19 weeks until we can file

[Chrysalis]

bcohen, thanks for responding. I welcome all input! It's a real conundrum, because if we don't file, I don't know what else to do.

I started to type a more detailed response, but I am on my phone, so I'll wait. I will update tomorrow after we talk to this attorney.

I did do some internet searching and it appears that you are not allowed to get into student loans while in a 13.

[Chrysalis]

Update:

Met with the new attorney today. His office is literally about 2 minutes from our home, versus the other attorneys we were consulting in the big city, over an hour away.

Wow. This was a good visit. I told him upfront that we were willing to pay a fee for some extra time. I said my husband was going to have to take the day off work to be there, and we wanted this appointment to be as productive as possible. We didn't want to feel rushed. We understand the basics, but had some specific questions about our situation before we made any big moves.

Well ~ we were there for 3 hours and he didn't charge us a dime. Felt no pressure to commit or sign anything today. He sent us home with a contract, and his base fee is very reasonable. I still need to read through all of the fine print, and I hope that he doesn't try to charge us for this time at a later date. I asked him if I needed to write him a check for his time today, and he just waved his hand at me, like "don't worry about it". I was like, are you sure?! ...So hopefully this really was a free consultation, and not something that is going to be charged for later!

He's the first one to actually sit there and plug in numbers for Schedule I & J, as well as the means test. He is the first one who has really looked at our expenses and given us a good idea of where my husband's income actually needs to be for us to look solid in a Chapter 7.

One bit of good news we found out is that the "job insurance" my husband received in Jan/Feb will not actually count as income. This is a policy he has paid into for years and years, which reimburses him in the event of disciplinary action at work. He really doesn't think it's income -- it's more like if you had a claim on your car or home owner's insurance, basically. THAT was a relief -- and may mean that we can file a lot sooner than I was expecting.

One thing that seems good, and I hope is not actually bad, is that he seemed very confident in his answers and he wasn't nearly as concerned about a lot of things as I have been. I would really like to think this is because he's been doing this for 26 years and he knows his stuff. I hope it's not because we are going to find out at a later date that he wasn't as concerned about some things as he should have been.

For example, he told me there would be no problem with me getting student loans in a 7 or 13. We just tell them this is what we need to do, and -- no issue. Here I am, worried about coming up against a roadblock and not being able to finish nursing school -- and he's like... yeah, no big deal.

He of course advised us (as everyone has) to stop "throwing good money after bad". It's pointless. When we asked how long you could go without being in serious trouble, he shrugged and said, "6-12 months". He said if he were in our shoes, he would have probably stopped paying them a long time ago. Yeah. Well, we weren't there with my husband's income (or so we thought) and I guess we were just not there mentally, either.

Tomorrow is payday. I have a check coming in for $2085.46 and we are supposed to send $1284.95 of that to unsecured creditors. Do we all agree that it's time to stop the madness?

bcohen, I know you don't agree that it's time, because you don't think we should file bankruptcy. But like I said last night, I don't really see another choice in our situation. I think we are going to have to do our best to figure this out.

[justbroke]

Stop the madness.

[Chrysalis]

Stop the madness.

Lol. Thanks, jb. I am working on it.

Gathering account numbers for all of the cards right now & putting them in my spreadsheet. When they want addresses, I assume payment addresses?

I also need to decide what to do about the phone number issue. Lady suggested Google Voice (I know nothing about that). But I wonder if I should just answer the phone, tell them what's up, and be done with it. ...Call me every day, call me 10x a day, it's not going to change the situation.

Thoughts? I know people go different directions on this. I guess I just need to decide.

[Chrysalis]

I tried to access our credit reports today (annualcreditreport.com) so I could make sure there was nothing squirrelly on there -- before we officially make it squirrelly, that is.

We had gotten our Experian reports back in September, but I intentionally waited for the other two, so that we could check it a few times throughout the year.

Well, today I could get neither my Equifax or TransUnion online -- they both said I had to request by mail, and send them a bunch of documents. ...What? Never had this happen before. Should I be worried that something weird is going on?

My husband's Equifax was the same message. No idea why ~ but his TransUnion showed up, and it all looked fine. Green, green, green everywhere...

Is Credit Karma something we should be thinking about? Honestly, at this point I have no desire to see what happens with my credit score ever again. Maybe I will feel differently in the future. But after the past 20 years of living and depending on credit, I'm so over it.

