question about filing ch 7 ch 13?

[jencz]

Hello everyone,

I am new here and have been reading many of the threads and have a few questions I am hoping someone can help me out on....

My husband and I completely over extended ourselves by buying another home w/o selling our previous one, thinking we would just rent it out (not for the full mortgage amount of course) and then sell it later. Well, "later' came and went, I lost my job, found a new one (making less $ though) and in the meantime we also lost our renter.

We ran up all our credit cards trying to pay both mortgages and all the bills until finally realizing we could not continue this way. Stupid I know....But I am not playing the victim here, we got ourselves into this mess and now I am trying to determine the best path out.

I met with a bankruptcy attorney in August 07 who told us we needed to wait 4 months to file (we had been using credit cards for my work) and not to use any cc to avoid being sued by our creditors. We also decided to surrender the rental in our bankruptcy as well and have not been making payemnts there. Not having the rental to pay gave me the extra cash flow we needed to not use the c cards. Things are tight but managable.

At the time we met with the attorney she was not sure if we would file ch 7 or ch 13 until all our income statements were in, minus the rental income. We are right on the line of ch 7 or ch 13. The attorney was leaning towards ch7 but did not want to qoute this for sure...We are scheduled to met with her again on Jan 5. Now we have learned my husband's employer is now laying off due to the economy and he strongly supects he will be lossing his job this January.

My questions for all you is this~will this job loss help our filing chapter 7? And if so, should we wait until my husband actually losses his job to file?

We also owe backtaxes from 07, about $10,000 which I have been making monthly payments($200 per mth) on. I supect we will have a big enough return from 08 to wipe this debt. out but would also like to keep the return to help build a nest egg again. Or am I just dreaming?

I am of the understanding with a ch 13 I could keep my return but have to commit to a monthly payment for a minimiun of 3 yrs. I think our attorney thought the payment would be about $440, of course this is with my husband still employed which he most likely will not be.

So my other question is this~should I file ch 7 and be done with it or fill ch 13 and keep my tax return to built my savings and commit to affordably monthly payment plan? Or is there even such a thing as a affordable payment plan with ch 13?

Any advice on this would be greatly appreciated!

Thank you all, I know I am asking alot here.... I am just soo glad I found this forum, it's nice to know I am not alone....

[MJJ3767]

Since you asked, I think you are dreaming. : ) First, if you expect a refund and owe back taxes, the IRS will keep any refunds until they are paid in full.

As far as your 2nd question, I believe that every state and trustee is different. It seems that if you are in 100% payback, you can keep your refund. In my case, I am in 0% payback and the IRS had placed a lien on anything I own so those assets became secured property. I have to repay the IRS the equivalent value. The rest of the IRS debt is unsecured and is not being repaid. Any future return that I expect will be handed to the trustee to pay my creditors.

Filing Chapter 7 and being down with it? I don't think that is possible with your taxes. Your taxes are too recent and wont be written off in a Chapter 7. You can file Chapter 7 but you will still have those taxes hanging over your head.

I think either way you proceed, file 7 or 13 or not file at all, you should plan not to see any return for a while.

[jencz]

Thanks for the reply, I thought it sounded too good to be true.....

I think we will try for the chapter 7 and count on this years return taking care of the back taxes. I am expecting about a $10,000 return so this will hopefully wipe out the taxes we owe and then the ch 7 (hopefully)will take care of this rest.

One thing I am learning, nothing is what I expect it to be....so hopefully I am not still dreaming :

Thanks again!

[MajorMike]

You're going to get a $10,000 refund???? How did you manage that?

[jencz]

by claiming 0 and holding at a higher single rate on both mine and my husband's income and having a lot of deductions, including medical.

Owing the IRS really scares me so I did this deliberately to be able to pay off my back taxes

[bpn2009]

by claiming 0 and holding at a higher single rate on both mine and my husband's income and having a lot of deductions, including medical.

Owing the IRS really scares me so I did this deliberately to be able to pay off my back taxes

You should probably rethink that idea of such a high withholding rate. That is money you could've been used during the year. It is a balance that you have to figure out especially when those tax deductions.....er, I mean children start leaving the nest.

During our chapter 13, we took the maximum exceptions so that we could get those funds to spend during the year instead of waiting a year to get a refund. Before CH13 tax return $6900.00 now tax return $2300 = $4600 / 12 = $383.33 a month more in budget.

Of course your situation will differ from mine, just something for you to consider.