Ch 13 dismissed. What's next?

[Mary Irene]

My Ch 13 was dismissed voluntarilly. It is the 23rd of the month and there is money sitting in my account with the trustee waiting for the 1st of the month for disbursement. Will that go out or will it be refunded to me? The dismissal was obtained on 10/22.

[Flamingo]

Anything you paid into your plan prior to your dismissal will get disbursed to the creditors. Effective 10/22 the balances due and owing your creditors are back at what they were at filing (100%) plus interest owed minus whatever you paid to that creditor during your plan. You can expect to hear from all of them again real soon.

[HHM]

If you were 23 months in, why did you voluntarily dismiss.

[woeisme]

All paid in will be dispersed, sorry. But it will count against what you owe your creditors, which you will now have to pay outside of the BK.

[Mary Irene]

Anything you paid into your plan prior to your dismissal will get disbursed to the creditors. Effective 10/22 the balances due and owing your creditors are back at what they were at filing (100%) plus interest owed minus whatever you paid to that creditor during your plan. You can expect to hear from all of them again real soon.

I was paying 100% in my plan. The trustee I got was a real beyotch. I was in it only 19 months. My fiancee lost his job and we couldn't afford groceries, it was so tight. All of my debt was charged off and sold and bought at least 3 times, the last being after I filed. I paid off the secured debt, and now one company, B-Line (Round-Up Funding), a debt buyer owns all my unsecured debt. I think I can probably negotiate a settlement with them that will be less than 100% so there's nowhere to go but down. Along with the job loss, I am just really pissed off that all these big wall street companies are getting bailed out with our tax dollars, and no one cares about what happens to us. This more than anything made me decide that I could not stay in this hypocritical farce. This is no 'fresh start'. This is legalized robbery. I refuse to pay these debt buyers who paid 10 cents on the dollar for my debt when my family can't eat. By the time I decided to settle, I will have saved enough to pay them in a lump sum. Even if I don't, and they sue me, they have no proof of claim. That is what I found out after scouring the internet for the last year. So that's why I had it dismissed.

[ready2puke]

Have you DV'd them? And your sure they have no proof? I hope it works for you,please keep us posted ok?
If it comes down to it, I guess you could do a 7...

[HHM]

How exactly does your fiance getting fired affect YOUR chapter 13 plan. Are you living together such that his income contributed to your expenses?

Once he got fired, why not convert to a chapter 7 or modify your chapter 13 plan to a lower payment.

Good luck with you plan. But I hate to say it, by voluntarily dismissing your 13 without exploring your options within the BK, you have thrown away your best chance to bring "certainty" to your debt situation. As you said..."you hope" you can settle (where are you going to get the money....most of these place expect a lump sum payment, not payment plans). If you do settle, are you prepared for the tax consequences; if you settle but the debt buyers sell the remaining balance to another buyer (which does happen), are you prepared to sue to protect your rights.

[Mary Irene]

I stayed up half the night reading these blogs, and it looks like the CC's are making deals with people before they are discharging them. They are asking for 20% of what is owed. So instead of wasting time selling to a debt buyer for 8-10 cents/dollar, they are going straight to the debtor for 20 cents/dollar. About time! I've said for a long time that they should just sell it to the debtor. Makes perfect sense. They'd get more, the debtor would avoid all this crap from the debt buyers, and the govt would get some $$ in taxes. It's a win win. And after hearing that the 'new' group of debtors are getting 'deals', I am doubly glad I dropped this stupid bankruptcy. I was paying out $1100 a month to them. And yes, without my fiance's paycheck, we can't make ends meet. After rent, I only have $800 for bills, food and everything else. Ch 13 is impossible to live with unless you get a trustee that lets you slide for 10-20-30 % to unsecured. I had a hard ass who wanted 100%. I never sent a validation letter because I didn't even know they bought my debt. It happened between when I filed for Ch 13 and had the plan confirmed. They just slid in without anyone knowing who they were (including my laywer). I know they don't have any proof because I've looked up litigation against this company and the judges are ruling in favor of the debtor, as they say that there is no relationship between the debtor and this collector. I have done my homework for the last year. I will be saving the money I was paying into the plan as much as I can so that I can have a lump sum to offer them 20 cents on the dollar when they call.