[kberly69]

I tried to access our credit reports today (annualcreditreport.com) so I could make sure there was nothing squirrelly on there -- before we officially make it squirrelly, that is.

We had gotten our Experian reports back in September, but I intentionally waited for the other two, so that we could check it a few times throughout the year.

Well, today I could get neither my Equifax or TransUnion online -- they both said I had to request by mail, and send them a bunch of documents. ...What? Never had this happen before. Should I be worried that something weird is going on?

My husband's Equifax was the same message. No idea why ~ but his TransUnion showed up, and it all looked fine. Green, green, green everywhere...

Is Credit Karma something we should be thinking about? Honestly, at this point I have no desire to see what happens with my credit score ever again. Maybe I will feel differently in the future. But after the past 20 years of living and depending on credit, I'm so over it.

I personally think you should forget about scores right now. They're going nowhere but down for the moment and will go up when you discharge. That's the time to worry about building your credit back up. You'll stress yourself out watching them fall and there's no point, IMO. Your job right now is getting mentally into the fact that you are filing for BK, giving your attorney what he needs to do it, and being an informed filer.
Regarding the phone issue, I never set anything up with a separate number. I mostly didn't answer the calls, but on occasion I did. I was honest with them and for some weird reason, it felt good to do that when I was in the mood. A little shred of control in a sometimes helpless-feeling process, I guess.

[Chrysalis]

Thanks, kberly. I thought it was you who said you just went ahead and talked to creditors. I am going to change my email address to an old one I don't check very often, so I don't have a bunch of emails in my face. But I am leaning toward leaving my phone number the same, and doing like you did. I'll answer when I'm in the mood & have the time. ;)

[Chrysalis]

Is there an official form where you list all of your personal possessions in detail, or is it just the A/B form I've found?

We got a pretty detailed form from the attorney ~ I just wondered if there is an "official" one they turn in, which I can find somewhere?

[justbroke]

Is there an official form where you list all of your personal possessions in detail, or is it just the A/B form I've found?

We got a pretty detailed form from the attorney ~ I just wondered if there is an "official" one they turn in, which I can find somewhere?

The official form is Schedule 106A/B. The one I think that you are mentioning. I did a detailed list in a spreadsheet and then consolidated them down into categories which matched the Schedules (although at the time of my Chapter 13/7 the forms were a little different). Even though I had consolidated some categories down to basic things, like Miscellaneous Electronics, I specifically itemized anything that had a value over $400 itself. I can't speak for your attorney, but they probably use Best Case and likely consolidate the items into categories.

The official forms are always at http://www.uscourts.gov/forms/bankruptcy-forms

[Chrysalis]

Thanks, jb. That's the site where I was looking, and yes, I found the 106A/B.

So, if my attorney gave me a more detailed form, it should be safe to go by that one when listing things. What I was looking for was whether we were going to have to get even more detailed than his form at some point -- but it appears that the official government form is actually less detailed. So we should be good.

One thing that is bothering me... and I'd like your input on. We feel like this contradicts itself: "For purposes of valuing your property for bankruptcy -- please value and list everything as if you were making a claim to your insurance company. For example, if you lost your home in a fire, what would you list? Be sure to list depreciated, "garage sale" values, NOT the purchase price."

I asked him about this when he told us a story in his office. He said that he had a client who was in the middle of a Chapter 7, who actually did have a fire. And so, when they had to list items for replacement by the insurance company, their values were higher than what they'd claimed on bankruptcy forms. He said he told these people, "Okay, we either have insurance fraud here... or bankruptcy fraud..." And I never did hear the rest of the story, because I stopped him at that point and told him that part was confusing. I said, your form says to list things as if you'd had a fire. But, if we had a fire, they would not expect us to replace our refrigerator with one that is 14 years old and worth maybe $100 ~ would they?

In my mind, replacement value for a fire is a completely different situation than valuing the items in your home as if you were going to sell them in a garage sale. I'd love to hear others' thoughts on this.

I am honestly getting a little worried that we are going to be over Indiana's wildcard exemption (total of $20,500 for the possessions of five people?!) I don't want to value things too low, but we also can't value them too high. Just a weird situation. Our oldest is going to buy a car with his money, which everyone says is fine and understandable, but that has to come out of our exemption money. So it's like, even if we could afford to help him get a little bit nicer car... we can't, because of being restricted by the exemption amount.

