I got served today...only 3 months after I stopped paying my CC

[tobee43]

I don't know if it varies by district in PA, but in ours, the UI was included. No way to get around it and was told that we'd have to revise the plan if I ran out of UI before getting a job (this was also early in the recession; I'm not sure if anyone expected the idea of "getting a job" to be so similar to "winning the lottery"). I couldn't imagine doing a payment as large as that on the income you stated. Although one thing that helped us was my fighting with the lawyer and the trustee to raise the amount of federal taxes that were being withheld from my husband's check. I knew that by surrendering the house, we would no longer be deducting over $9K in property taxes, over $20K in mortgage interest, etc. So our effective tax rate was going to go from somewhere around 8% to 18%. Thank goodness I pushed that issue as we did owe about $1,000 in federal taxes last year even after having over $16,000 withheld. If the trustee had insisted on using the paystubs before we adjusted them, we would have owed $12,000 in federal tax. So anyway, federal tax is a pretty large deduction in our plan.

the tax adjustment was an excellent variable that many do not consider....

i argued and will argue the temporary EU...which means you will have to go back in for an adjustment on your payment once your benefits run out...stinks...the attys and trustees make more money...and you have pay to get them to readjustment your schedule....but for right now, it it works it's great!!

[Ifonly]

I agree with you regarding the adjustment. I'm hoping that we can get thru the five years without having to go back to the court. I try to use the "wiggle" room in our plan to make up the difference(s) for what's coming in (my UI payment is already $800 less monthly than what it started out as in the plan). We don't spend our $100 in entertainment, we try not to spend our entire grocery amount, I had $40/month for garbage that I don't pay any more since we moved to a different area, we cut our utilities, our car insurance went down when we moved - I basically piece it together. Looking forward to one car loan being done in a month and then will have to hold it together with duck tape, LOL (no, really, right now pieces of the front bumper are being held on with duck tape).

Thank goodness I'm an accountant - you should see my excel spreadsheet of our budget/expenses/variance!

[tobee43]

I agree with you regarding the adjustment. I'm hoping that we can get thru the five years without having to go back to the court. I try to use the "wiggle" room in our plan to make up the difference(s) for what's coming in (my UI payment is already $800 less monthly than what it started out as in the plan). We don't spend our $100 in entertainment, we try not to spend our entire grocery amount, I had $40/month for garbage that I don't pay any more since we moved to a different area, we cut our utilities, our car insurance went down when we moved - I basically piece it together. Looking forward to one car loan being done in a month and then will have to hold it together with duck tape, LOL (no, really, right now pieces of the front bumper are being held on with duck tape).Thank goodness I'm an accountant - you should see my excel spreadsheet of our budget/expenses/variance!

come on...now you know you accountant are the worse!! LOL!!!! i have a call into my now....my daughter's best friend is one here in florida...but i do my owe taxes just have the accountant sign them for me...LOL!!!!!

i'm certain you have it to the penny....we surrendered one of our cars...why not...now that we didn't both have jobs why have an additional car payment and if and when we both get back to work then we will worry about that then....

we are luckier than most...we have state pensions...we took early ss....(many do not think that smart..too bad!)..i say TAKE THE MONEY....i took that budget looked to move where those two items were enough to live and pay the bills with no worries...packed it up and left the house after 33 years...i tell you, it was the best thing we ever did.
i many times do want to go back to work....in this state since i have a national cert i can open an paralegal practice here....NOT IN BK!! ROFL...at BU...hated family law and bk....HATED them both...but i see now filing out bk forms may be worth a business since i had to show the paralegal in my atty's office what to do....i'm so OCD...it all had to be to the exact penny....bad i was!!! and still am...but prepared for the worse...in case we can't get hired, i know we are luckier than most....we can at least live...both are kids are done with college and grad school...(THANK YOU!)....and so are we...cuz i'm not going back to burger U...that's all i can say!

