Is Chapter 13 really a fresh start?

[JayGZ]

I suppose I could have posted this under the Chapter 13 section, but this is still somewhat of a general post.

From what I've heard, Chapter 13 is basically just a debt consolidation plan run by the government. They calculate how much extra income I have after paying all my bills and then that's the amount they take each month for a set period of months to meet the Chapter 13 requirements.

So this means, I get a tax refund--gone. I get a pay raise, the payment is increased accordingly. I get a bonus at work--gone to them.

Is Chapter 13 a fresh start then? I mean I realize that paying CC's for 20 years is not a viable alternative and it makes a chapter 13 sound good, but come on, it still seems like a death sentence because you are basically paying whatever extra you have back into them--no emergency funds, no opportunity to build any kind of savings or college fund for your children.

Can I even buy a birthday present or Christmas present for my daughter? Is that calculated in as part of an entertainment expense?

Does my lawyer build in things like this into my monthly income? Because I basically don't see how ANYONE gets through a chapter 13 without eventually going chapter 7 or basically driving off a bridge due to some expensive unforeseen and unavoidable event that occurs during the 3-5 year repayment requirement.

And I'm not talking about being distraught about losing a health club membership or making my own lunch or whatever, I'm just straight out talking about living with any kind of basic hope.

[FoolAndHisMoney]

You're correct, it is very tough. In a perfect world where nothing ever goes wrong then it's a fair plan. Trouble is this isn't "the world of perfect". I was making progress paying down my debts and "stuff happens" that makes it difficult to get ahead. It takes years just to chip away at a few thousand in debt and WHAM now you need a few grand to rebuild a blown engine or fix the leaky roof, etc. Their argument I guess would be that if you need holiday gifts, etc, then spend less on food such as eating more mac & cheese or peanut butter & jelly. 5 years is still a bit long to live like this even though it's better then 30. The only positive note on a 13 is if real problems do arise and it pushes you over the edge you can still modify the plan or even convert to a 7. I guess you convert to a 7 in cases like your paycheck going up a BIG 2% when you health benefit deductions go up 10% along with fuel and utilities, rent, mortgage, etc. Even a bankruptcy judge on a link I was reading stated that the Mandatory financial management course that bankruptcy filers must attend after filing is unnesessary for a chapter 13 debtor that completed their plan. They learned better then anyone on the planet.


JayGZ, do you think you have to file for a chapter 13 or are you just upset at the concept?

[StaciMM]

What expenses can/can't be allowed in a ch. 13 is not something I know anything about. It will vary a little based on where you are-each district has their own rules. Discuss this question w/ one of the attorneys that you consult with.

[JayGZ]

Basically, I just don't know what to do. And I wish someone would say this what you need to do, so I could just do it.

Chapter 13 seems flawed because I don't see how anyone survives it for that long of a period. There's not even room in it for buying anti-depressants, which I would assume I would need once I was in it! Now, I have to cut down on my mac/cheese to pay for my prescription that will allow me to feel better about my situation?

I don't know yet if I'm going to fall in chapter 13 or not. I'm not sure if I have a clear understanding of my situation even though I'm working out my expenses, met with a lawyer and credit counseling, etc.

I don't meet the median income rule as part of the new bankruptcy laws, but based on my expenses, especially child support, that even with secured/unsecured debt removed, I'd barely have any money left over. The lawyer who I gave a rough estimate of my monthly expenses felt I underestimated in some areas. That means to me that I basically don't have any funds to pay out as part of an ongoing chap. 13. And I have a student loan that comes up later in 2006, which would make it even more unlikely that I would have funds.

[FoolAndHisMoney]

Click the below link and see if you qualify. You sound very upset. I felt the same way. until I saw the official forms. I thought it was just my own mismanagement and then I saw that I am way higher then the median and the means test has me at a negative. When I did the form I didn't even include the 7% administrative fee which can be deducted. My real income after expenses has me plus $60.

