter most, if not all, of the same experiences.

Best of luck to you and also that is marvelous that you will continue on to get your degree. Don't give up on that....that is your key to the future and getting this all behind you.

[silverlotus]

What most people are not prepared for after all the emotion is over and the Plan filed and approved, is the reality that there are no credit cards to fall back on if something happens

In truth, we've hardly had them to fall back on because they're maxed out and without minimum CC payments that amount to 45%-50% of our net income, we could live fine without them... we could live ok if they were half that! Credit card debt is why needed to get more credit in the first place. Sounds screwy but when your money is all going to debt, you need to borrow again when things come up. When your money isn't all going to debt anymore, the rules change. I like budgets. In fact, they give me a great peace of mind to know money is allocated for the majority of things we need to live. Rather than, "Did I just spend the utility bill money on groceries and car repair?" That level of uncertainty is stressful in and of itself.

Fortunately, we live in apartments and so if anything goes wrong with that, we don't have to worry about replacing it ourselves. That's one big cost down that alot of people face that we will not. However, I am expecting to need dental work in the next year or less. So we're going to build a savings account in whatever amount or way our BK lawyer tells us is best for us.

It's difficult - you will find the lifestyle change the hardest if you are having problems now thinking about giving up your weekend getaways cause you can be almost certain you will not be able to do them that often.

We like to go on a weekend trip (usually a Saturday and Sunday, but sometimes a Friday too) and all the costs run us less than $400. We do this between 2 and 4 times a year. Living in Colorado, there's every kind of vacation imaginable available to us here and in the surrounding states -- from a shoe string budget to a celebrity package that is worth more than an entire years salary for us. LOL. In the winter, we love to just go down to New Mexico where it's cheaper and hang out in the desert. In the warmer months we like to find off-season deals near ski resorts and play in the mountains for the weekend. Again, this still costs us less than $400 per trip and we do it no more often than once per season. We also like to take one big vacation a year to somewhere far away, but I can give that up as long as I can keep a few weekend trips per year. I go plain stir crazy if I have to sit in this apartment and never get out at all. But usually one weekender will hold me over for a few months. This isn't as much a matter of lifestyle as it is mental health for me. I need the break and the fresh air for a couple of days every once in awhile or I will end up stressed out, depressed, anxious, etc. I am saying this in all seriousness because I've been that way for the past 11 years. I have well-documented Seasonal Affective Disorder among a couple of other things.

I cried for weeks before filing trying to find ways not to file but it was absolutely impossible if we wanted to keep our house. I almost had a nervous breakdown

Boy does that sound familiar. We've tried for a few months to do everything in the world except BK. Credit counseling, debt settlement, re-budgeting, rebudgeting again and again, cutting expenses like cable and cell phone, bargain shopping for necessities only... and we still can't make ends meet. We are still in the negative every month. I feel like BK is a bigger mental hurdle than even a legal one at this point because it does seem like a prison sentence... but that's just been my impression over the years between the media and second-hand (or third or fourth) horror stories.

Thanks for your response

[chpxiii]

I feel like BK is a bigger mental hurdle than even a legal one at this point because it does seem like a prison sentence... but that's just been my impression over the years between the media and second-hand (or third or fourth) horror stories.

Bankruptcy is not a prison sentence. Creditors will do their best to discourage you, they want to keep you shackled to your debt and keep paying them.

Debt "management" or "counseling" agencies just want your money so they try to discourage bankruptcy by talking about it as if it's some death sentence.

I'm doing fine. I've been doing fine. I wanted to pay my debts. I needed to keep my car. Chapter 13 was the way to go. While I still felt badly about filing, looking back I can see how almost immediately after my 341 I was just SOOOOOOOOO relieved! It was like a HUGE weight was off my shoulders. I was paying some of my debt back atleast. I needed that emotional and mental relief. I knew that I had a budget that if I had to work retail I could keep AND make my trustee payments. I'm just so fortunate that I started finding work in my field.

I will say that I had also accepted the fact that I will just never own a home and that I was completely and totally done with credit. Over time, and after having met a fabulous boyfriend who gave me *hope,* I feel hope now and am saving for a house.

Chapter 13 helped me get a control of my finances, learn how to budget (although I wasn't living beyond my means, I had lost my job and was unable to pay my debt while being unable to get a job in post-911 tech industry.) Knowing that I had my finances taken care of and I was ok even with having a minimum wage job, it was at that point EVERYTHING turned around. I think potential employers, when I interviewed, could sense something was wrong with me. I believe that. I was so stressed and worried.

The horror stories are just that: stories. Stick around here and you'll hear a lot of success stories that can give you hope that you too can have a fresh start.

[Flamingo]

Chapter 13 helped me get a control of my finances, learn how to budget (although I wasn't living beyond my means, I had lost my job and was unable to pay my debt while being unable to get a job in post-911 tech industry.) Knowing that I had my finances taken care of and I was ok even with having a minimum wage job, it was at that point EVERYTHING turned around. I think potential employers, when I interviewed, could sense something was wrong with me. I believe that. I was so stressed and worried.