[justbroke]

I always use "yard sale" or liquidation value prices when it comes to personal property (with few exceptions). It's hard to figure depreciation as well, because the insurance companies will depreciate the property as it ages to 7 or 15 years or more. It would certainly not be the replacement cost. It would be somewhere between a literal "fire sale" and a "garage or yard" sale.

Try to picture yourself at a neighbor's garage sale and asking how much you would pay. You can't be unrealistic as (almost) everything has some value. Even an old DVD of the movie Gigli has some value (maybe only $1 or less at a yard sale, but "some" value).

[Chrysalis]

It's pretty easy for me to picture yard sale prices for things like books, DVDs... I mean, sure, how much would someone actually pay for our 14-year-old bed, you know? But when you get to big things like my wedding rings, my husband's 2002-2006 four wheelers... I took a stab in the dark on some things for the consultation. Do we take what we'd be "happy" with at a garage sale, or what someone would be likely to pay at a garage sale? Just because my husband thinks his 4-wheelers are worth $5000 doesn't mean anyone else would. On the other hand, the trustee could look into it and think they are worth even more?

I had a friend tell me, "I think you may be too responsible to file bankruptcy". Lol. Not that people who file bankruptcy are necessarily irresponsible -- she could just see me struggling with certain parts of it. Like the idea of not paying my cards...

[Chrysalis]

justbroke, we are still really going around and around discussing our options since meeting with this new attorney. He talked about a Chapter 13 giving us "more tools in our toolbox" and he also told us that if we chose to go that route, we would definitely be in a 3-year plan, "because we qualify for a Chapter 7".

I thought, if your financial situation changed, they could extend your time and make you go five years. He said no.

I guess I just don't understand how they come up with the payment, and we left there without a clear understanding of what he said. I used nolo's calculator today and just put in the FMV of our car, truck, and trailer, at 36 months -- and the payment was HUGE. What am I missing here? If we qualify for a 7 -- what is really the advantage of a 13?

Edited to clarify: He never actually told us what our payment would be. He did say it would be "basically paying back our secured debt". We were pretty focused on a Chapter 7, so that is where my mind was, for sure.

[Chrysalis]

Ok, I've done some more reading. So let me see if I am understanding this correctly:

The only advantages I can find in our situation for a chapter 13 are:

1). The ability to modify your plan if your life circumstances change.

2). The ability to switch over to a Chapter 7 at some point if you need to.

3). Not having to worry about any of your things being taken if you are over the wildcard amount, and being able to keep the kids savings and cash value in their life insurance policies.

BUT, we have to pay back the fair market value of our vehicles, and also pay back on top of that the amount of non-exempt property. Am I understanding this correctly?

So even though he says we would qualify for a three-year plan, it seems to me we would have to do five years to be able to pay all of that back, to be able to somewhat afford the payment. I need to go calculate that now.

[justbroke]

The advantages of a Chapter 13, when you want to keep property, is enormous just in that case.

1). The ability to modify your plan if your life circumstances change.

Yes.

2). The ability to switch over to a Chapter 7 at some point if you need to.

This is exactly what I had done. I tried to save some investment property, but about 2 years after filing Chapter 13, decided it wasn't worth it and converted to Chapter 7. I had qualified for a Chapter 7 when I filed, but did a Chapter 13 because I was saving property.

3). Not having to worry about any of your things being taken if you are over the wildcard amount, and being able to keep the kids savings and cash value in their life insurance policies.

Yes. The calculation is a little tricky, though, and I'll explain that next.

BUT, we have to pay back the fair market value of our vehicles, and also pay back on top of that the amount of non-exempt property. Am I understanding this correctly?

You may have to pay, minimally, the non-exempt value to your unsecured creditors. The "Chapter 7 liquidation" value -- or best interest of creditors test -- takes what the unsecured creditors would have received had you filed a Chapter 7. Even though I had property that exceeded my available exemptions in my Chapter 13, I was not required to pay the unsecured creditors that amount because the IRS priority claim was worth more than non-exempt value/equity. The unsecured creditors would not have received anything had things been liquidated in a Chapter 7 and priority debt paid first. That's why this "liquidation test" is important.

I think I like to say that you "may" have to pay the non-exempt value of property in a Chapter 13, subject to the liquidation test.

So even though he says we would qualify for a three-year plan, it seems to me we would have to do five years to be able to pay all of that back, to be able to somewhat afford the payment. I need to go calculate that now.

See what I wrote above. Please rely on your Chapter 13 bankruptcy attorney. They actually use software that makes most of these calculations.