A few questions....

[jennordhavn]

Hi, I am relatively new here. I've been reading the forum for a couple weeks and this is definitely the most informative and least harsh forum on BK I've found in my online searches.

Here is my situation - I filed Ch. 7 bankruptcy in Dec. 2000 mainly due to credit card debt. After my discharge in Feb. 2001, I established new credit fairly quickly with a new auto loan, credit cards and a computer. I was doing well for awhile, but I got in over my head AGAIN. My rent and utilities kept increasing and my daughter's tuition and daycare expenses kept going up as well. I also had to move TWICE (long story) which cost a lot in moving expenses, deposits, etc. I purchased a new car in 2005 when my other one died (2001 Hyundai) so my car payment is large since they paid off my old car loan as part of the new loan. There just wasn't enough money left over to pay all the bills. Now I once again have a bunch of collection accounts and I can't even begin to pay them all. I also have HUGE student loans as I put myself through college and law school.

I am about to let my car get repossessed because I just can't afford the payment and insurance. Luckily my fiance has two cars, so I will still have a car to drive to get to/from work.

I can't file another Chapter 7 until December 2008 and I don't think I can wait that long because once my car is repossessed I will have a large deficiency judgment. Therefore, I am going to file Chapter 13. I need to wait until the end of November since I just moved into this district, but in the meantime I've been doing a lot of reasearch. Today, I was filling out the forms (to see where I stand) and on the Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income it comes to 3 years (which is great!) but it says to mark the box "Disposable income is not determined under 1325(b)(3)" because my average 6 month income is smaller than the median. I'm just wondering how they determine disposable income if they don't use the "IRS standards?" Do they use your actual disposable income based on Schedules I & J?

Also, I understand my student loans can't be discharged, but where do I list them? Student loans is not one of the priority claims so I don't think I list them there. Do I put them under the unsecured non-priority and they just don't get discharged? Also, I included the payment in my expenses since it's not dischargable, is this correct? I need to know because the payments are large ($480). I am assuming I can just make the payments directly to the lender as long as I've listed it properly.

One more question: Do I list both the original creditor and the collection agency on the list of creditors? Some of these are old and I no longer have the original statements, but if I need to list the original creditor, I'm sure I could find the information.

Thanks in advance for reading this long post and for any information you can provide.

[lrprn]

Hi J - welcome to BK Forum - glad to hear you've been lurking and learning!

I can't file another Chapter 7 until December 2008 and I don't think I can wait that long because once my car is repossessed I will have a large deficiency judgment. Therefore, I am going to file Chapter 13.

You can do this if you show sufficient disposable income on your Means Test and Schedules. And I hate to be the one to break this to you, but 3 year plans are rare under the current bk law. Most Ch 13 filers end up in five year plans these days.

I need to wait until the end of November since I just moved into this district...

Have you lived in the same state for the last two years? This determines which state exemptions you get to use.

I'm just wondering how they determine disposable income if they don't use the "IRS standards?" Do they use your actual disposable income based on Schedules I & J?

This is an area of tremendous conflict right now across the country. Some districts use what shows on your Means Test, others use Schedule I & J. We're dealing with a trustee objection in our case right now over this exact issue.

Also, I understand my student loans can't be discharged, but where do I list them? ... I am assuming I can just make the payments directly to the lender as long as I've listed it properly.

Student loans are considered non-secured so you list them with the rest of your non-secured debt. You're right - your student loans won't get discharged.

Here's the worst part - since student loan lenders will place your student loans into forebearance while you're in bankruptcy, some trustees won't allow you to pay on your student loans until you are discharged. This means your loans will generate interest for the length of your plan. Talk this over with your lawyer to see what to expect in your district.

Do I list both the original creditor and the collection agency on the list of creditors?

Yes, the safest thing to do is list every debt from every original creditor and any collectors they sold your debt to before filing.

My one concern for you is if you will have sufficient income to qualify for a Ch 13. If you look back six full calendar months, how much income from all sources have you received? Which state are you living in? Have you lived in the state consistently for the last two years?

Again, welcome to the Forum family! Keep asking questions - we'll help you sort things out as best we can.

