New Pro Se Chapter 13 Filer with questions

[Dopey]

I filed my Chapter 13 on May 19th. I completed an emergency barebones due to an IRS public levy. I've completed all the forms and schedules on my list. I have a status meeting coming up this Wednesday. I'm planning on filing the rest of my forms while I'm there to meet the 14 day window.

However, before I file my Chapter 13 plan, I have a few questions. I am below the state median income so I'm obligated to a 3 year plan. However, my main debt is child support and taxes. My disposable income comes out to $27 a month. Yet as I understand it, I must pay off my child support in full. To do that, my payment would be $1300 a month at 0% interest for 5 years. So how do I put together a plan that pays off the child support with only $27 in disposable income?

In the mean time I am filing an OSC with the family law court to get the amount reduced by $40,000 due to fraud. Even if justice is served and I win, I still owe $36,000 of which 50% is interest. So realistically, I only owe $18,000 in principal which is a more workable number.

I also have a $240,000 IRS lien which is what forced me to file in the first place as well as $15,000 in state taxes which are all considered priority debts. So my plan must pay these off as well?

The IRS figure is an assessment due to some un filed business returns from over a decade ago. My current wife ironically is a tax preparer and is preparing the returns which will reduce the IRS debt down to around $20,000 with interest and penalties which is also a more workable number.

My problem is I have to submit my Chapter 13 plan within a week to meet the deadline. However, the numbers will change drastically before the 341 meeting July 2nd. So I'm guessing I'll have to file an amended plan then with the current numbers?

I wish I had the funds to hire an attorney, but I am flat broke, so here I am. I am currently paying 10% interest on the child support in addition to my current support. I haven't been late or missed a payment in over 3 years. My arrears are from the great recession of 2008. So as I understand it, I'm paying 10% now to the Child Support Department plus the trustee is going to charge me 6% which will put me up to 16% so it seems chapter 13 is more hurtful than helpful. I have a feeling my case will be converted to a chapter 7 and I'll be back to paying 10% interest on a debt that keeps going up.

Pretty frustrating....

[LadyInTheRed]

My disposable income comes out to $27 a month. Yet as I understand it, I must pay off my child support in full. To do that, my payment would be $1300 a month at 0% interest for 5 years. So how do I put together a plan that pays off the child support with only $27 in disposable income?

You don't. To have a feasible plan, you have to adjust your budget so that Schedules I and J show enough disposable income to pay the amounts that you are required to pay in the plan. It doesn't sound like you can do that. You are including your wife's income in household income, right?

Did you consult with any attorneys before you filed? If not, I suggest you do so now. Most BK attorneys give free consultations. Even if you can't afford to hire one, you may at least get some good advice on what to do now.

Do you have any assets to protect? Do you have any significant dischargeable debt? Did you try to negotiate a payment plan with the IRS? It sounds like that may be a better option than a Chap 13, at least until you resolve the child support issue.

[justbroke]

There is absolutely no way to tell what your plan would, could, or should be. A Chapter 13 Plan is a work of art. If, after all of your necessary and reasonable expenses (housing, food, clothing, utilities, secured debt (house, car), taxes, medical, etc), you only have $27, then there is no way to file a feasible plan (period).

It reads that you have a serious tax problem and the course of action may have been to find a way around the taxes. You really need an experienced bankruptcy and/or tax attorney. There are too many questions around the dischargeability of the old taxes (unless they are "trust fund" related) . In both the tax and child support case, it reads as though negotiating a compromise or reduction should have and still needs to be accomplished.

Otherwise, bankruptcy will never solve problems with non-dischargeable debt.

[Dopey]

The only way I can adjust my expenses is to give up my apartment and move into a cardboard box and eat out of trash cans. I already have a bare bones budget with no savings, nothing going towards retirement, and all my expenses are already way under national standards as it is. No car payments. No credit cards. Just rent, utilities, food, transportation, health insurance, child support and food in our budget. Not much to trim.

