Advice needed. in desperation

[bw77]

Hello all. I am in a bind and not sure exactly what to do and if ch13 is an option or not. Here are some data points.

1. 40k (roughly) creditcards
2. 44k IRS debt
3. IRS lien on my house
4. Balanace of 155,000 on my mortage 30 year fix (8 years into it)
5. Never been late on mortage or bills
6. Pay about 600-650 amonth on cc ( minimum+)
7. Just finished paying off $22k student loan (which was accidently defaulted)
8. Have a low credit score due to IRS and student loan. Score low 500
9. I make roughly 125k a year single income (same company for 6 years)
10.1 car payment of $225 a month ( owe 10k on balance)


Basically, i dont think i can ever pay back the credit card companies with the high interests rates if i have to pay for the IRS. I don't plan on trying to cheat the system and willing to man up to the hole i've created. I just need a good plan and path to take.

Thankyou all for your advice.
-w

[enginegirl]

Bankruptcy is an action of last resort for most of us... have you talked to a counseling service???.. get connected to a reputable nonprofit credit counseling organization in your area, contact the National Foundation for Credit Counseling by calling toll-free (800) 388-2227 or by visiting their website at DebtAdvice.org.

Just looking at the above they may be able to get you a plan or at least help you put a budget together.... if you go into a chap 13 at your salary you will more than likely be in a 100% payback plan .. and they will take every single cent of you disposable income.. probably around 1800+ a month! think long and hard.. and see if you can find an alternate plan

[Flamingo]

I would suggest two things; first get a free consultation with a BK attorney in your area to find out exactly where you stand financially and what you can or cannot do as to filing BK. I don't think you will be too happy with the outcome and you would be facing probably a Chapter 13 and your IRS debt will have to be paid out over the course of the Plan. The IRS lien will not be removed by the BK - I suggest getting some good legal advice. Secondly, You need someone to take a long hard look at your finances to see whether or not you could dig yourself out of this if you rein in your spending and batten down the hatches for several years. Do you have a payment plan with the IRS? Have you negotiated with any of your creditors to lower interest rates? You need some professional opinions so you can get yourself on course.

[catleg]

My thoughts: do you have a 401k? Is there one available to you at work?
Do you have equity in your house?
Seems like a ch13 plan would have to cover about 105k of debt in 5 years (40k cards, 44k IRS, 10k auto, ~8k trustee fees, ~3k attorney fees). So call that $1750 a month max. That assumes that in a 100% plan interest stops accruing on unsecured claims, does anyone know if this is true?
Your lowest possible plan would be all of the above but paying de minimus to the credit cards so your monthly payment would be about half, say $900 a month.
The IRS claim will be split and penalties and interest become unsecured debt.
If you can fund a 401k at the same time you may be able to put away some savings for yourself at the expense of the credit cards.
So you would need to look at your income, current taxes, mortgage and living expenses and see how much would be left over. Hopefully somewhere around $1000 a month would be perfect.

[bw77]

My thoughts: do you have a 401k? Is there one available to you at work?
Do you have equity in your house?
Seems like a ch13 plan would have to cover about 105k of debt in 5 years (40k cards, 44k IRS, 10k auto, ~8k trustee fees, ~3k attorney fees). So call that $1750 a month max. That assumes that in a 100% plan interest stops accruing on unsecured claims, does anyone know if this is true?
Your lowest possible plan would be all of the above but paying de minimus to the credit cards so your monthly payment would be about half, say $900 a month.
The IRS claim will be split and penalties and interest become unsecured debt.
If you can fund a 401k at the same time you may be able to put away some savings for yourself at the expense of the credit cards.
So you would need to look at your income, current taxes, mortgage and living expenses and see how much would be left over. Hopefully somewhere around $1000 a month would be perfect.

Thanks for the quick reply. Yes my company has 401k but i've stop putting money in ther for the past year hoping to use that money pay off some of the debt. I do have equity in my house but i cant refinance because my credit score is too low + the irs lien. I'm confused of what you are saying here..... are you saying file ch13 and pay $900 or $1000 a month and put the other 1000 in the 401k? Pardon my ignorance but where does the 401k fit in this picture?

[bw77]

I would suggest two things; first get a free consultation with a BK attorney in your area to find out exactly where you stand financially and what you can or cannot do as to filing BK. I don't think you will be too happy with the outcome and you would be facing probably a Chapter 13 and your IRS debt will have to be paid out over the course of the Plan. The IRS lien will not be removed by the BK - I suggest getting some good legal advice. Secondly, You need someone to take a long hard look at your finances to see whether or not you could dig yourself out of this if you rein in your spending and batten down the hatches for several years. Do you have a payment plan with the IRS? Have you negotiated with any of your creditors to lower interest rates? You need some professional opinions so you can get yourself on course.

Thanks! i paid a tax lawyer 6k to help resolve my situtation with my tax. they are in the process of coming up with a payment plan i believe. Does the interest on the IRS debt reduce if i file ch13?

[bw77]

Bankruptcy is an action of last resort for most of us... have you talked to a counseling service???.. get connected to a reputable nonprofit credit counseling organization in your area, contact the National Foundation for Credit Counseling by calling toll-free (800) 388-2227 or by visiting their website at DebtAdvice.org.

Just looking at the above they may be able to get you a plan or at least help you put a budget together.... if you go into a chap 13 at your salary you will more than likely be in a 100% payback plan .. and they will take every single cent of you disposable income.. probably around 1800+ a month! think long and hard.. and see if you can find an alternate plan

The reason why i am considering 13 is that (1)credit is already bad due to tax lien other things.... (2) reduce interest rate while paying back. What are the disadvantages of filing considering i plan on using cash for the next 5 years. I'm alreadying doing that today....

[jetsfan2010]

I dont make anywhere near what you make a year, but other than that, was in a similar situation. I originally filed, but with a previous job, the fluctuation in income(commission based before) made my original plan payment out of whack, and I was in a 100% plan. Now, I am on a fixed income*, salaried, and the IRS tax debt, CC debt, and other bills are all at a fixed payment. I was selling my house anyway, so that wasnt a motivating factor.

consult 2-3 bk attorneys in your area, and get an idea if you hear a concensus of what to do.

[catleg]

Thanks for the quick reply. Yes my company has 401k but i've stop putting money in ther for the past year hoping to use that money pay off some of the debt. I do have equity in my house but i cant refinance because my credit score is too low + the irs lien. I'm confused of what you are saying here..... are you saying file ch13 and pay $900 or $1000 a month and put the other 1000 in the 401k? Pardon my ignorance but where does the 401k fit in this picture?

The 401k is the ultimate shelter in a chapter 13. Your assets contained in it are exempt, and whatever you contribute does not count as disposable income which must be paid into the plan. Therefore, in essence, contributions to a 401k allow you to create savings rather than pay unsecured creditors, as long as your plan otherwise meets ch13 rules.
Since your debts are not that high relative to your income a ch13 would get the IRS off your back, force a payment plan on them, reduce penalties and interest, and allow you to create some savings.