Going to Chapter 13?

[madmama73]

Originally thought we were filing Chapter 7 but when we met with the attorney yesterday he advised Chapter 13 due to the fact we own our home and vehicles. To buy back assets under Chapter 7 would be around 40,000 which we are unable to afford. When we left his office I reviewed the Monthly Income worksheet and found I had made an error in payroll taxes, insurance deductions to the tune of 465.00 ( he calculated we had about 400.00 for Chapter 13 plan). He is very difficult to deal with and I am sure will be furious because of the error in paperwork. He is contemptuous of almost everyone as they are inferior to him in intellect ( His words )!

We are dealing with an IRS 2009 tax debt of 19,000 and received a letter of intent to file lien, garnishment, etc... within 30 days. Have not paid unsecured debt in 3 months and they are sending letters and calling daily. The way I understand it we cannot file Chapter 7 and now because monthly income is in the negative balance after deductions and expenses we will not be able to file Chapter 13! What can our options possibly be?! The only asset we have is my IRA which is worth $27,000.. Any suggestions would be welcome!

[newbie2]

Originally thought we were filing Chapter 7 but when we met with the attorney yesterday he advised Chapter 13 due to the fact we own our home and vehicles. To buy back assets under Chapter 7 would be around 40,000 which we are unable to afford. When we left his office I reviewed the Monthly Income worksheet and found I had made an error in payroll taxes, insurance deductions to the tune of 465.00 ( he calculated we had about 400.00 for Chapter 13 plan). He is very difficult to deal with and I am sure will be furious because of the error in paperwork. He is contemptuous of almost everyone as they are inferior to him in intellect ( His words )!

We are dealing with an IRS 2009 tax debt of 19,000 and received a letter of intent to file lien, garnishment, etc... within 30 days. Have not paid unsecured debt in 3 months and they are sending letters and calling daily. The way I understand it we cannot file Chapter 7 and now because monthly income is in the negative balance after deductions and expenses we will not be able to file Chapter 13! What can our options possibly be?! The only asset we have is my IRA which is worth $27,000.. Any suggestions would be welcome!

You state that your only asset is the IRA but in the first paragraph you state to buy back your assets would be $40,000.

I don't know what is going on in your situation, but you sound confused as well so I would most certainly shop around for another attorney! (Hopefully you didn't already pay this attorney in full)

Good luck to you.

[madmama73]

I meant a cash asset of 27,000. The vehicles are worth 16,000 and we have home furnishings,etc.. to bring what he calculated to be a buy back of around 40,000. I am confused as to what our options will be in filing. Unfortunately we have paid him 500.00 in fees with a final of 350.00 due at last meeting scheduled for 5/21.

[ssmdem]

He is very difficult to deal with and I am sure will be furious because of the error in paperwork. He is contemptuous of almost everyone as they are inferior to him in intellect ( His words )!

Are you kidding me?? YOU'RE paying HIM -- don't put up with that crap! If he was really all that bright, he wouldn't need to be tooting his own horn. I'm sorry you've already retained him -- but I wouldn't be so quick to settle for using him. You may be out what you've already paid him, but I'd rather lose that money than deal with that attitude throughout your case!

[ssmdem]

I meant a cash asset of 27,000. The vehicles are worth 16,000 and we have home furnishings,etc.. to bring what he calculated to be a buy back of around 40,000. I am confused as to what our options will be in filing. Unfortunately we have paid him 500.00 in fees with a final of 350.00 due at last meeting scheduled for 5/21.

Is the $27,000 an IRA - or is it a cash account? IRAs should be exempt. Your $16,000 in vehicles - are there no liens on them, you have a clear title, not making payments on them?

[ssmdem]

The way I understand it we cannot file Chapter 7 and now because monthly income is in the negative balance after deductions and expenses we will not be able to file Chapter 13!

Why can't you file Chapter 7? Is your income over the median income for your area - did he explain this to you?

If you're truly in a negative balance - going to have to looks at the means test to see, then you do qualify for Chapter 7.

I think you still have alot of questions that aren't getting answered. If this attorney isn't willing to do that, please do yourself a favor and find someone else. This is a big decision and a major stepping stone in your life. You need to make sure you do it right with the right person advising you.

[SMinGA]

I don't think the problem is that they can't file for ch. 7 - but that they would lose non-exempt assets in ch. 7 and don't want to do that.

I agree that you need to seek out alternate attorneys - the $500 paid is gone no matter what, but do you want to waste more time & money and not get any help?