Please figure it out and you maybe surprised and feel better. Good luck!

[JayGZ]

I am very upset. I have a beautiful daughter that I want to see have a happy life and not be handicapped by this. I don't see the light at the end of any tunnel. I would like to have a life as well even if I'm working until I'm 90.

My question is that if your real income after expenses had you at + $60. That would mean you'd pay that amount every month as part of a chapter 13?

What if you had any kind of increase in your earnings (salary, bonus) would you get to the keep the difference and build upon that? I guess not.

Now, I'm a bit more confused. How does a + $60 make a difference? If I was + 300 it would be gone as well. In either case, I'd be at $0 each month just hoping that my daughter didn't get a cold, break an arm? How do I buy tires for my car when they are needed? That's not a typical monthly expense?

I'll do the form, though, to see where I think I stand. Thanks!

[StaciMM]

Medical expenses ARE considered, its just not an area that statistics can predict. (That is why it isn't on the means test-no one can tell you that your medical should be under $X.)

Also, your student loans will be taken into consideration. For that reason, filing closer to the time they'll be due for repayment would be too your advantage.

I know you've stated that you don't think you can handle the calls from the creditors, and that is why you want to ACT NOW. What's the worst they can do to you? They can call, you can hang up. If you really don't want to deal with it, then let the machine do the talking. (And if you really want to mess with them, perhaps have someone leave a 'I'm not in, leave a message' type message in another language.) Consider the ups & downs of your options-Rushing into something with a good chance that you'll regret the hasty decision later, wasting money, or taking the time to study/investigate/make an informed decision?

No one can tell you what to do-we're not in your shoes. You can evaluate your situation, refer to any info you can find, and put it all together to form a plan. And, you can bounce any ideas/thoughts/questions here for feedback.

[StaciMM]

When doing a budget, you have to consider the every month items (groceries, rent, utilties, etc.) and the occasional (car maintenance, medical). The best you can do is annualize those, and divide by 12.

I think the standard requirement is $100/more in disposable income per month. If you're barely over $0, then you would not be able to do a ch. 13.

I am very upset. I have a beautiful daughter that I want to see have a happy life and not be handicapped by this. I don't see the light at the end of any tunnel. I would like to have a life as well even if I'm working until I'm 90.

My question is that if your real income after expenses had you at + $60. That would mean you'd pay that amount every month as part of a chapter 13?

What if you had any kind of increase in your earnings (salary, bonus) would you get to the keep the difference and build upon that? I guess not.

Now, I'm a bit more confused. How does a + $60 make a difference? If I was + 300 it would be gone as well. In either case, I'd be at $0 each month just hoping that my daughter didn't get a cold, break an arm? How do I buy tires for my car when they are needed? That's not a typical monthly expense?

I'll do the form, though, to see where I think I stand. Thanks!

[Kam]

JayGZ: Please post your expenses if you have not already done so. We are not Ch3 "experts" but we can give you some solid advice.

You are going to give yourself an aneurysm if you don't slow down and take a deep breath.

Write down all your every day expenses. Does your daughter require day care? I am unclear whether she lives with you or her mother. You mention child support so I am presuming she lives with her mother. If your daughter lives with you, keep in mind all the expenses for school lunches, school projects, etc.

[JayGZ]

Kam,

Thanks for your post. I have joint physical custody with my ex, so my daughter spends almost half of her time with me. In addition to child support and day care expense, I do have the additional costs of food, clothing, school lunches, medical/dental (split half the cost with ex) and so on. I really didn't realize until the past couple of months just how much I spend for my daughter. It's all worthwhile and hardly extravagant, but it does add up.

I will add up all expense and share them, so you and others have a better idea where I stand. Thanks!

[StaciMM]

JayGZ-
I didn't realize you had joint custody. That will help you in the means test, though its not the every day situation, so make sure to discuss this when you have the attorney consults. (It seems a little odd that you pay so much child support when you have shared physical custody-did you share custody when the child support agreement started?)

