Something I had not anticipated

[BearChaser303]

Ok so I was unemployed for most of 2007. When I saw the writing on the wall about getting laid off, I took out insurance on 2 of my credit cards to make the payments while I was out of work...

So the insurance made the payments while I was off, to the tune of about 21,000 between the 2 cards.

Today I received in the mail a 1099 for this. By the time I filed in December, the insurance stopped paying due to maxing out. It never crossed my mind that I might need to list it as "income". Out of sight out of mind so to speak.

So anyway I need to discuss it with my attorney, but does anyone think it will cause any problem with my case? The payments were made directly from the insurance company to the credit cards, I have the explanations of benefits and credit card statements to prove it. So it really wasnt "income" as in money in my pocket. However, if I had to list this as income on the means test, it would put me about 3,700 over the median.

Thoughts?

[CATCHMEIFYOUCAN]

My thought would be less money the Trustee would have to pay to that particular creditor(s). I would think it would boost your "income", since you have less due which would in effect boost you income since thats (1-2 less creditors you owe - if they had filed a claim and if you are in the Ch13 repayment plan). Make sense? Just my guess. I'm no mathematician though.

Best of Luck, Catchmeifyoucan

[jp2861]

Is that 21K taxable as well? If so, you need to plan on how to pay the IRS. Good post! I'm sure not many think about the negatives of these insurance plans.

[BearChaser303]

Yes it is taxable, I think. That is a whole other issue.