Why can't you file Chapter 7? Is your income over the median income for your area - did he explain this to you?

If you're truly in a negative balance - going to have to looks at the means test to see, then you do qualify for Chapter 7.

I think you still have alot of questions that aren't getting answered. If this attorney isn't willing to do that, please do yourself a favor and find someone else. This is a big decision and a major stepping stone in your life. You need to make sure you do it right with the right person advising you.

[SMinGA]

Madmama, can you give more info?

What state do you live in - that determines exemptions.
What are you vehicles worth, are there loans against them or do you own them outright?
What is your home worth, what is owed on it?

[ssmdem]

Originally thought we were filing Chapter 7 but when we met with the attorney yesterday he advised Chapter 13 due to the fact we own our home and vehicles. To buy back assets under Chapter 7 would be around 40,000 which we are unable to afford. When we left his office I reviewed the Monthly Income worksheet and found I had made an error in payroll taxes, insurance deductions to the tune of 465.00 ( he calculated we had about 400.00 for Chapter 13 plan). He is very difficult to deal with and I am sure will be furious because of the error in paperwork. He is contemptuous of almost everyone as they are inferior to him in intellect ( His words )!

We are dealing with an IRS 2009 tax debt of 19,000 and received a letter of intent to file lien, garnishment, etc... within 30 days. Have not paid unsecured debt in 3 months and they are sending letters and calling daily. The way I understand it we cannot file Chapter 7 and now because monthly income is in the negative balance after deductions and expenses we will not be able to file Chapter 13! What can our options possibly be?! The only asset we have is my IRA which is worth $27,000.. Any suggestions would be welcome!

I don't think the problem is that they can't file for ch. 7 - but that they would lose non-exempt assets in ch. 7 and don't want to do that.

I agree that you need to seek out alternate attorneys - the $500 paid is gone no matter what, but do you want to waste more time & money and not get any help?

Shouldn't an IRA be an exempt asset though? I'm just wondering if she truly has the amount of assets she thinks.

But yeh, my hot button was that attorney's comment. Nothing sets me off faster than someone who is that arrogant. Why on earth would you tell a client almost everyone is inferior to you in intellect --- good grief, bet he's fun at dinner parties!

[madmama73]

SMinGA - All but one vehicle is owned outright. Home is owned outright and yes I understand the IRA is exempt. We live in AR and I have read exemptions and understand the home is exempt.. Evidently he is basing the buy out on vehicles and assets in the home ( he said we are only allowed 1,000 in personal belongings). We have been married 39 years - naturally have accumulated furniture, etc.. Not that it's all so valuable but it isn't junk either. We just moved to AR and retained this lawyer through a legal plan through husbands employer. Really cannot afford to change lawyers so will try to work with this one. His reply to my email was "Thanks for the note - will see you soon". Am assuming with that reply my error was noted and he was not concerned that we would not be able to file Chapter 13. Thank you for your input and hopefully I will be able to report good news soon!

[SMinGA]

How long ago? You don't use AR's exemptions if you have lived there less than 2 years.

If you have not lived in AR for 24 months, where did you live from 24-30 months ago? You use the exemptions of the state you spent more than 1/2 the time in that 6 month window.

We just moved to AR and retained this lawyer through a legal plan through husbands employer.

[momofthree]

cannot afford to change lawyers

Sounds to me like you can't afford NOT to change lawyers. Yes, it may cost you an extra $1000 or so (most ch. 13 include lawyer fees into the payment plan so you just pay retainer up front), but it could save you 10s of thousands depending on how willing an attorney is to fight for you...Plus, I've heard really bad things about attorneys on "employer legal plans."

[SMinGA]

Ultimately, the attorney is probably right that chapter 7 will be a problem unless you give up assets. To figure out exactly where you stand regarding exemptions you need to figure out which state's exemptions to use based on when you moved and where you have lived over the past 2 to 2 1/2 years.

Since your home is owned outright and you also own cars outright - you're likely to have non-exempt assets. I don't know of any state that allows you to fully protect a home and still allows generous vehicle/personal property/wildcard exemptions. I don't know the exemptions for every state off the top of my head, but I doubt such a state exists - since if you own alot of property outright you're not really bankrupt.

If you do have non-exempt assets, on top of $19,000 tax debt, you'll need a lot more income in order to fund a feasible ch. 13 plan. Enough to cover the assets & tax debt & trustee fee in 60 months. The other option is to liquidate the non-exempt assets, which would open up the ch. 7 option but you'll still owe taxes.