[CindyLou]

Here's the worst part - since student loan lenders will place your student loans into forebearance while you're in bankruptcy, some trustees won't allow you to pay on your student loans until you are discharged. This means your loans will generate interest for the length of your plan. Talk this over with your lawyer to see what to expect in your district.

MY Brother actually included his student loans inside his plan and they will be paid when his 13 is finished. He is however is a 100% payback, that may make a difference.

[lrprn]

MY Brother actually included his student loans inside his plan and they will be paid when his 13 is finished. He is however is a 100% payback, that may make a difference.

Cindy, you are absolutely right - student loans can be included and paid in Ch 13 if they can be paid off completely by the end of your plan.

Unfortunately the large student loan total for most Ch 13 filers makes this impossible. Since jenn was making student loans payments of $450/month, I figured this wasn't going to be an option for her (it isn't for most Ch 13ers, us included) so I didn't mention it. For example, if we had included our $22K Parent Plus loans in our 5-year plan, it would have increased our monthly payment by over $400/month - we just couldn't add that much to our calculated Ch 13 payment each month to pay off the student loans in five years.

I swear student loans are like the black sheep of bankruptcy - non-secured loans that can't be discharged short of total disability (and sometimes not even then). They sure can create a mess inside Ch 13.

[CindyLou]

yes, they do create a mess and thanks for that info. I was wondering why they let him include them. That clears that up. I didn't know what the qualifyer was as far as including them.

[jennordhavn]

Thanks for all the information

Thank you for all the information. To answer some of the questions that came up:

Yes, I have lived in the same state (California) for 2 years (my whole life, in fact......lol). I'm waiting to file because I want to file in the district I live in now, because it will be more convenient. You need to live in the district for the majority of the preceeding 180 days. Also, I need a couple months to save the money for an attorney anyways.

I do have sufficient income to make a Ch. 13 payment. I just started a new job so I make a good salary, above average for my state median. But if I file in November and go back 6 months, I'm still below the median.

As for the student loans, I definitely cannot include them because there is NO WAY they will be paid off in five years. I owe $137k and they have been in deferment/forbearance since 2003. The only reason the payment is low is because I am on the graduated payment plan so the first two years have lower payments. They are already consolidated so the interest rate is low (3.5%). So I guess if they are put in forbearance for another 5 years I can live with that. But I assume that means that the $480 I would pay to the lender will then go into the Ch. 13 payment??

If I use Schedules I&J it shows I have a about $700 disposable income so if they include the student loan payment also that would mean I'd pay close to $1200 to the trustee for 5 years. That seems high. I don't know if it would even be worth it to file. I really don't think that I could realistically manage that for five years. I think I used high estimates for my expenses, but perhaps I'm leaving stuff out because I sure never have $700 left over now. In fact, I'm struggling to pay all my bills (and I haven't yet made my student loan payment, it starts in October) and my account is always negative and I'm sick of paying overdraft fees.

I don't think that any of my collection accounts will sue since they have been delinquent for three or four years and haven't bothered to sue yet. My main concern is the deficiency balance on my soon-to-be repossessed car. If I could pay the payment until April, then I could do a cramdown and end up paying only about $5-6k while my loan is about $16k. Then paying more to the trustee may be worth it. But I don't think I can manage it, especially with my high insurance (I already switched companies and saved $80/mo.) and I'm already 1 1/2 months behind on the car payments and my registration is 2 months past due.

I guess I need to discuss all of this with an attorney. I consulted one last year and he suggested I wait to file a 13 until my car was 910 days old and/or wait until Dec. 08 and file a 7. But with my new job I make about $3k more than the median and I don't think I'd pass the means test. Plus, as I said, I don't know if the car lender will hold off that long. I think one option would be if my fiance and I got married. Then I would be able to use higher expenses since he is currently in school and has no income. That would put me below the median and show much less disposable income. Maybe I need to travel to Las Vegas and get hitched.........lol.

[JollyGG]

http://www.ca-bankruptcy-attorneys.com/calculators/expense_calculator.html

Here is an expense calculator to help you make sure you are including everything you need to in your budget.

A link to it can be found in the general bankruptcy section under "Links for members".