[chrisdfw]

I am not an attorney, but aren't secured debts paid back in full during a chapter 13? I would get new cars and pay for those rather than 1500 a month to creditors. Shit, I would probably have settled if I had 1500 a month to use (and my credit cards were ~120k)

On the lawsuit front, I know I got sued because of my mortgage balance in relation to the property value. They thought they were going to get a lien on my house!, not on my homestead in texas... Citibank was the one to sue me, and I'm pretty sure it was the house they thought they could put a lien on, or maybe it was the no contact letter, but if not that, I was a hardass in negotiations. I was not settling for one penny over 20%, I told them that was all I had, and they didn't believe me. They sued, so my only option was Ch7.

[Ifonly]

Chris, there are many, many threads here re: settling. Not the best use of time and money when you throw in the tax implications (1099 on debt forgiveness). I believe Mere was quote $1,500 DMI to go towards her unsecured debt. In our case, we surrendered our home so there was no need to worry about how to handle the mortgages and the one car loan is paid outside of the plan. The other car was surrendered as it was too new (910 rule).

tobee, all things considered, I consider us lucky as well - my husband has had the same job for over 15 years and despite the pay freezes and rising medical, I am grateful that he has that job security (as much as anyone can have). And sometimes I'm grateful for the opportunity to get away from that corporate rat race. I have so much more time to spend with our children which is a joy.

[Mere]

Thanks Ifonly Yes tax implications would be a concern regarding settlement, I owe 85k on many cards so each card wants a fair amount of money, we would not be able to settle on all of them and by paying only on some it would look like preferance Chrisdfw...so that's not going to work. By the time I was able to save up and work deals, I would be sued across the board by many, they are coming in hard and fast as you can see by the title of my post.

Am I correct in my thinking? Gotta file, I don't really see any other solution

[Charlie777]

You don't have to file bankruptcy to avoid taxation on settlements - check their publication on how insolvency is determined. If you are insolvent (most people considering BK fit the criteria) you can exempt the 1099 income from settlements. But if you settle piecemeal, your settlements may make you no longer insolvent, and later settlements can create income.

[chrisdfw]

You don't have to file bankruptcy to avoid taxation on settlements - check their publication on how insolvency is determined. If you are insolvent (most people considering BK fit the criteria) you can exempt the 1099 income from settlements. But if you settle piecemeal, your settlements may make you no longer insolvent, and later settlements can create income.

True, as long as the settlement doesn't make your net worth positive, it can be excluded.

A 1500 payment just sounds like a lot of money to me, I am not suggesting bankruptcy is bad, it might be better, but consider everything if you haven't. 1500 x 60 mos = 90,000 Hopefully some of that is paying secured debt for an asset you will have at the end of the period.

I would definitely not go into it with old vehicles. If I have to hand over 1500 I would try to get whatever value out of it that I can. Get legal advice though, you don't want to be accused of abuse.

[tobee43]

You don't have to file bankruptcy to avoid taxation on settlements - check their publication on how insolvency is determined. If you are insolvent (most people considering BK fit the criteria) you can exempt the 1099 income from settlements. But if you settle piecemeal, your settlements may make you no longer insolvent, and later settlements can create income.

excellent point....so you have to look at the "long" term and "end" result....

examine what the bk will or could do to your position...as chrisdfw has pointed out...as long as your net worth does not become positive you have alternatives....

i would also get the best legal advise possible and proceed carefully......play a good game of chess with this situation and i'm sure you will turn out fine.

[Mere]

Hey guys, I was told a while back to make sure I had reliable transportation so we bought a new car back in October 2011 Hyundai Sonata, how ever because our credit score was already tarnished our intrest rate is very high and the payment is $600 per month, I am not sure how that is going to be viewed, I was not aware of the allowance rule of $489 at the time. The car we traded in was a 2004 Infinity G35 coupe, so I think that was a good decision on our part.

