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[sophie]

Hi,

Background: We're in our first year and we're confirmed.

Problem: My car lease is up and so we went to get another one. And you guessed it. No one will touch us. And we can't get a car loan. So after my nervous breakdown I realized that my only option is to cash in my IRA. I know about the penalty and tax but I really have no other alternative. No family member to help me out, etc. So here's my questions.

Once I cash my IRA in, this will raise my income this year a lot. But only for this year. Also, since I will be buying a car, my expenses will go down a couple hundred a month. . Now I need to know if this is going to raise a red flag. What can the trustee do to me? I haven't been asked for anything i.e. tax return yet but it's only Feb. Can he raise my monthly payment if he audits me? I had to cancel some insurance 'cause it was too expensive and I'm trying to cut back on other things too to give me more money each month. I figured that plus not having a car payment I will be able to put a little away for an emergency. But if he sees my changes will he want more for the plan? Will the local hospital have an extra bed for me for my next nervous breakdown.

Thanks.

[kmb]

Sophie,

Did you ask the company that holds your lease if they'll finance you to buy the car? After my almost nervous breakdown, that's what I did, and they agreed to extend the terms at the same interest rate I was at until the car is paid off--which is only 4.9%.

I know you won't be able to put that extra money away for awhile, but chances are you're going to pay a hefty tax penalty on withdrawing it early (usually 20%) so a lot of that money will go towards your tax bill next year anyway, and you won't have to worry about the trustee coming after you for more money.

Just my two cents.

[sophie]

KMB,

That sounds like a great idea! But the leasing company already turned us down for another lease. Do you think that this might be different? Do you mind me asking what leasing company did that for you?

[sophie]

Kmb

Can you also give me details on what you said to the financing company etc. I'm a wreck over this. We used 1 leasing company for 5 cars. This company we used for our 2 leases. And both leasing companies said no way. So when I call the current leasing company what do I say?

[Flamingo]

Hi,

Background: We're in our first year and we're confirmed.

Problem: My car lease is up and so we went to get another one. And you guessed it. No one will touch us. And we can't get a car loan. So after my nervous breakdown I realized that my only option is to cash in my IRA. I know about the penalty and tax but I really have no other alternative. No family member to help me out, etc. So here's my questions.

Once I cash my IRA in, this will raise my income this year a lot. But only for this year. Also, since I will be buying a car, my expenses will go down a couple hundred a month. . Now I need to know if this is going to raise a red flag. What can the trustee do to me? I haven't been asked for anything i.e. tax return yet but it's only Feb. Can he raise my monthly payment if he audits me? I had to cancel some insurance 'cause it was too expensive and I'm trying to cut back on other things too to give me more money each month. I figured that plus not having a car payment I will be able to put a little away for an emergency. But if he sees my changes will he want more for the plan? Will the local hospital have an extra bed for me for my next nervous breakdown.

Thanks.

First, you need to contact your attorney about this because you will need Trustee permission to obtain another vehicle or you risk the dismissal of your Chapter 13. Not a good thing. The same applies as to utilizing your IRA. There are many postings in this forum about folks questioning how to avoid letting the Trustee or attorney know about financial dealings they are trying to hide from both. The risk factor here is too high for you to take your IRA and get that vehicle without your Trustee's knowledge and permission, plus the money you have to pay on taxes and penalties for early withdrawal will make your head spin. You are not dealing with a few hundred dollars in this situation, you are talking thousands. To protect your Plan and yourself, you should contact your attorney about this before you proceed any further. We know all about the nervous breakdown feeling about issues like this - been there and got through it. But if you don't follow the rules, your Chapter 13 can go right down the drain and you are back right at step one before you filed.

[kmb]

Sophie,

My car was leased through VW, it was a 4 year lease. I went to them and asked them to refinance the remaining "balloon" payment---so I'm not leasing a new car, rather I'm buying it out. They kept the same terms for me, so the same interest rate and payment amount and in 32 or so more months, I will own it. I've taken good care of it, so I'm happy to keep it.

Another option to try is 722redemption.com . I didn't do much with them because VW refinanced me, but they do work with Chapter 13. You have to buy one of there cars, but from the website it says they are late models, low miles, etc. They will also work with your attorney and your trustee. Again though, I didn't have much experience with them, so I can't say how good they are--but another potential option.

According to my lawyer, my trustee was fine with my situation because the payments were already included in my budget and the payment amount didn't change. He also never asked when my lease was over.

HTH

[sophie]

So far we haven't heard anything back from the leasing company about financing our residual. BUT, my lawyer doesn't seem to think he needs to notify the trustee regardless. I know he's a good bk lawyer but I'm a bit nervous. Where does it say (on which papers) that I need to notify the trustee of anything? Thanks.

[kmb]

I don't know where it says anything, but I asked my lawyer and he told me the same thing, that I didn't need to notify the trustee. The payments were being made outside the plan, and technically I was "extending the lease" (or so he said) and because the terms didn't change, he said I was fine.

He also told me we don't have to provide our tax returns to the trustee and we get to keep our refund (if we get one). I'm still waiting to file, since I owe the IRS from a few years ago, but the trustee still hasn't made a disbursement from our account for the 9 months we've been paying. There is more than enough sitting there to pay off the IRS which is a priority claim, so I'm hoping they do it this month, then I won't have to worry about them keeping it for back taxes.

[krielly]

KMB,
You shouldn't have to worry about the IRS as long as they are included in your plan. You may be waiting a long time if you are holding off on filing your taxes until monies have been disbursed to the IRS by the trustee.
We owed the IRS and included them in our plan. We filed in 10/05, were confirmed in 2/06, and the trustee did not make his first disbursement to the IRS until 11/06. We did tax returns for 05, and got a hefty refund. The IRS did NOT take any of our refund.

K

[kmb]

Thanks Krielly! I actually looked online and it looks like after 9 months the trustee has finally disbursed, so our back taxes are paid in full! I'm getting my Turbo Tax out this weekend and filing. Now I just have to hope for a refund!

[sophie]

Kmb

I don't know what it means when you say after 9 months the trustee finally disbursed our back payments. Where do I find out that info about mine? I went through pacer and didn't see where to find it.

Thanks!

[lrprn]

I don't know what it means when you say after 9 months the trustee finally disbursed our back payments. Where do I find out that info about mine? I went through pacer and didn't see where to find it.

PACER has no records for Ch 13 disbursements, so don't waste any more time looking there.

The only online places you can see your Ch 13 trustee's monthly disbursements are on 13Network at http://www.13network.com/ or National Data Center (13 DataCenter is the debtor side) at https://www.13datacenter.com/data/home_debtors.asp .

Check the trustee lists in both locations to see if your trustee participates in one or both sites. If he/she does, then all you have to do is sign up for a free usename and password and you can see your trustee payments to your creditors along with other useful information about your Ch 13 any time you want. And it's FREE!