It's hard to increase my income because I'm at the top of the pay scale for my trade as I've been in it for over 20 years. Also I work on call as needed so I can't get a second job as it would conflict with my on call schedule.

My wife isn't working due to a lack of a work permit or green card as she wasn't born in the US, she's from Peru. We consulted with an immigration attorney to file her petition but we were told to take care of the child support issue first as it would become an issue during the immigration process. Sort of a Catch 22. We've been married for a year and a half and the balance has gone on up on the child support instead of down due to the 10% interest. My arrears payments are going 100% to interest instead of child support.

My wife has a bachelor's degree in finance and really wants to work. She's going a little crazy staying in our apartment everyday by herself waiting for me to come home from work. She can't even go anywhere because she doesn't have a driver's license either.

We have no assets. I haven't even bought my wife a wedding or engagement ring yet. Our car is a 92 Jeep Cherokee with 250,000 miles on it. All our furniture is from the local thrift store as well as most of our clothes. I have around $14,000 in an IRA which I believe is exempt. I lost my house due to the great recession. I was unemployed for a couple of years which is what created the arrears debt. Courts wouldn't reduce my support obligations because it's not based on income, but potential income of which I had none nor any unemployment income. I was in the underemployed category in 2008, 2009, and most of 2010.

I tried bargaining with the IRS on the phone but they responded by filing the public lien against my income. According to the paperwork they sent to my employer, they were only going to leave me and my wife $400 a month which wouldn't even cover a cardboard box let alone food.

My only dischargeable debt is medical bills.

$40,000 of the child support is from my ex going in to the family support office and telling them our son lived with her from 2007 to 2010 when in fact he was living with me. They of course believe what ever she says and sent me a bill for $34,000 which is $40,000 now with interest. I'm hoping to have that amount discharged.

What I'm hoping to get out of the Chapter 13 is a reduction in interest on the arrears that I owe so I can start paying the support again instead of the interest. There's no negotiating with my ex. All her decisions are based on what ever is worst for me or our child.

I'd really like to pay the support off as our daughter is 20 now and in college. Our son is 16. Really the only way I see paying it off is if the enforcement case against me is closed so I can file my wife's immigration petition and get her to work. A second income would really help. However it's a Catch 22. My ex will never close the case even if it means being paid off. She would rather see me suffer.

What I need is an immigration attorney, a family law attorney, a tax attorney, and a bankruptcy attorney. All four of which I'm flying solo. If I ever get out of this mess I may go to law school as I'll have quite a bit of experience by then.

[justbroke]

Approaching the IRS with an Offer in Compromise (OIC) is not as simple as a phone call asking them to forgive some of the debt. From what I know, as I considered it at one point prior to filing, it needs to be based on some reality with an actual dollar figure that represents something. In other words, you can't just call and say please reduce my balance. Now, putting you into non-collectable status, may be another thing, but you really need some professional advice on this matter.

From what you post, you could never file a feasible Chapter 13 plan anyhow. This is why you need all of those professionals to get you to a point where a Chapter 13 could help you.

[LadyInTheRed]

The IRS figure is an assessment due to some un filed business returns from over a decade ago. My current wife ironically is a tax preparer and is preparing the returns which will reduce the IRS debt down to around $20,000 with interest and penalties which is also a more workable number.

You can't get an IRS offer in compromise or a payment plan until you file your past due returns. I suggest you get those returns filed asap. Then either propose an offer in compromise or a payment plan. Here's a link to information on how to do that: http://www.irs.gov/Payments/Alternat...ip-Information.

I suggest you consult with a BK attorney or check to see if your court has a pro-se filers clinic. You need some professional advice on whether it make sense to continue with a BK at this point.

