Budget Questions if I go CH13

[Tom_Mi]

Hi all,

I've had a real estate investment (2 apt buildings) go sour and it's wiped me out. I have a decent job, and little consumer debt, just 2 apts that are upside down for about 150,000 and behind on payments. My atty thinks because it's a failed business we "might" be able to get a CH7 but we are planning for the worst. Some of the plan failure stories I've read about sound like the program is pretty draconian. My wife is really worried that a CH13 plan will kill us, and I'm worried she's right. Can you all please let us know if a 13 will allow any of the following? (We're in Michigan)

-401k... Am I essentially NOT allowed to contribute to my 401k for 3 solid years? I'm 40, I've lost my savings and this is unacceptable.

-Home Mortgage Pmt: My home loan has an option to pay 30yr or even 15yr amortization per month. Would the Trustee let me budget the 15yr amount? I figure this might help offset if I have to lose 3 years of retirement savings above.

-Will my 3 young children get nothing but socks and soup for birthdays and christmas? We tend to budget 90/month for that now.

-Will we not be able to enter a movie theater for 3 years? (or budget any sort entertainment expense)?

-can I assume also that my kids won't see a family vacation or camping trip for 3yrs...as that can cost 500+ with gas/groc etc?


Many Many thanks for any opinions you can share on any of the above!

-t

[Flamingo]

As to the 401(k) - the money you contribute to your 401(k) plan is considered disposable income to you. Contributing is voluntary. It all depends on your trustee and district as to whether or not you will be allowed to contribute and, if so, at what percent of your income. The money already in your 401(k) will be exempt.

Home mortgage payment - uncertain as to that; will probably work with the payment you have been making for the past several months and may not allowed to switch to a higher payment - ask your attorney.

You will not starve and suffer during a Chapter 13 but it will be a dramatic lifesytle change for your family. No more credit cards and living on cash only. It's an eye opener but a great lesson learned, believe me. Many do not want to see a credit card again when finishing.

You will not be chained to your house for the term of the Plan and if you budget carefully you can get out to eat now and then or go to the movies. It all depends on how you run your budget and save what you can. You may have to put expensive vacations on hold for a while but know that when your Plan is over, you will probably be able to plan them again, within reason.

Chapter 13 is not a death sentence but a way out to a fresh start and a way to keep your home. While it may be difficult to get through, just the chance at being able to do that is worth the effort.

There is lots of support on here as you will find out as you go along. I've been through it and there are good times and bad times; it all depends how you can adjust after filing.

[itneverends]

I am in Michigan and am at the end of my 13, so I am old law. So things might be different now. But I can answer in general.

401K- I had to stop all payments. Unacceptable? I don't know, I think wiping out $100K in debt will do more for my retirement than the 3 years of payments would have done.

Home Mortgage- everyone has the "option" of paying more, but more than likely it is going to be based on what you were paying. Your bank and mortgage statements are going to show that to the trustee.

Gifts, Movies, Trips- No, $90 a month for gifts will not fly in the budget. But you will have wiggle room in your budget and you will have to decide want is important. Are you willing to give up the your clothing budget to buy gifts for the kids? Will you buy your food at Aldi so you can afford the movies? Not run the air conditioning so you can take a trip?

I give my kids way less in the way of gifts now and they honestly do not even notice. It is not easy, but I am about 2 months from being pretty much debt free expect for my mortgage. I would not have even thought that was possible 3 years ago.

[rrockinggramma]

I am in Michigan also and a lot depends on the trustee you have. Some are more "strict" than others. I am in the Eastern District. And a lot will depend on your attorney as well and how good he is working with the trustee to get your budget approved.

[Tom_Mi]

new question removed..posted as a new thread