[JayGZ]

I am a complete moron tonight. I meant joint legal custody. Meaning I play a role in decisions about my daughter's welfare and all that. My ex has physical custody, which explains why I pay child support. Although had we had joint physical custody I would be contributing considerably to my daughter's welfare but it would be in more proportion to what I could afford.

It's funny. I realize this is a site for asking questions and getting support, but I can't help not talking about this experience because it leaves me so raw.

I loved my wife. I look back and in the simplest way of explaining it I can say that I married the wrong woman for the right reasons while she married the right man for the wrong reasons. In any case, she is gone. The house is gone. My dog is gone. A family (hers) that I once was a part of is gone. Most of the belongings that I purchased are gone. The dreams I had for my life ahead are gone. And now after so many years of building and battling debt, I'm seeing the rest of it go as well.

And, more than likely, my ex will wish to move away from this area. While I have a geographical restriction in place, once my ex learns of my bankruptcy, she'll know she can take me to court and have it dismissed because she'll know I can't afford a lawyer.

And then my daughter will be gone. And I will barely have the money to see her. And she will be in another city. And there's the part of me that wants to ask my ex if her boyfriend is a good guy, a good provider. That somehow I hope that he can provide for my daughter what I can't anymore---a house, a yard, a dog.

And all I can provide is love. And in this world today, they don't make too many credit card commercials or billboards or Tom Hanks movies covering that.

My daughter is it for me. I'm not the best father in the world, but I'm a devoted one. If anything being divorced has brought me closer to my daughter and more connected as a father. And I just can't lose that one, too.

And I know there are millions and millions worse off than me. And I should feel fortunate. But I don't really.

Several weeks ago I saw "believe" on something and then a few days later I saw it again as a holiday sign on a fence. I sort of held onto that phrase thinking it was there for me. That I needed to believe. Not to rationalize. Not to judge. Not to stress or question my future, but just believe. With my daughter tonight, we watched Polar Express. "Believe" plays a big part in that movie.

Part of me thinks that if I go into a debt recovery program that I could barely squeak by. But then my student loan comes up in August and I'll have to pay on that and then what happens?

I'm not getting a bonus next year. My salary may go up some.
I'm not sure exactly what to "believe." I'm afraid of falling through the cracks on this one after leading a life for the past 35 years of basically having things covered and my life moving forward.

I apologize if this sounds melodramatic, but it is what I'm feeling and just needed to let it out.

[Genenco]

Not a problem JayGZ, I can hear though don't have a clue as to feelings on this.

Frankly, I'd go with the lawyer, hike the expenses..There's more then enough evidence (From what I am hearing from you) to think the trustee will take one look and agree to the Ch 7.

Regarding your wife moving, does she hate you that much? She cannot put her feelings aside for the childs mental health? Or would this be something financially good for her and the child?

I am NOT about to tell a father who loves their child as much as you seem to, to say "Oh well, that's a bummer" She could have the restriction dissolved I guess (Knowing nothing of child custody law) but would think that she'd make major allowances for you to visit.

And if you are put into the Ch 7 you WILL have enough to vist on occasion, but sure, the child needs more then a "3 Day "Hi Honey" visit" from her Father evey 3-6-12 months...

Oh, and your comment about feelings and emotions and problems:
/quote JayGZ
And I know there are millions and millions worse off than me. And I should feel fortunate. But I don't really.
/quote JayGZ

I fully agree with this statement. I knew one who had a tough life, and he'd be FURIOUS with others who'd say "Well, other got it tough!' The thing is, this is PERSONAL, This is YOUR LIFE..No one can FEEL like you do at this or any moment..

To say "Others have it tougher" says "You whine too much!" and that in any persons experience is only DEMEANING to the person who is suffering.

My best wishes (And prayers) are with you...