[Dopey]

My wife worked as a tax preparer for Liberty Tax for 5 years while she was in college. She has a tax payer ID number, but no work permit or green card. She has already completed the returns and we're filing them this week. The IRS debt is down to zero at this point so the IRS is a mute point in the bankruptcy. I would have actually gotten a small refund had I filed the returns on time. The returns were due during my divorce and I just never got to them. Like I said the IRS debt was just an assessment

My real problem is the child support arrears. With the fraud my balance is almost $80,000. So I'm accruing $8000 a year in interest and I'm still paying current support. I asked my ex to go in to the support office and tell the truth but now she's delusional as well. I have all the proof including school records, receipts, bank statements etc to back up my claim but it's just time consuming to fight as the case is in a different county and I work full time with no spare vacation time. I'm loosing wages just with the bankruptcy as it is.

[justbroke]

Well, hopefully when you file those delinquent returns, you also call the Office of Reconsideration. If those returns are that late and the IRS filed substitute returns, then you need to actually get the IRS to accept those newly filed (late/delinquent) returns. I don't know the exact process and perhaps your spouse knows the exact process for filing a tax return once a substitute return was issued. You have more work to do!

As for child support (a DSO), it's the same type of issue. You would need to pay the back support in any Chapter 13. You still don't show that you have the money to pay it back. It keeps reading like bankruptcy won't solve your DSO issue.

[Dopey]

I went to my status conference today. The judge dismissed my case and gave me no reason. He said I need to hire an attorney and should look into a Chapter 7 since I have no assets. I'm not sure what happens next. Can my Chapter 13 be converted to a Chapter 7? Or do I just have to start from scratch since he dismissed it?

He dismissed every single case on the docket. I sat and watched even after he was done with mine just to see if I could learn something. I learned the judge likes dismissing cases.

Anyone have any suggestions?

I filed all my paperwork including my plan and there were no errors or omissions.

[justbroke]

You can convert to a Chapter 7, by notice, within 14 days of the order dismissing your Chapter 13 case. (In fact, the order dismissing case will say as much.)

Here's what I think happened. You proposed an infeasible plan which in no way would ever be confirmable. You may also have irregular income, but an infeasible plan will always be infeasible. At this point, you have too much non-dischargeable debt. A Chapter 13 will not save you, and you should be lucky that your Judge realized as much.

If you go through with a Chapter 7 conversion, only your dischargeable debts will go away. You will still need to deal with both the IRS and the Domestic Support Obligation (DSO). While you would not owe any other debt, you will still be in a very bad position with the IRS and any State enforcement agency.

As a Pro Se debtor, you should have had a PACER account before you even filed. If you look in PACER, there may have been a motion to dismiss from the Chapter 13 Standing Trustee. Was there a Status Conference Statement docked in PACER? Have you read it? Cases are not just spontaneously dismissed and it appears that the Judge believes that you are ill-prepared to understand why your case cannot proceed. That is why the Judge recommended that you hire an attorney.

(As for the judge dismissing cases, most BK judges have a very predictable -- and published -- calendaring method. Typically, certain days at certain times, are for certain matters. The hearing you attended probably had 20-30 cases all scheduled for, let's say, 1:30PM and the judge just went through them with less than 1 minute on each. Most of the debtors and/or their attorney did not attend. In fact, your hearing time may have been just for the Pro Se individuals.)

[Dopey]

I filed my paperwork 30 minutes before the hearing so it wasn't in the system yet. I included a Pacer registration form with my packet and I have an online account now. Yes, it was an 11:30 hearing and most of the people did not show up. Those of us that did were all dismissed as well. In my plan I proposed paying off all the child support and interest over 5 years and a big chunk of the taxes.

I have a steady income of $5,000 a month. I've been working for a university for over 3 years. I used to be a sub contractor in construction but was forced out of business during the recession.

To cover the cost of the payment I brought my housing and food down to $0 with plans of moving into a homeless shelter and eating at the soup kitchen with my wife until we can get her a work permit and a job for her. Once that happens, we should be able to get another apartment.

