Need Help! Military Entitlements Ch 7

[Stuck]

I have been looking for the answer to this question everywhere; I really hope someone here knows the answer or where to look for the answer! Here we go:

As a military family stationed overseas living off-post, we get a large amount of money for rent and utilities that is listed on our earnings statements. The entire amount goes to rent and utilities as the government oversees the rental agreement and then allocates the money to cover the rent and utility amounts based on the agreement. You can not get more money than you are paying in rent and most families use more utilities than the government allots and make up the difference out of pocket. However, because the rents and euro rates are so high, our income appears doubled. We also get a cost of living allowance to help with the higher costs of living overseas to give us the same buying power as we would have in the states with the same base income. We will be losing both of these entitlements when we leave this assignment in less than two years.

How is this situation handled? If we did not have these entitlements, we would be under the median income for our state, if that matters. If we are able to deduct the rent and utilities we pay from the gross pay, we will qualify on the 22A even with the extra cost of living money added to our base income. But, do we get to deduct the living and housing expenses as usual? We have a house at our last assignment location and are making 1st and 2nd mortgage payments on it, so it seems as if we would be justified in doing so.

This is very confusing and I can't find anything that addresses it on the government bankruptcy website. I need an answer quick because we have been getting by with infusions from tax refunds and rebates but we will not be able to pay all our bills this month and will need stop paying them to retain and pay a bankruptcy lawyer as soon as possible before we get sued or garnished or whatever happens when you don't pay the bills. Plus, we have a renter in our house and we need advice on how to handle that so he or she has time to relocate.

This is terrifying for us.We went from a dual to single income after our youngest was diagnoised with autism 21/2 years ago. We will be a single income family for the forseeable future to meet out child's needs and can no longer make ends meet.

Looking forward to your advice!

[jenopher]

Well, I don't know the answer to overseas allowances, but we are military and our housing allowance counts exactly as it is shown on the LES. We are off base, but even on base with the PPV housing it would count the same even though you don't see it ever enter your bank account. We would be under median as well if BAH didn't show up, but you still would have to put free housing if you didn't see BAH on a LES. You have to do exact expenses on the I and J forms. I'm not sure about COLA, but I imagine it is the same way. Once you fill out the Iand J forms you just put the expenses down and it all evens out and you would still probably qualify for a 7. We qualify, but are still probably going to do a 13 becuase we can strip the 2nd mtg. Our 13 payment will be about 350, and our 2nd is 388, so we get rid of the 2nd and pay for 5 years vs. a 7 where we have to keep the 2nd and pay 388 for 19 more years.

[Stuck]

Hmmm, if you do the 13, will you be able to pay off credit cards? How do the car payments work? So, are you saying that with a 13 you will get to drop the second mortgage entirely and have your house paid off in 5 years? Will you have any discretionary income at all during that time?

[Cali]

The total entitlement amount on the LES is used as your monthly pay.

And as jenopher stated, you will use your exact amounts on I and J forms.

Good luck!

[jenopher]

A 13 takes all unsecured debt and you make payments for 5 years on it. After 5 years it is then discharged. They strip the lien from your home on the 2nd. So it then becomes unsecured and added to the debt amount. It does nothing for the 1st mtg. You still pay that with the same terms you already have. Your payments are based on your excess income after you fill out the forms I and J. We qualify for either 13 or 7. We were going to do 13 until yesterday when we found out it's a pretty good chance we go to Hawaii next summer for 3 years. It woulds be way to tough to rent our home and have to come up with the extra money to make the mtg. We are going to do a 7, that way we at least have the option of walking away if we can't rent it out. Our payments for the 2nd are almost the same as a 13 payment would be, we just won't be finished in 5 years. We really thought we'd be here for 4 more years at least, but it doesn't look that way at all now. I also didn't like that I couldn't work and make extra income for the next 5 years. I don't plan on working for 2-3 years, but when I feel my kids are ready I'd like to work a little. I just don't want it all to go to the trustee and creditors. My daughter will need braces soon, I'd like a little extra to pay for that, you know just anything that might come up. You are a bit more stuck in a 13 plan. The small yearly military pay raises won't raise your payments, but a spouse with a 2nd income would. The general belief is anything over 10% per year increase in income and they'll up your payments. Good Luck

Jen

[Cali]

Hawaii is so beautiful, but their school system isn't up to par IMO.