[JayGZ]

Okay--Kam suggested I post my expenses, and here goes:

Monthly net salary: $4,000

Monthly child support: $ 996
Monthly day care: $ 143
Rent: $ 821
Electricity: $ 80
Gas/Water: $ 15
Car payment: $ 336.51
Gas $ 200.00
Car Insurance: $ 94.00
Groceries: $ 500.00
Lunch/Dining: $ 150.00
Telephone/DSL/Cell: $ 145.00
Laundry/Dry Cleaning: $ 80.00
Entertainment/Sports: $ 75.00 (this is blockbuster and health club mship)
Clothing: $ 100.00 (estimate of mine and my daughter total)
Vision: $ 25.00
Medical: $ 15.00 (estimate on 1 co-pay a month)
Prescription: $ 20 (estimate on 1 prescrip. a month)
Alcohol: $ 50
Total $3,801

CC debt: $23K total
Student Loan: ? Due in later 2006 (balance $8,990)
Signature Loan: $106.00 a month (balance $1,266)
Medical Bill payment: $106.00 a month (balance $1,274)

What expenses could I be missing?
I don't have cable service because I'm trying to save money, do I get cable to boost my amount?
For some expenses they are estimates and some line items I added just because I saw them listed in different bankruptcy files (alcohol, for example).

Groceries may seem high per month but that's for a family of 2. I have my daughter a little less than half of the month, sometimes more. For school, I'm also packing her lunch.

I may be low on some estimates as well because I'm cost-sensitive in my budgeting (going without at times).

I have to believe I can come up with a $100 or more in monthly expenses--more probably too offset listed expenses that could be striked off.

Any ideas?

[Genenco]

Okay--Kam suggested I post my expenses, and here goes:

Monthly net salary: $4,000

Monthly child support: $ 996
Monthly day care: $ 143
Rent: $ 821
Electricity: $ 80
Gas/Water: $ 15
Car payment: $ 336.51
Gas $ 200.00
Car Insurance: $ 94.00
Groceries: $ 500.00
Lunch/Dining: $ 150.00
Telephone/DSL/Cell: $ 145.00
Laundry/Dry Cleaning: $ 80.00
Entertainment/Sports: $ 75.00 (this is blockbuster and health club mship)
Clothing: $ 100.00 (estimate of mine and my daughter total)
Vision: $ 25.00
Medical: $ 15.00 (estimate on 1 co-pay a month)
Prescription: $ 20 (estimate on 1 prescrip. a month)
Alcohol: $ 50
Total $3,801

CC debt: $23K total
Student Loan: ? Due in later 2006 (balance $8,990)
Signature Loan: $106.00 a month (balance $1,266)
Medical Bill payment: $106.00 a month (balance $1,274)

What expenses could I be missing?
Any ideas?

1. Maint of vehicle...That's $50-$100 per month depending on car, driving and how (City driving is MUCH harder on cars then highway)

2. Life Insurance..Have any? Renter Insurance? (Note you SHOULD have renters ins, the owner don't care about what you have, only what THEY own) If you don't have it, get it and drop the booze charge. You might get a AA member for trustee!

3. Medical, Go higher...There's chances (As you grow older) of seeing the doc 2-3 times a month AND pills and such are going higher every week..(Just as an aside, my Mother takes 6 pills every day, costs is $290 a month. That's WITH Insurance!)

4. Do you clean your place with bathsoap or your tounge? Didn't think so, add cleaning supplies there..About $35 a month...( I spend about $50, but that's due to "Unusual Circumstances"

Oh, what type of job do you have? That "Might" slide the $150 dining under the wire, but chancy...

Electricity...Hmmm..That actually seems low..IS that one month? I'd look at yearly..Spikes (Cold weather can bump the figures)

Entertainment/Sports...I'd change that to "Birthday/Christmas" gifts...

Hey, BTW, I get $3845 for total. Add in those "Other payments" and you're in the red Or soon will be.