We still have a Nissan Murano 2004 with 85K miles, I am hoping it makes it through the BK, I don't think we could get another loan for a new car at this point, and I am afraid it would look like abuse if we did. What do you guys think?

Unfortunately paying back the 85k in the BK will all be on unsecured CC debt, that's why I am hoping the attorney I meet with on Monday is good, becuase I am hoping he has creative ways to lower our DMI...that statement may sound naive, and to be honest it is, I'm not sure if numbers are numbers, or if a good attorney can take care of you and make the next 5 years....well not as painful, your thoughts?

Thanks guys

[tobee43]

Hey guys, I was told a while back to make sure I had reliable transportation so we bought a new car back in October 2011 Hyundai Sonata, how ever because our credit score was already tarnished our intrest rate is very high and the payment is $600 per month, I am not sure how that is going to be viewed, I was not aware of the allowance rule of $489 at the time. The car we traded in was a 2004 Infinity G35 coupe, so I think that was a good decision on our part.

We still have a Nissan Murano 2004 with 85K miles, I am hoping it makes it through the BK, I don't think we could get another loan for a new car at this point, and I am afraid it would look like abuse if we did. What do you guys think?

Unfortunately paying back the 85k in the BK will all be on unsecured CC debt, that's why I am hoping the attorney I meet with on Monday is good, becuase I am hoping he has creative ways to lower our DMI...that statement may sound naive, and to be honest it is, I'm not sure if numbers are numbers, or if a good attorney can take care of you and make the next 5 years....well not as painful, your thoughts?

Thanks guys

well mere...we were a chapter 7....so maybe someone with some chapter 13 expereince can give you more insight has to how this situation with your car would be viewed....also...hopefully on monday the atty should be or hope they would be able to help you with a "clear" answer on that!

[chrisdfw]

Hey guys, I was told a while back to make sure I had reliable transportation so we bought a new car back in October 2011 Hyundai Sonata, how ever because our credit score was already tarnished our intrest rate is very high and the payment is $600 per month, I am not sure how that is going to be viewed, I was not aware of the allowance rule of $489 at the time. The car we traded in was a 2004 Infinity G35 coupe, so I think that was a good decision on our part.

We still have a Nissan Murano 2004 with 85K miles, I am hoping it makes it through the BK, I don't think we could get another loan for a new car at this point, and I am afraid it would look like abuse if we did. What do you guys think?

Unfortunately paying back the 85k in the BK will all be on unsecured CC debt, that's why I am hoping the attorney I meet with on Monday is good, becuase I am hoping he has creative ways to lower our DMI...that statement may sound naive, and to be honest it is, I'm not sure if numbers are numbers, or if a good attorney can take care of you and make the next 5 years....well not as painful, your thoughts?

Thanks guys

The valuation rule is just for the means test if I understand. Secured debt still gets paid in the plan. All buying a new car would do is move some of the money that would go to unsecured creditors to secured creditors, but that gets you a car. I am not sure how this would be viewed, I am not an expert, but I would strongly consider it.

I would not count on a 2004 murano making it 60 more months. But I would not get anything flashy, you might get an objection from the trustee who thinks the car should be sold so more money could go to unsecured creditors ( I am not sure why, they get paid either way, but their job is partially to look for abuse)

Your attorney should be able to advise you on what is acceptable. I would think the extra secured payments may allow you to get something out of having to fork over so much money. (A newer car, less repairs during the plan)

[Mere]

The valuation rule is just for the means test if I understand. Secured debt still gets paid in the plan. All buying a new car would do is move some of the money that would go to unsecured creditors to secured creditors, but that gets you a car. I am not sure how this would be viewed, I am not an expert, but I would strongly consider it.