The horror stories are just that: stories. Stick around here and you'll hear a lot of success stories that can give you hope that you too can have a fresh start.

A major loss of income that cannot be replaced over a period of time puts you in the spiraling black hole toward bankruptcy and you dig yourself in even deeper trying to avoid filing. The majority of people do not want to file; mostly due to the stigma surrounding the term "being bankrupt" but during the past 10 or more years, with credit being so easily available that many people feel comfortable with good jobs taking on additional credit ("sure we can afford it"). In our case, and apparently in yours, when the job loss hit and could not be replaced in a decent period of time, that's when it starts for a lot of us who end up having to file. About six months after the job loss, even though we were not late with any bills we started getting phone calls from agencies who apparently were able to view the amout of debt we had on our credit report and all sorts of debt counseling and other subprime mortgage places we never heard of started calling us. We let them send us some information in the mail once and when I looked at the fees involved I said to my husband this is total highway robbery and anyone who signs papers like this will lose everything. That is when we stiffened our upper lip and went to see an attorney. We knew the vultures were moving in and it was just a matter of time. We did not want to sell our house or lose it.

To the OP; always do what is best for you and remember that everyone's situation is different. Each one of us gets to where we are for some specific reason. The majority are able to get it together and move on to better things. I hope you are able to keep up your getaways as it will provide you with a reprieve so budget to ensure you are able to keep doing them. The best advice anyone can give you as to a Chapter 13 is that if you do file Chapter 13, do not ever be late with any payment whatseover, including electricity, phone, whatever. That will all work to your benefit when your Plan is discharged. You will see.

[lynniethevette]

I don't know what to do. I've made a few really bad financial decisions thrown in on top of being laid off 3 times in the last year and a half.

Here's my situation:

I live in South Carolina. My expenses are about $2591 per month. My husband and I bring home about $2628 per month. I think you can see my problem.

My husband is right now trying to purchase a mobile home on his own. His name is not on my house, my credit cards, my car loan or anything connected with my assets or liabilities. South Carolina is not a community property state.

Our intention is to move to the mobile home and let the house go to foreclosure if it does not sell. It is currently on the market for $25000 less then the recently appraised value and I will be reducing it even further in a few weeks.

The only asset that I own that has any value is my car. I have about $40000 equity in the car (I put down $40000 on it and financed $24000) (The 40000 came from an annuity, and I will owe about $9000 taxes next year for withdrawing the money) I know, I know I'm stupid, but I panicked when the stock market took a dive. I lost about $60000 when that happened).

I don't want to lose my car by filing for bankruptcy. If my house sells I would be able to afford the smaller payment on the mobile home. Could I put my car in my husbands name 6 or 7 months before filing? Would that save it if it came down to having to file for bankruptcy? I could take a loan against it to pay off the credit cards, but then I'll be back to the $700 car payment again.

Do you HAVE to file for bankruptcy if your home gets foreclosed on? Would they not take my car if there was no equity in it? I'm using the $10000 in the bank to make the car payments and to put money down on the mobile home so that will be gone pretty quick.

I can't sleep at night for worrying about what's going to happen and where we are going to go.

What is my best solution, without giving up my car.

[woeisme]

Lynniethevette,

Welcome to the forum. You should read the rules for the forum though. One of the first rules is to not hyjack threads. (meaning don't post your questions to someone else's topic, start your own new thread) I'm not saying this to be mean, but really to be helpful, because you will get a lot more replies to your questions if yours is the original post in the thread. If your's is post # 14 in silverlotus's thread, most of the replies will be to silverlotus, or comments on people's replies to silverlotus, and your questions will most likely get lost because people reading this thread will tend to focus on the original post, not yours.

That being said, I had to comment on your car question. Do NOT try to hide assets by transfering titles if you intend to file for Bankruptcy. This is considered fraud (after all, you are trying to hide assets from your creditors) and will cause your BK case to be dismissed. They will find out about it, in my case we had sold a car to a junkyard for scrap because it was 12 years old with close to 200,000 miles on it and the transmission blew, and still had to document why we no longer had the car! They will definitely ask about a car with 40K equity, and the 6 months your propose waiting is also meaningless, they can go back years, and car titles are the most easily traceable paperwork out there, believe me, they'll find it!

There is no rule about having to file due to a foreclosure. Some people do in order to prevent deficiency judgements and leins. Whether you should file or not depends on the totality of your financial picture.

The one thing I can't help noticing about your financial picture, is that you bring home less than $3000 a month total between you and your husband, yet want to keep a $64,000 car??? Why don't you sell the car, buy one that you can afford, and use the remainder to put a down payment on the mobile home? Look into your state exemptions for vehicles and homestead. See if you can exempt the money in your place of residence. That would be a legal way to protect your money I think. Seriously, I'm having a hard time getting over a 64K car for someone in the lower rungs of the middle class... maybe it's my midwest mentality, but my house only cost 75K!

Goodl luck, and keep posting. I hope you'll find this site as useful as I have.