Sad newbie...many questions :( please help

[gava1910]

Hi my husband and I are seriously considering filing ch 13 because we are at our wits end. He is a self employed contractor who makes a lot of money (12K/month) but it is so erratic, because of the nature of his job and when customers pay him etc. we have so many bills that just one month of being behind is pretty much forcing us into bankruptcy. We just built a beautiful home for our four children 2 years ago and I want to do everything in my power to keep it. I work very part time but am mostly a SAHM. What has happened is that he gets deposits from customers for 1/3 labor plus materials...say that job doesn't start for a month or so. And the current job he is on gets delayed...we end up using the deposit money (including material $) to pay our bills, and then just make that up with the next deposit. It's an awful vicious cycle and it finally caught up with us. My major questions are these (we are meeting with an attorney Thursday):

When does one decide to file? If we already know this is what we plan to do, should I just stop paying all of my bills? We have good credit and have been mostly able to keep up until this month our mortgage and car payments are 1-month past due.

How long does the process usually take from filing to starting the plan? 30 days the first payment is due, but how long are bk proceedings?

Since he is self employed, how will the repayment plan work? One lump sum per month, bi-weekly? My biggest fear is not being able to pay one month, not because we won't make the money but because of the unstableness of income from month to month.

Our house probably has about $40,000 in equity, but since we are in PA we can use the federal exemption which would make that null and void ($22,000 each, right?). Does that mean we won't have to pay any unsecured debt?

We are currently on a payment plan to pay $17,000 in back taxes from 2912 when we didn't file quarterlies. We owe another $9,000 for this year. Will that be worked in?

I recently got a loan from lending club to consolidate debt, and I have only made one payment. I feel like such a piece of crap about that. Ugh. This is so upsetting.
ThAnk you in advance

[159515951]

Nothing beats the advice of a good attorney, but here's my $0.02 based on my personal experience:

1. Once you're POSITIVE you're going to file, there's really no reason to continue paying your bills unless you plan on keeping something with secure debt (e.g. car) and don't want the chance of it being repossessed prior to filing. As far as credit cards, etc. go, once you're sure you're filing, continuing to pay them makes little sense. Now, there is a contrary opinion that your credit will repair itself sooner if you enter a Chapter 13 without any late payments, but my opinion is that a bankruptcy is going to kill your credit anyway.

2. I think it took us less than 60 days from filing to plan confirmation, but I think this might vary by jurisdiction. If the plan isn't feasible or you get objections from creditors, it might take longer. You'll get better answers on this from the nice people that frequent this forum.

3. The plan will likely look at yearly earnings and make some assumptions to come up with a payment amount. Payments are typically monthly -- again, this may vary by where you live. You're going to want to make sure you have a bit of savings in place to make sure you have a reasonable chance of success with your plan. It sounds like you're living month-to-month right now. Once you decide to file, sock away everything you would be using to pay bills and build a bit of a (hopefully exempt) nest egg for those bad months. This can/should be done prior to filing.

4. Equity in your home and unsecured debt are two different topics. I would be very surprised with your income level if you didn't have to pay back some unsecured debt.

5. Yes, owed taxes can be included in your plan as a priority item.

6. How recently did you take that consolidation loan? Your lawyer will tell you more about this, but you have to be careful about incurring new debt right before filing in order to avoid the appearance/presumption of abuse.

[LadyInTheRed]

Weclome to BKforum gava1910!

15955951 has given you good answers. To clarrify a bit about your home equity and unsecured debt, because you can exempt the equity, it does not create a minimum that most be paid to unsecured creditors during your plan. But, that doesn't mean your unsecured creditors will not get paid. That depends how much of your plan payment is left after unsecured and other priority debt areaid.

If your husband's irregular income is what got you to where you are, that is also going to be a challenge during a Chap 13. You are going to have to budget and build a cash cushion so that you have the cash for your plan payment even in months where income is lower. Most plans are monthly payments, but I have heard of plans that provided for payments twice a month. I have never heard of a plan that allows payments less frequently than once a month.

[ValleYum]

Lending Club loans appear to be just a fancy payday loan IMO.