My KINGDOM For Some Answers!

[BKINAZ]

Remember...my Kingdom comes with an $88k second!

So with that said...saw a second attorney today. Sucked. Kinda. He answered my questions, refused to look over my means test results (2 flipping minutes to glance it) because "that happens after we hire them" AND he said that is the way it is with most. So congrats to those of you that got a lawyer to do it for you in consultation.

QUESTIONS: (still unanswered)

1. If I make $20k more a year after I file and receive chapter 13. Does 100% of that money go to my trustee to pay off debt?

*I realize it's my debt and I should pay for it. Yadda, yadda. But I want something for nothing. :-) Kinda. How does it make sense for me not to cheat, or not work if 100% of my income above my settlement goes to debt?

2. Life Insurance. I or my wife (more likely i) kick the bucket during our 5 years...she gets the $250k...one lawyer says it all goes towards debt, another says $50k goes to my wife and the balance to debt. True?

*(cough/cough) Huh...JUST looked at our policy and we have her mom as the beneficiery...go figure? Or are we just screwed with our life insurance no matter how "creative" we get?

3. If we file 13 (to remove the HELOC second)...our house is worth less than what we owe...is it possible and recommended to file chapter 7 sometime after? How long after could we do it?

4. The lawyer today sounded like a lien strip (without looking at our case) in general is not a slam dunk even if your house is worth less than what you owe. Is he right? It doesn't sound right? In our case (as I said to him) we owe $366k, our current value (appraisal) is $300k.

Thank you for your time guys/ladies...you're amazing people.

[StartingOver08]

In order to strip the 2nd in a CH 13 the ENTIRE 2nd must be unsecured. So, if your second is $88k and your house value is $300k with a total of $366k owed - then your second is NOT entirely unsecured. Are you certain the value is right? When was your appraisal completed - more than 90 days ago?
If so, the value is probably less if you are in one of the hard hit areas (FL, CA, AZ...oops I see you are in AZ!). Check your house value again. Not with Zillow or any automated valuation site - get a CMA (free) and make sure to let the agent know it is for a possible distressed sale.

Check your exemptions for the Life Insurance here (and the other exemptions)

http://www.legalconsumer.com/bankruptcy/state_bankruptcy_info.php?st_fullName=Arizona

Check with other attorney's until you find a good one.

[BKINAZ]

Appraisal (looking at my watch)...last Tuesday.

BTW...it's secured...I had always heard the second (secured) could be stripped if the house value was less than what you owed...no?

[BKINAZ]

OH...thanks..I will look up the Life Insurance.

[BKINAZ]

Okay...ouch.

AZ REV STAT 33-1126. Money benefits or proceeds; exception

A. The following property of a debtor shall be exempt from execution, attachment or sale on any process issued from any court:

1. All money received by or payable to a surviving spouse or child upon the life of a deceased spouse, parent or legal guardian, not exceeding twenty thousand dollars.

IT SAYS THIS ONE TOO...WHAT DOES IT MEAN? (IN ENGLISH PLEASE)

6. The cash surrender value of life insurance policies where for a continuous unexpired period of two years such policies have been owned by a debtor and have named as beneficiary the debtor's surviving spouse, child, parent, brother or sister, or any other dependent family member, in the proportion that the policy names any such beneficiary, except that, subject to the statute of limitations, the amount of any premium which is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1, with interest thereon, shall not be exempt. The exemption provided by this paragraph does not apply to a claim for the payment of a debt of the insured or beneficiary that is secured by a pledge or assignment of the cash value of the insurance policy or the proceeds of the policy. For the purposes of this paragraph "dependent" means a family member who is dependent on the insured debtor for not less than half support.

[catleg]

If your income goes up, you should be able to stash the increased amount into a 401k or other ERISA-qualified retirement plan so it doesn't become disposable income. This is in BAPCA, not everybody likes it but officially, it's the law.

[justbroke]

I think I'll give this a try...

1. If I make $20k more a year after I file and receive chapter 13. Does 100% of that money go to my trustee to pay off debt?

