Near the end ... But stressed!

[GUYINA13]

Good Day,

I have posted on here before, so basically this is an update and I am also looking for some guidance.

I am in month 57 of a 60 month plan (5 years) and all payments have been made on time and will continue to be made until the very last one. (heck it has always come out of my paycheck automatically before I could even do anything with it).

So on one hand my Chapter 13 is going smoothly.

However, back in year one of the plan, I had a family member suddenly pass away and unbeknownst to me at the time, I was left half of her 401K (over 20,000 dollars) -- I didn't know what to do with it, I just wanted her own daughter to have it all, since I knew the courts would want it if it went to me -but I was getting the impression that I couldn't turn it down since it was in my name and It would be like I was defrauding my bk case by refusing money that could be used to pay off unsecured debt I owed.

I reported it right away to my lawyer at the time and he reported it to the trustee and as a result my plan was amended and all that happened at that time was they took my base balance and just tacked on the agreed upon 17,000 that I would turn over to them from the inheritance - I technically got to keep 5 thousand of that inheritance in the agreement - even though 2,800 went towards taxes at tax filing time just a few months after I got the inheritance. So I kind of felt jipped there. but oh well.

So meanwhile my inital 5 year plan had me paying back all of my secured debt and of course lawyer/trustee fees and really just a fraction of my unsecured debt. But thanks to the inheritance, My plan base balance skyrocketed from just over 35,000 in total to now right below 56,000

So in all I will be paying back all but 2,300 of my unsecured debt - so that is what a 90-percent payback plus of the unsecured debt?

So in the course of the remaining four years, to no ones fault but my own, I used up some of that 17,000 that was just sitting around. I should've just paid it to them right from the moment I got it and never had to worry about it again, as I figured the trustee would ask for it right away. When I saw that he just added it to my plan base balance, then I figured I had the full five years left to pay that 17,000 so I would hold onto it in case an emergency situation came up in those final four years of the plan.

So long story short and to get to the point: I have just a few months left and again all my plan payments are going to be made as scheduled, but I do have a hole in that 17,000 that I have to fill and I am almost certainly going to have to borrow from my work TSP (similar to a 401K) to make up that hole.

I have just informed my lawyer about this who will be informing the trustee real shortly.

Does anyone think this is going to be a problem - me borrowing from my own retirement (not to keep up with plan payments) but to makeup for the inheritance shortage I have created for myself in my plan?

It even gets odder, because about a few weeks ago, my lawyer called me to inform me he was retiring in a few days and he was passing my case off to another lawyer friend of his in a neighboring town because he can't retire unless all of his cases are closed.

So now I had to spring all this onto this new lawyer who has never even met me and the whole thing is just getting scary this close to the end.

Sorry this was so long.

[justbroke]

Don't be sorry. A Chapter 13 is a big deal and when life throws curves, especially when there is death in the family, it can be especially difficult.

You are going to need to pay that $17,000 as promised. The value is already baked into your plan base and if you fail to pay the plan base by the end of the Chapter 13, then your case would not be discharged. You should be able to borrow from your 401(k) to cover what I hope is only a modest amount of that $17K.

[GUYINA13]

Don't be sorry. A Chapter 13 is a big deal and when life throws curves, especially when there is death in the family, it can be especially difficult.

You are going to need to pay that $17,000 as promised. The value is already baked into your plan base and if you fail to pay the plan base by the end of the Chapter 13, then your case would not be discharged. You should be able to borrow from your 401(k) to cover what I hope is only a modest amount of that $17K.

Yes - thanks for the reply.

It is a little more than modest as I have just around 6,000 left of that 17,000 - but I can definitely cover that hole with the TSP (similar to 401K) loan.

I am concerned if the trustee starts asking about why I spent some of that 17,000 over the course of the last four years - because I really won't have a good noble reason that I did so -- I do believe I did cover some car repairs with that money, but by in large I just kind of spent a little here and there thinking I could pay it back over time - and of course (that is how I eneded up here to begin with).

The good thing for me is that I have been promoted several times in the last two years, I am making much better money now then when I started the plan (I had updated my attorney with every promotion) and I haven't touched any of that remaining 6,000 in over a year and a half. So I think once this is all over with and hopefully discharged, I will be on a firmer path to never returning here ever again.

[justbroke]

I wish you the best and I hope that your new attorney has a clearer answer and strategy for you.