[Flamingo]

I hope you know what you are doing and you have no guarantee they are going to call and offer you 20 cents on the dollar. Also, if you do eventually settle, you will receive a 1099 for the forgiven amount which you will have to include on your taxes as taxable income in the year forgiven.

[BK2008]

Unless you are insolvent immediately before the cancellation.

IRS Publication 4681:

Insolvency

Do not include a canceled debt in income to the extent that you were insolvent immediately before the cancellation. You were insolvent immediately before the cancellation to the extent that the total of all of your liabilities exceeded the FMV of all of your assets immediately before the cancellation. For purposes of determining insolvency, assets include the value of everything you own (including assets that serve as collateral for debt and exempt assets which are beyond the reach of your creditors under the law, such as your interest in a pension plan and the value of your retirement account). Liabilities include:

*

The entire amount of recourse debts, and
*

The amount of nonrecourse debt that is not in excess of the FMV of the property that is security for the debt.

Note.

This exclusion does not apply to a cancellation that occurs in a title 11 bankruptcy case. This exclusion also does not apply if the debt is qualified principal residence indebtedness (defined in this section under Qualified Principal Residence Indebtedness, later) unless you elect to apply the insolvency exclusion instead of the qualified principal residence indebtedness exclusion.
How to report the insolvency exclusion. To show that you were insolvent and that you are excluding canceled debt from income to the extent you were insolvent immediately before the cancellation, attach Form 982 to your federal income tax return and check the box on line 1b. On line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately before the cancellation. You must also reduce your tax attributes in Part II of Form 982 as explained under Reduction of Tax Attributes, later.

[13bound]

This is why i got an attorney...............

unless you are insolvent immediately before the cancellation.

Irs publication 4681:

Insolvency

do not include a canceled debt in income to the extent that you were insolvent immediately before the cancellation. You were insolvent immediately before the cancellation to the extent that the total of all of your liabilities exceeded the fmv of all of your assets immediately before the cancellation. For purposes of determining insolvency, assets include the value of everything you own (including assets that serve as collateral for debt and exempt assets which are beyond the reach of your creditors under the law, such as your interest in a pension plan and the value of your retirement account). Liabilities include:

*

the entire amount of recourse debts, and
*

the amount of nonrecourse debt that is not in excess of the fmv of the property that is security for the debt.

Note.

This exclusion does not apply to a cancellation that occurs in a title 11 bankruptcy case. This exclusion also does not apply if the debt is qualified principal residence indebtedness (defined in this section under qualified principal residence indebtedness, later) unless you elect to apply the insolvency exclusion instead of the qualified principal residence indebtedness exclusion.
How to report the insolvency exclusion. To show that you were insolvent and that you are excluding canceled debt from income to the extent you were insolvent immediately before the cancellation, attach form 982 to your federal income tax return and check the box on line 1b. On line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately before the cancellation. You must also reduce your tax attributes in part ii of form 982 as explained under reduction of tax attributes, later.

:d

[Mary Irene]

I hope you know what you are doing and you have no guarantee they are going to call and offer you 20 cents on the dollar. Also, if you do eventually settle, you will receive a 1099 for the forgiven amount which you will have to include on your taxes as taxable income in the year forgiven.

I would welcome a 1099. I got one for a forgiven debt from JC Penny. I put it on my taxes and it was for $13,000. This did not increase my taxes as much as the debt due to my deductions. Besides, with all this new toxic debt out there, these JD buyers have fresher meat and bigger fish to fry than me. I have no property and no car. There is nothing they can do except garnish 25% of my check. However, they will have to do it in Superior Court as it is over $10,000 and it will cost them a lot more, so I think they'll take the sure thing.

[Flamingo]

I would welcome a 1099. I got one for a forgiven debt from JC Penny. I put it on my taxes and it was for $13,000. This did not increase my taxes as much as the debt due to my deductions. Besides, with all this new toxic debt out there, these JD buyers have fresher meat and bigger fish to fry than me. I have no property and no car. There is nothing they can do except garnish 25% of my check. However, they will have to do it in Superior Court as it is over $10,000 and it will cost them a lot more, so I think they'll take the sure thing.

Nothing is ever a "sure thing." Best of luck to you...

[Mary Irene]

I just called the Trustee's office and they informed me that there will be no more dispursements as the case has been dismissed. They will be sending me a refund check for the money I have in the account this week. Woo hoo!