I would not count on a 2004 murano making it 60 more months. But I would not get anything flashy, you might get an objection from the trustee who thinks the car should be sold so more money could go to unsecured creditors ( I am not sure why, they get paid either way, but their job is partially to look for abuse)

Your attorney should be able to advise you on what is acceptable. I would think the extra secured payments may allow you to get something out of having to fork over so much money. (A newer car, less repairs during the plan)

I will talk to the attorney on Monday about getting another new car, and if he says it's a good idea then great...the question is who is going to give me a new car loan at this point? any suggestions?
I look a mess on paper...my only saving grace is my husband works from home so he does not commute to work, that could help us out if we are not able to get another new car.

[bcohen]

Why would you think a 2004 Nissan Murano with only 85,000 miles isn't going to last a mere 5 years more? As long as it's been properly maintained and never involved in a flood or collision, I would expect it to last at least another 10 or 12 years more.

In my family, we have owned many cars, of modest cost, and none have died before 20 years, except for a 1981 Chevette that was destroyed in a collision in 1993. My dad had a 1981 Caprice, purchased new at the same time that the Chevette was purchased, which he traded in for a new Caprice in 1993. The Chevette was replaced with a 1988 Toyota Corolla (purchased used), which we junked a few years back--due to excessive rust--even though it still ran fine.

In fact, I currently drive a 2004 Toyota Corolla, which currently has about 58,000 miles, and I fully expect to keep this car for another 10 years or more.

Heck, I have friends and co-workers who drive really old cars from the 1980's and early 1990's, and they still run fine.

So unless you are seriously abusing your cars, or drive the lemons made by GM/Chrysler, you shouldn't have to worry. Maybe the reason why you (and many others with the same kind of thinking) are bankrupt is due to the high cost of car payments for vehicles that aren't really needed to begin with! Many people think they need a new car every few years and keep "trading up", thereby rolling more and more negative equity into each subsequent car loan, and ending up with a payment that's absurd by any stretch of the imagination!

My advice to you is to quit buying (or thinking about buying) any new cars for the forseeable future. Once you know for sure that you will file bankruptcy, you should stop paying on all of the cars that still require loan payments, and let the repo man cart them away. With the money you're saving not paying these loans, you should be able to save up $2-3k to buy an inexpensive used car outright, and not have to worry about loan payments again. Of course an older car will require periodic repairs, so you do need to set aside money for this, but the cost per year will probably be less than just one of these $600 payments you're making each month.

The same goes with other unnecessary expenses. If you have cable/satellite TV, or an expensive cellphone plan, you should cancel these things as well. If there are any "early termination" fees, etc, then don't pay them, and let the bankruptcy discharge these debts. Likewise, if you have credit cards, unless the balances are so low that you can pay them off in full in one month, you should quit paying on those too.

[chrisdfw]

My advice to you is to quit buying (or thinking about buying) any new cars for the forseeable future. Once you know for sure that you will file bankruptcy, you should stop paying on all of the cars that still require loan payments, and let the repo man cart them away. With the money you're saving not paying these loans, you should be able to save up $2-3k to buy an inexpensive used car outright, and not have to worry about loan payments again. Of course an older car will require periodic repairs, so you do need to set aside money for this, but the cost per year will probably be less than just one of these $600 payments you're making each month.

The same goes with other unnecessary expenses. If you have cable/satellite TV, or an expensive cellphone plan, you should cancel these things as well. If there are any "early termination" fees, etc, then don't pay them, and let the bankruptcy discharge these debts. Likewise, if you have credit cards, unless the balances are so low that you can pay them off in full in one month, you should quit paying on those too.

Keep in mind we are talking about a person going into a chapter 13 that is probably going to be paying 1500 a month whether they have a car payment or not. I would never recommend taking on a large car payment in general. Just that in this case you have to pay the money anyway. And a chpater 13 doesn't really allow a lot of flexibility for unexpected expenses.

If we were talking about chapter 7, I would concur with your assessment. for 600 a month you can pay for a lot of car repairs. But in a chapter 13, you don't get to keep that 600 towards repairs, if you don't have the car payment, the money goes to the unsecured creditors. In general everything you say is true, when I say go 5 more years, I mean 5 more years without any repairs to derail a chapter 13 plan.