I said Chapter 13.. husband said Foreclosure

[mat04]

State: Fla

Problem: Cant afford $ 4500./month mortgage on second home total loan amount is $525,000 (2nd mortagage is $70,000 and 3rd mortgage $140,000)

Unsecured CC $50,000.

Our lawyer said we have disposable income of $5,000./month which we have to give every month until $50,000. is paid. We dont have $5,000 a month because of my daughter in college.

My husband dont want to file chapter 13 because we are not allowed to include my daughter's college expenses. He would rather foreclose the house and pay for the deficiency judgement and have control. l

I think Chapter 13 is better. Any advise is appreciated.

Thanks.

[lrprn]

Our lawyer said we have disposable income of $5,000./month which we have to give every month until $50,000. is paid. We dont have $5,000 a month because of my daughter in college.

Unfortunately as you have discovered when parents file Ch 13, many Ch 13 trustees consider paying for a child's college a luxury, not a necessity.

The advantage of filing Ch 13 over just foreclosure and paying the debt yourselves is that your non-secured creditors will not be able to charge interest or late fees, have to accept the plan, and can't contact you or change the rules after you file. That will not be the case if you don't file bankruptcy.

Also the amount owed now will continue to climb due to interest fees charged unless you can keep up not only with the foreclosure deficiencies but the interest on the current secured AND non-secured debt as well. And of course, this also assumes you don't get into more debt after you start paying things down.

Your best bet is to sit down with 3-4 experienced bankruptcy lawyers in your area who have a great deal of experience filing high-income Ch 13 cases. Most give free or low-cost initial consultations. You'll find out from reliable sources whether filing Ch 13 makes long-term financial sense in your situation or not.

[AboutToBK13]

State: Fla

Problem: Cant afford $ 4500./month mortgage on second home total loan amount is $525,000 (2nd mortagage is $70,000 and 3rd mortgage $140,000)

Unsecured CC $50,000.

Our lawyer said we have disposable income of $5,000./month which we have to give every month until $50,000. is paid. We dont have $5,000 a month because of my daughter in college.

My husband dont want to file chapter 13 because we are not allowed to include my daughter's college expenses. He would rather foreclose the house and pay for the deficiency judgement and have control. l

I think Chapter 13 is better. Any advise is appreciated.

Thanks.

Disposable income of $5,000 per month. That is quit a bit of disposable income. You could pay off the debt yourself in 10 months. Your daughter taking school loans for 1 year would sure help things along.

Once your debt is straightend out, you could repay the loans for her.

Just my opinion. Good Luck.

[ssdsco]

You may have an issue with a term I've come to hate called “fraudulent conveyances” concerning the support you've provided your daughter. Check with your attorney.

How much do you estimate the deficiency on the 2nd home to be ?

[AboutToBK13]

You may have an issue with a term I've come to hate called “fraudulent conveyances” concerning the support you've provided your daughter. Check with your attorney.

How much do you estimate the deficiency on the 2nd home to be ?

I don't know that paying for a child's education constitutes fraudulent conveyance. If they BK 13, they may not be able to continue those payments, but I don't think it is fraudulent prior.

[ssdsco]

I don't know that paying for a child's education constitutes fraudulent conveyance.

[AboutToBK13]

I believe you but that does surprise me beause educational tuition is an allowable expense on the BK 13 paperwork we are filling out for the lawyer.

Maybe the difference is age of the child and college vs. k-12?

It could also be the state as well?

[chpxiii]

I believe you but that does surprise me beause educational tuition is an allowable expense on the BK 13 paperwork we are filling out for the lawyer.

Maybe the difference is age of the child and college vs. k-12?

It could also be the state as well?

Now, I'm only guessing here, but maybe the "Educational Tuition" being referenced as an allowable expense is for the *debtor* who is filing, not for the debtor's children.

Someone correct me, please?

[FreshLikeADaisy]

I can understand the "fraudulent conveyance" issue if the $5000 a month goes toward a whole lot more than books and tuition. In other words, if OP is paying tuition directly, and then cuts dd a check for books, food, rent, car, gas and beer money, that could definitely be construed as fraudulent conveyance, especially if the dd's accomodations are fairly luxe. If dd's driving a late model Beemer, for instance, the trustee might not be obliged to see that as a necessary expense. Also, if the parents are literally bankrupting themselves in order to give dd the best of everything (not saying that's the case, but it happens) the trustee might be very inclined to force the parents to turn that around.

I'm going by the OP that said "college expenses" as opposed to "college tuition". Depends on the trustee, though.

