A question about money?

[Nicki8875]

When you file for BK 13 do they take ALL your money? Or is there a little money for you? I know it is BK and I have to repay the money but I also have 3 kids and want to be able to have money to take them to a movie or bowling, Christmas....etc. Can you please tell me what it is like when you declare BK13 as far as your living?

[justbroke]

Hopefully someone posts real soon with a link on the myths of Chapter 13. I think it's somewhere here on this forum.

They don't take all your money. Basically, Chapter 13, is a Reorganization Plan! It allows a debtor with regular income to reorganize their finances and give them time to catch up on missed payments on secured property (like homes and cars).

It can also allow the debtor to discharge certain debts after paying what they can technically afford to pay. This is done by making the Chapter 13 debtor commit all of their projected disposable income to the repayment of unsecured creditors.

How much you pay is a function of your income and your expenses (combined with some limiting factors... known as the IRS allowances).

A Chapter 13 can be difficult for most people because the reason many people end up in Bankruptcy to start with, is because they can't budget. Chapter 13 is basically a court induced budget.

[BigJohn]

Have you talked with a lawyer yet?

Do you need to do a Chapter 13?

As for taking all of your money; nobody has come up with a method to get blood out of a turnip yet.

[optimistic1]

The Trustee will allow recreational expenses when determining your plan payment, recreational activities just as you have brought up.

This isnt 1940's Germany, and the Gestapo is the Trustee, this is USA, and your plan will work, but make sure you hire a good attorney who know the ins and outs of the laws.

[justbroke]

I also have 3 kids and want to be able to have money to take them to a movie or bowling, Christmas....etc. Can you please tell me what it is like when you declare BK13 as far as your living?

This depends. If you are under median income then you can claim these specific things as a specific line-item expense.

If you are over the median income, these specific things need to fit within the IRS allowance. This is held under the IRS Allowance for clothing, food and other items. Yes, that allowance includes personal care products and "miscellaneous" which includes entertainment.

As optimistic points out, the key is to get a good attorney that can utilize the allowable expense categories to your advantage and get you with a budget with "some" room in it.

[MommyMc]

My husband and I are filing chapter 13, creditors meeting is tomorrow.
Anyway, We have 4 kids, 11, 8, 3 and 7months. We are being given $150 a month for "Entertainment". Otherwise the "budget" given to us is really tight. That $150 is the only extra money we will have.

[Flamingo]

The "key" to a successful Chapter 13 is learning to change your lifestyle and that means living without credit cards on a cash only basis. It is difficult - not being able to do that is the reason most Chapter 13's fail. When you go into a Chapter 13 you will not be starving and will learn to budget to have extra cash on the side. If you never learned to budget before, a Chapter 13 is the best teacher and when you are done with your Plan, you truly never really want to see another credit card again...It is not the end of the world, it's tough to go through, it's an eye opener but it will change your life for the better if you learn from it.

[Nicki8875]

The "key" to a successful Chapter 13 is learning to change your lifestyle and that means living without credit cards on a cash only basis. It is difficult - not being able to do that is the reason most Chapter 13's fail. When you go into a Chapter 13 you will not be starving and will learn to budget to have extra cash on the side. If you never learned to budget before, a Chapter 13 is the best teacher and when you are done with your Plan, you truly never really want to see another credit card again...It is not the end of the world, it's tough to go through, it's an eye opener but it will change your life for the better if you learn from it.

Thank you! I think my biggest reservation is the fear of never having an extra dollar. Dh is pretty good with a budget and saving and paying cash for things...I am the one with the problem so he will most likely be in charge of everything once this starts.

[EricaCallaha]

It is hard. But knowing there is light at the end of the debt tunnel will help you budget and learn to save a few dollars here and there for a movie or a fun day out with the kids.