We were going to do 13 until yesterday when we found out it's a pretty good chance we go to Hawaii next summer for 3 years.
Jen

[Stuck]

Thank you both. Are you or your husband the military member, or both? How are your husbands reacting to the bankruptcy? Mine (the service member) is mad at me and acting as if I'm making him do this when he is the one who racked up a horrifying amount of debt without my knowledge. We have been living below the IRS living allowance tables for months to maintain our minimums and the rising fuel and food prices are making it literally impossible to take care of our family and pay our bills at the same time. He is also being very emotional about it and doesn't seem to be able to look at it as a business decision; a crappy one that I'm not happy about making either, but necessary. I guess what I'm asking is how are you and your spouses dealing with the emotional aspects of being forced to declare?

[jenopher]

I am in charge of paying bill, buying food and clothes, etc. So when I tell hubby we don't have any extra cash, he doesn't believe me, or thinks I spend all the extra on myself before he gets a chance. He also has major ADD which he takes meds for. I absolutly love that we will not have any CC's and we have to stick to a budget. Then I don't have to be 'MOM" when it comes to finances with him. I don't know that he really thinks I spend money so he can't or that is just his way of whining to buy something. I get the cold shoulder or silent treatment or anger outburts if I try to limit his spending on CC's or financing a new toy. I have warned him for months that we are upside down and going further in debt each month. I mentally blame him, but don't really say much personally to him about that. He thinks it's 50/50 and says so. It's probably 80/20. It finally sank in for him when we had no cash left in checking and no room on any cards to charge anything and we needed gas and groceries and payday was 3 days ago. Then he finally sat down focused on our excel spreadsheet budget. We have always had one, he just refused to live by it. He saw after making minimum payments we were nearly 1K upside down. He had purchased in the last year, a boat, travel trailer, motorcycle and quad, another motorcyle, and a childs quad. Everytime we got low on cash he charged whatever else he wanted. He wanted to buy a big ford F-350 diesel a few months ago, but I totally refused and wouldn't back down on that one. I still got the same cold, pouty, childlike behaviour for a few days. I realized awhile ago that was his way of being able to blame me for financial problems. If I gave in it was my fault for not taking better care of the finances. I no longer handle finances alone. He has to look at the numbers himself and he has x amount of dollars to spend. We do the envelope method and I already had to get after him for taking out of my envelope. He wanted to take our son to the motocross track and figured it was ok to take my money to pay for our son and use his own money to pay for himself. He had to give it back out of our misc. fund. He's really having a hard time being responsible and a partner with our money. He's ok with filing and actually says he looks forward to a stricter cash basis budget as well. He knows he has a problem and that's why he prefers I be in charge so I can be blamed when nothing balances. He realizes how unfair that has been and how wrong it was to treat me poorly until I agreed to buy something then blame me when we had no money. I told him he either had to sit down and be a partner and figure this out with me, or I would go to my Mom's with the kids and he could call me and let me know when he had it all handled. When he asks if we have enough for something, I now tell him "You know what our budget is, go look at it again and you decide if you can afford it. It's frustrating because I could easily say "No" but we'd go straight back into our old roles and habits of me being the finance bitc* and him being the sneaky teenager. I look forward to BK mostly because it forces him to be an active participant in our finances. We have had many fights the past 18 month due to me knowing what was happening and him refusing to be involved. Some of it is his ADD, and some of it is just the way we let our jobs be defined. MAybe you should hand over all the debt and tell him to figure out what to do as well. Let him make up the budget and be in charge of it and I'll bet he'll be ready to file a lot sooner.