[ssdsco]

I can understand the "fraudulent conveyance" issue if the $5000 a month goes toward a whole lot more than books and tuition. In other words, if OP is paying tuition directly, and then cuts dd a check for books, food, rent, car, gas and beer money, that could definitely be construed as fraudulent conveyance, especially if the dd's accomodations are fairly luxe. If dd's driving a late model Beemer, for instance, the trustee might not be obliged to see that as a necessary expense. Also, if the parents are literally bankrupting themselves in order to give dd the best of everything (not saying that's the case, but it happens) the trustee might be very inclined to force the parents to turn that around.

I'm going by the OP that said "college expenses" as opposed to "college tuition". Depends on the trustee, though.

[FreshLikeADaisy]

Sorry ssdsco, I didn't realize your situation was exactly the same as the OP's. I am not implying that there's fraud or anything extreme in either case, only saying that I understand where they might see these payments/gifts as fraudulent conveyances. The Beemer was a hypothetical obvious example of something the trustee might not view kindly. And the trustee, who gets paid out of what he can recover from your assets and does not love your daughter like you do, may well feel that if supporting her is bankrupting you, then you need to address your own bills first.

If you can afford it, why NOT put your kid through school? As a parent there's really no better place to put your money. And if you can afford it, why NOT make sure they have a decent car and place to live while they're bettering themselves through education? I have no problem with this, personally.

It's just that by the time you get to bk, they want you to have cut every conceivable expense possible before you file, period. I also get the feeling, ssdsco, that your state of residence has a lot to do with it: there is a LOT of old money in NY, as opposed to, say, West Virginia, and the state laws are going to be geared in that direction. While you are not trying to hide assets through your daughter, you would SO not be the first person who tried, and had every justification in the world for doing so.

Just sayin.

[ssdsco]

Sorry ssdsco, I didn't realize your situation was exactly the same as the OP's. I am not implying that there's fraud or anything extreme in either case, only saying that I understand where they might see these payments/gifts as fraudulent conveyances. The Beemer was a hypothetical obvious example of something the trustee might not view kindly. And the trustee, who gets paid out of what he can recover from your assets and does not love your daughter like you do, may well feel that if supporting her is bankrupting you, then you need to address your own bills first.

If you can afford it, why NOT put your kid through school? As a parent there's really no better place to put your money. And if you can afford it, why NOT make sure they have a decent car and place to live while they're bettering themselves through education? I have no problem with this, personally.

It's just that by the time you get to bk, they want you to have cut every conceivable expense possible before you file, period. I also get the feeling, ssdsco, that your state of residence has a lot to do with it: there is a LOT of old money in NY, as opposed to, say, West Virginia, and the state laws are going to be geared in that direction. While you are not trying to hide assets through your daughter, you would SO not be the first person who tried, and had every justification in the world for doing so.

Just sayin.

No need to apologize ! It's just my dry sense of humor. I thought it was funny you almost nailed the situation which the average BK filer would never get in to.

I saw the OP had a half million dollar plus 2nd home and figured they might be doing the same thing I was with support for their daughter.

Now I have to wait 2 years from the last support payment to file to have a clean Statement of Financial Affairs.

[FreshLikeADaisy]

Now I have to wait 2 years from the last support payment to file to have a clean Statement of Financial Affairs.

Man, that's harsh, ssdsco. Especially that you were doing the right thing by both your parents and your child, and now you're getting slammed for it, ugh. I wish you a happy wait, if such a thing is possible.

[AboutToBK13]

Now I have to wait 2 years from the last support payment to file to have a clean Statement of Financial Affairs.

2 year wait. OMG. That is crazy. I really hope things work out for you. Good luck.

I am hoping my BK 13 is not that difficult.

[ssdsco]

2 year wait. OMG. That is crazy. I really hope things work out for you. Good luck.

I am hoping my BK 13 is not that difficult.

Very few filers will have the problem I do. There's a couple other folks around here that committed "fraud" by giving their kids a down payment for a home.

In this situation the trustee actually goes after the recipients. Rather than have legal action against my daughter and my father's hearing aids repoed I'm waiting the 24 months. I could also settle with the trustee myself.

I'm judgment proof so waiting the 24 months is no big deal. It actually gives me time to convert some non-exempt assets into exempt assets.

I'm also working on collecting enough fines from the collection agencies to pay for my bankruptcy.

Can't wait to see what $190k in CC debt adds up to after a couple years of 33% interest plus fees. My chapter 7 which should be a slam dunk by then may come under a little scrutiny.