Attorney advises 13, ?s/concerns

[cleanslate]

My attorney has advised me to file Chapter 13 to protect an annuity in my name. I receive $650 a month via the annuity and that is my only source of income.

He recommends a payment plan of $514 a month for 36 months which would include paying off my auto loan - presently $590 a month with 20 months remaining on a 60 month loan.The plan also includes 1%, about $2000, for other creditors.

He stated that, unless I am a fool and call the trustee, future income offset by an increase in living expenses would not threaten the plan. His receptionist also indicated it was highly unlikely that the trustee would start checking-up on me every year. Is this accurate or rosy thinking?

I asked, assuming my annuity was cashed-in, how the monthly payment would be affected. He stated there would be no effect as the minimum payment is $514. Is this accurate? I don't see any discussion on this forum of a floor for minimum Chapter 13 payments.

Is the annuity safe in a Chap 13 or will future employment allow the trustee to seize the annuity payments?

The annuity is the one sure safety I have and I have not filled because I don't want to lose the annuity. It sounds like, for Chap 7, the trustee will find the annuity and seize the remaing balance. I can't get a clear answer for Chap 13. I'm tempted to sell, though I would lose 20% of its total value, the annuity.

For example, what if the annuity proceeds were to be "lost" gambling, etc...and then I were to file Chap 13?

Thanks!

I want to start over and my attorney claims Chap 13 will allow me to do so but the posts on this forum seem to indicate that Chap 13 is even worse then not filing at all.

[StaciMM]

I don't know your background, anything about your debts, etc. If your only source of income is $650/month in annuity, I am wondering what else there is to the reason your attorney recommended chapter 13? I'm sure you have $650 in expenses! The only thing I can think of is the BK court might see it frivolous that you have a $500 car payment on a $650/mo income.

Most likely, your attorney said your minimum into the plan wouldn't decrease because all it is paying is your car, trustee fee, and 1% to unsecured. Can't go much less than that...

[SinkingFast]

I'm guessing your attny advised Ch 13 because Ch 7 would result in your annuity being cashed out to pay whatever debt it could. Ch 7 is liquidation. Any asset you have of any value, that you cannot exempt will be liquidated and the proceeds distributed to your creditors.

The Trustee isn't gonna have look for the annuity to discover it. You are gonna have to disclose it up front. If you try and hide your annuity, and the Trustee finds it on their own, you will be guilty of Fraud, can be fined and sent to jail.

I've learned here, from other people in Ch 13, and in paperwork from attnys we've Consulted with that increase in income needs to be reported at about 10% or more. Cost of living type increases don't need to be reported because the costs of living have increased as well.

[cleanslate]

Clarifications

I would not attempt to hide my annuity. Rather, I can sell the annuity for cash but would prefer not to do so as I would have to sell the annuity at a discount.

My attorney advised chapter 13 due to property holdings in other family members names that I financially contributed to. However, the contributions came from joint accounts and it could be argued that the funds were not mine in the first place. I have no desire to jeopardize other family members so we, my attorney and I, have decided it is not worth the risk to file a Chapter 7.

I recognize that the annuity would be seized in a Chapter 7. My questions are:

1) Will the trustee be able to garnish my annuity under Chapter 13 if I begin to earn a high salarly?

2) Does the law actually state that if your income increases by 10% your Chapter 13 plan will be adjusted or is this just an experience based example people are tossing around on this forum?

3) If my family were to sell holdings I contributed to purchasing and then returned the amount I orginally contributed would the trustee no longer be able to hold other family members liable?

4) Can anyone recommend an attorney or a referral service for cases such as my own? I live in a small community and my case is too complex/uncommon for the bankruptcy attorneys here.

[SinkingFast]

There are several people here who have been in a 13 plan for quite a while and several who have completed plans. They all said they did not have to report cost of living type pay increases. That's the 3%-4% type of pay increase. Then, in the paperwork we got from one attny, in reference to expected income increases/decreases, that attny's paperwork specifically stated 10% or more change in income.

If you get a high salary job, you'll have to report the change to your attny, who reports the change to the Trustee. The Trustee will then adjust your 13 plan payments according to the increase in pay. Less expenses you incur that are reasonable and necessary for the job. Like clothes, lunches, transportation, and such.

If you family members sell the property and give you your portion of the proceeds while you are in the Ch 13 plan, the Trustee will take those monies and apply them to your 13 plan. If you are at a low payback level, you'll continue to pay out the remainder of the payments. If your proceeds are significant enough, those monies could help to end your 13 plan quicker. Depends on how the 13 plan is structured at the onset.

We had lots of trouble finding an attny as well, Clean. Small town. Lots of the BK attnys had quit with the changes in the Law. Many didn't wanna take us because we have to use out of state exemptions. They felt all the changes with the New Law were enough to deal with let alone having to learn the exemptions of another state. Best thing I can suggest is ask BK attnys in your area for referrals to BK attnys they might know within your District in another, bigger town. One of them may know someone. Otherwise, you'll have to net search by cities in your State's BK District.