[Stuck]

Oh, jenopher, that sounds very familar. I had him take over the budget and that's how we got in this mess so that's his doing it again is not an option. But, it's my fault we are declaring bankruptcy because I can't make the finances work! Sneaky teenager is right on the money; made me laugh! You forgot whiney. I used part of our tax rebate to buy clothes, haircuts, and shoes, mostly for the kids, because we had not had any money to buy anything since, what, last September? Now, we're not talking name brand anything or luxury items of any kind, just things that we should have been able to buy as the need arose but could not because we have nothing left after bills, gas and food. DH complains that I'm spending like crazy even though I did it all in one week and haven't bought anything since. One daughter was down to only one pair of jeans that fit and weren't torn but I was being extravagant(?!?) - he is completely irrational when it comes to money! He needed some new things also and spent more on his items than I spent on both children. Because I 'allowed' him to purchase these things, they are lumped in with my 'spending spree' and I am 'not taking care of things'. My big worry is that we'll declare, get this cleared up and he will start taking out credit and getting us in this hole again. Also, he is doing nothing to help me make this work and is actually being as obstinate and difficult as he can. But when I tell him to figure out a solution, he refuses to even look at the spreadsheet. He's also freaking out about how this will affect his precious military career; too bad he wasn't thinking about that when he was taking out all those loans and racking up all that credit card debt (turns out he has a gambling addiction, which is a whole other problem). But my favorite thing is his getting angry because he thinks I'm mad at him about all this every time I have to ask him questions about balances and payoffs and stuff. Actually, I try not to be angry (officially, gambling addiction is a sickness and I'm trying real hard to buy into that) but his assumption that I am annoys me. I also love his implications that I'm a bad person because I want to do this as smartly as possible, which means planning the best way to come out on the other side as financially ok as possible. Somehow, the fact that I am going to have a huge mark on my credit due to his actions is completely irrevelant, which is just charming. And, of course, it's just great that he seems incapable of looking at this as a necessary business decision and gets all emotional about not paying certain bills and wanting to keep things on which we owe far, far more than they're worth. I just want to get it over with and he is making it harder every step of the way. He is acting like a big pouty baby and I have no patience with it since it's his fault we have to do this. In my opinion, if anyone is justified in being a pouty baby around here, it's me - lol! I do love him but, if we didn't have a child together, I'd most likely cut my losses and get a divorce after the bankruptcy. Just because you love someone doesn't mean they're good for you, know what I mean?

[Cali]

I was also in the military, but got out for a very good paying job. DH is still active duty.

The reason behind us having to file is because I lost my dream job(business went overseas) and the CC companies thought it was ok to up interest rates on cards, even though we have never missed or been late on any bill in 17 yrs. So for the past year, we have been living on his paycheck and money we had for emergencies.

We decided it was time to close this chapter and move on. Hubby has been very helpful with getting things together.

Edited to make more sense. LOL

[Stuck]

Cali, I'm so sorry that happened to you. Wow, a year's worth of rainy day money; your being able to save so much was a great accomplishment and bodes well for your financial outlook after this is over. I'm pretty good at staying out of debt (on my own, that is) but saving is a big challenge for me. How did you manage to do that?

[Cali]

I have always been a saver for just in case times. We used to do 6 mths of living expenses and I decided 1 yr would be better. So we take the yearly raise, the special duty pay, tax refund, the extra money we got from changing our w/holdings, and of course money from my job. All the money was put in a high-yield savings account.

Cali, I'm so sorry that happened to you. Wow, a year's worth of rainy day money; your being able to save so much was a great accomplishment and bodes well for your financial outlook after this is over. I'm pretty good at staying out of debt (on my own, that is) but saving is a big challenge for me. How did you manage to do that?