As long as I can convert it to a 7 and keep the automatic stay in effect we should be fine. My wife filed the returns today but I understand it will take the IRS a couple of months to process them. Once they're processed, my balance owed will be $0

My wife is a real keeper. Most women would bail in times like these or pour gas on the fire. She is by my side and trying to help me put the fire out. With a Chapter 7, my wife working, and the IRS account closed we'll be OK.

[justbroke]

To cover the cost of the payment I brought my housing and food down to $0 with plans of moving into a homeless shelter and eating at the soup kitchen with my wife until we can get her a work permit and a job for her. Once that happens, we should be able to get another apartment.

That is an infeasible plan. No Trustee or judge would ever allow you to submit such a plan like that -- or allow it to be confirmed -- because a.) it's entirely infeasible, and b.) it's highly likely that such a plan would be considered to be filed in bad faith. (Good faith is a requirement of Chapter 13 Plans, not just implicitly, but it's explicitly in the code in 11 USC 1325.)

Don't read me wrong on the good faith argument. While your intentions are noble, they just aren't in good faith as your plan is not feasible and is beyond a mere (speculative) likelihood that it would fail.

As long as I can convert it to a 7 and keep the automatic stay in effect we should be fine. My wife filed the returns today but I understand it will take the IRS a couple of months to process them. Once they're processed, my balance owed will be $0

No, your balance won't be magically $0.00. The IRS has to accept the newly filed returns rather than the substituted returns. There are steps that you need to take in order to do this, as I've had similar issues (with a wrongly filed 1099-MISC). Again, I think the IRS Office of Reconsideration must be contacted once those returns hit their system so that they use the filed return rather than the substitute return.

My wife is a real keeper. Most women would bail in times like these or pour gas on the fire. She is by my side and trying to help me put the fire out. With a Chapter 7, my wife working, and the IRS account closed we'll be OK.

I believe that California actually has both Pro Se clinics and have some Pro Bono attorneys available. You should be at that clinic, yesterday. The Order Dismissing the case has a very specific timeline of 14 days to convert (or seek reconsideration). These are procedural issues which you must address.

Let me summarize. You still have a serious tax deficiency and you (may) need to do more than just finally file 5 year late tax returns. (Contact the Office of Reconsideration for the procedure.) You still have a serious domestic support obligation. The Chapter 7 (discharge) will not help you with either of those issues. The Chapter 7 stay is only going to help you for about 90 days from conversion.

[Dopey]

Hopefully 90 days will be all we need. I'll look into the procedure in the mean time. The problem with the clinic is it's another day off from work. So much for a vacation this year.

[justbroke]

Hopefully 90 days will be all we need. I'll look into the procedure in the mean time. The problem with the clinic is it's another day off from work. So much for a vacation this year.

I can feel your frustration with all the time taken off. It certainly does not help.

Do you at least have a guidebook such as NoLo? Do you have any assets (cars, furniture, money in banks, 401(k), pensions, etc)? Do you know the difference between California System I and California System II? These are things that a guidebook "may" help you and the clinics would help you. I would hate to see you make an "asset" issue in a converted Chapter 7.

It's a process, but it can be done.

[Drazil65]

"I have a steady income of $5,000 a month. I've been working for a university for over 3 years".

You have no bills and you have only been paying the child support but make $5000 a month? Plus you say your wife worked for Liberty Tax and has a TIN but cannot work now? Plenty of people without green card working and perhaps she can babysit at home or in someone's home or do accounting under the table or clean or do something.

You for sure need to talk to a couple of bankruptcy attorneys (free consults) but I get the feeling that you will have an excuse as to why you can't or won't. Sorry I am not much for pity parties, your situation is what it is and you can blame everyone around you but the bottom line is you need to see an attorney and ask some serious questions. If you have to take a day off and book 2 or 3 appointments then do it (oh well on the "vacation" this year, seriously???). Do what you need to do as well as your wife, she needs to do something to help the marriage. Good Luck!