*I realize it's my debt and I should pay for it. Yadda, yadda. But I want something for nothing. :-) Kinda. How does it make sense for me not to cheat, or not work if 100% of my income above my settlement goes to debt?

It depends. it depends on what percentage you're already paying to unsecured creditors, if any. If you were already in a negative DMI status, then the additional monthly income would more than likely be used to pay unsecured creditors, less your negative DMI. So, if you had a negative DMI of $200 and you receive $400 more a month in income, then your DMI would be $200. Your new payment to unsecured creditors would then be $200.00. (Some Trustees would argue that you were surviving without the other $200... yada, yada, yada... let's just keep it simple.)

2. Life Insurance. I or my wife (more likely i) kick the bucket during our 5 years...she gets the $250k...one lawyer says it all goes towards debt, another says $50k goes to my wife and the balance to debt. True?

*(cough/cough) Huh...JUST looked at our policy and we have her mom as the beneficiery...go figure? Or are we just screwed with our life insurance no matter how "creative" we get?

This depends on your State. Most States have exemptions for a portion of the proceeds. Everything else would go towards unsecured creditors to the extent you pay them 100%.

3. If we file 13 (to remove the HELOC second)...our house is worth less than what we owe...is it possible and recommended to file chapter 7 sometime after? How long after could we do it?

Not really. Most people who want to do a "Chapter 20" do so by having a Chapter 7 followed by a Chapter 13.

4. The lawyer today sounded like a lien strip (without looking at our case) in general is not a slam dunk even if your house is worth less than what you owe. Is he right? It doesn't sound right? In our case (as I said to him) we owe $366k, our current value (appraisal) is $300k.

It depends on what the value of your first and second mortgages. They are a slam dunk in the 11th Circuit, if you have good supporting documentation (a professional appraisal). Many lenders don't fight in the 11th Circuit because it's fruitless, and only drags out the process.

Where did you get your house value from?

I stripped $130K+ of my second without even a peep from the lender (did it with negative noticing meaning that I wrote a new Order granting my motion after waiting 30 days for a response from the lender).

6. The cash surrender value of life insurance policies where for a continuous unexpired period of two years such policies have been owned by a debtor and have named as beneficiary the debtor's surviving spouse, child, parent, brother or sister, or any other dependent family member, in the proportion that the policy names any such beneficiary, except that, subject to the statute of limitations, the amount of any premium which is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1, with interest thereon, shall not be exempt. The exemption provided by this paragraph does not apply to a claim for the payment of a debt of the insured or beneficiary that is secured by a pledge or assignment of the cash value of the insurance policy or the proceeds of the policy. For the purposes of this paragraph "dependent" means a family member who is dependent on the insured debtor for not less than half support.

Basically protects creditors if your doing the beneficiary shuffle to make it so they can't touch it. Also basically states that if you got a loan against it, then it's not exempt as to that claim. Fancy speak for... don't mess with us. (At least that's my reading.)

[BKINAZ]

(Cat good idea, thanks!)

JUST...thanks for your time, where do I sent the check? I find myself saying that a lot lately.

BTW what the heck is this??? From your site STARTING OVER...It was from the ARizona section, but never says if we have a wild card or not???

Wild card exemption
Most, but not all, states allow a so-called "wild-card" exemption that can apply to any property. The wild card exemption can be of particular help if one or more of your other exemptions falls short of protecting your equity. You may split your wild card exemption amount over multiple items and stack it atop other exemptions as needed to protect exposed equity.

[StartingOver08]

Well, it looks like Arizona does not have a wildcard exemption (not all states do). Look at this link for exemption details (this is a different link from the last one):

http://bankruptcy-law.freeadvice.com/bankruptcy-law/arizona-bankruptcy-exemptions.htm

In the last link I believe it was explaning WHAT a wildcard exemption is...even though Arizona does not have any wildcard exemption. So the point really is moot, sorry.

[BKINAZ]

Solid link...

Thanks again!