Not even sure if I need to file BK

[zizzled]

Hello... thanks Lady in Red for pointing out to me that I needed to do a separate post with my questions. I appreciate that.

Anyway, this is my situation... I am not behind on anything EXCEPT IRS payments. I was married when the IRS debt was incurred and it's roughly $40,000. My ex-husband is not paying on it at all. And, for about a year, I paid on the installment agreement myself at $700 per month, but after living expenses took precedence, that payment shrunk to $100 per month which puts me and I guess, him, in default. I haven't heard a word from the IRS which is surprising, but I digress. I am current on all other debt... 2 Lending Club loans, other credit card debt, and a car loan (70k)... as well as student loans that are now in deferment because I'm still in school (student loan debt is roughly $70k). That's $180k total.

My income is roughly $75k per year, and every now and then, I get a bonus of about $3k once a year, depending on the organization's performance. In addition, my fiancee is from another country and has assets in that country, but is not technically "employed". He has alot of real estate that he has invested in and is building different businesses, etc... there is no tax in his country, so this is all very foreign to him... pun intended. LOL.

Even though I am current on payments, I am also living paycheck to paycheck and paying only the minimum amounts, which I hate! I've met with 2 different attorneys and will meet with a third, hopefully, this afternoon. The 2 that I have met with told me that I didn't meet criteria for a Chapter 7. Fine. So, they recommended a 13. Fine. However... i started thinking that since the "behind debt" is only the IRS, should I just hire a tax attorney to get out of that mess with them? Chapter 13 is no joke... and will require my commitment for roughly 5 years... and I don't want to keep spiraling to the point where I can't pay anyone!

My other question is... let's say I do decide to file a Chapter 13, would getting married affect that? Would it be better if I married before or after a 13? My fiancee is moving here in September, but won't be employed, obviously. So, would it matter when I file? The last question... has anyone encountered Lending Club as a debt when they filed a 13? Just wondering how they might respond... but, I guess it doesn't matter once I've made the decision.

I know this is a long post, but I just want to make the best decisions in this situation. Thanks in advance for your help, direction and feedback!!

[justbroke]

If you're already paying the IRS only $100/month (and should be paying near $700/month), then how would negotiating with the IRS help? The IRS' payment agreements typically are 5 years (sometimes 6 years) from what I have experienced. The IRS also continues to collect their interest as well which, at least nowadays, is quite low compared to when the prime lending rate is higher.

The nice thing about a Chapter 13 is that you can discharge any taxes that are more than 3 years old (since last due, and some other restrictions). If your taxes are from before (generally) Tax Year 2012 (due without penalty on/before April 15, 2013), then you could discharge those taxes. If you want to negotiate with the IRS and receive some offer in compromise (OIC) you could still owe a lot of money.

I have a side question. Did your divorce decree and/or settlement agreement mention the taxes?

As for getting married right now, I would probably wait until I had a clear path to my financial future. The problem with getting married is that your spouse is now part of all the financial calculations even if they didn't file (and is named on Schedule J). While it would be a married but filing individually petition, you would need to fill in a lot of financial data and income for the non-filing spouse. I'm not saying that when you marry, at some point during the Chapter 13, you would not need to amend your schedules to reflect this new status and potentially additional income.

One thing you will need is a decent attorney and make sure you mention the (future) potential nuptials.

[zizzled]

Thanks JB... No, my divorce agreement does not mention the taxes. It was a very amicable divorce and at the time, we were friends, so we just thought we would each continue to pay and that would be that, but since then, we've gone our separate ways and moved on, etc... He used to work in the oilfield, but that's bottomed out and so he's been working odd jobs, etc... and couldn't care less if taxes ever get paid (hates govt, etc...). Thanks so much for your feedback and I hope I've answered your question. I have a meeting with another attorney tomorrow evening, and I'm quite hopeful for this one.

I have another unique situation going on that I forgot to mention above... I am part of the VW diesel settlement case where VW now has to pay owners of their diesel model a considerable amount of money... starts at $5000 and up to $12,000. In addition, the owner of the vehicle has two options... 1) keep the car and wait for a fix by VW or 2) return the car to VW and they buy it back at the original purchase price. First, if this happens during my Ch. 13, does the Trustee get that potential 5-12k? Second, I owe roughly $32k on the car and if I sold it back to them, I would get roughly $35k. Would the Trustee get that $3k that I would make? If so... if the trustee gets whatever overages are not included in my financial details to them once I file, then I will have to wait until the car issue / pay out is settled, which is supposedly in October some time. OR... should I just include the car in the Ch. 13??? Ah... it's so confusing!

[justbroke]

Thanks JB... No, my divorce agreement does not mention the taxes. It was a very amicable divorce and at the time, we were friends, so we just thought we would each continue to pay and that would be that, but since then, we've gone our separate ways and moved on, etc...

I understand your feeling, believe me. From my experience, the agreement is enforceable when your friend decides they don't want to be friends anymore. It's probably why I think all marriages should have a prenup, even if the prenup says that the parties pledge everything to each other. Sorry to hear that the other person decided to no longer pay.

What's that saying... friends are friends but business is business.

I have another unique situation going on that I forgot to mention above... I am part of the VW diesel settlement case where VW now has to pay owners of their diesel model a considerable amount of money... starts at $5000 and up to $12,000. In addition, the owner of the vehicle has two options... 1) keep the car and wait for a fix by VW or 2) return the car to VW and they buy it back at the original purchase price. First, if this happens during my Ch. 13, does the Trustee get that potential 5-12k? Second, I owe roughly $32k on the car and if I sold it back to them, I would get roughly $35k. Would the Trustee get that $3k that I would make? If so... if the trustee gets whatever overages are not included in my financial details to them once I file, then I will have to wait until the car issue / pay out is settled, which is supposedly in October some time. OR... should I just include the car in the Ch. 13??? Ah... it's so confusing!

Whether the Trustee, well actually the bankruptcy estate, gets the settlement depends on whether the settlement can be claimed as exempt. There may be other options on how to deal with a settlement, but I have no personal experience with that type of settlement. I have had settlements within the bankruptcy due to stay violations and I was able to keep the proceeds (while in a Chapter 13).

If you need to replace your car, then I would say that he Trustee should not interfere but you would probably need to file a motion to use the proceeds. in order to purchase a replacement vehicle. I assume that you'll need another vehicle if you return your current car.

[zizzled]

Yes, you are right, JB... I would need another car if I gave them back theirs. So... after seeing your feedback, I am noticing that I should probably wait to file maybe after all that VW stuff is done. Like in December... as opposed to October. Regardless of whether I wait or not, though, I am probably going to stop making payments to all CC and personal loan accounts now. Just so I can save up some money to pay attorney fees, etc... 2 of my personal loans through Lending Club are set up as automatic-drafts from my bank account. Do I just notify my bank not to pay them or? I did phone my bank to find out about this, and they said they can do it, but it will cost $36. I guess I need to find out if that's a one-time fee or if that's monthly! Still that's nothing compared to the $1000 that goes to these loans.

I appreciate you responding JB... your questions have helped me clarify some things that I was unsure about. This evening, I'll meet with a 3rd attorney, and if my gut feeling is right, she just may be a keeper. We shall see...

[justbroke]

I don't know how your bank, or even my bank, works with automatic debits or whether the $36 is a one-time fee or for each occurrence. The best may be to open a new account and pay the bank to dishonour (stop payment) on the automatic debits. I have no experience with Lending Club.