My thoughts on 13 so far.

[bksmith12345]

First things first. We met with our attorney the first time around Thanksgiving. We filed on 12/31/08. I wish we would have looked into BK several months earlier. We knew things were tight and getting tighter in Sept/Oct. I guess we were just hopeing that our finances would turn around and who wants to file BK. We always get a large fed & state tax return in February. Usually around 15K. If we could have made it through till then we wouldn't have filed. But, why keep barely getting by with no way to ever pay off the debt? Its about 160K unsecured credit cards.

I wish we would have contacted an attorney in Sept/Oct. We could have saved all those unsecured payments and kept current on the mortgage and cars. Now we have our 4th quarter town taxes, 2 1st mortgage payments, a total of 3 months car payments and a cram down of a John Deere tractor in our payment plan. We are doing a lien strip of our second mortgage.

When we met with our attorney he said we would be able to keep our tax return. Now it looks like the trustee might take it. I guess its ok to give it up since we are flushing 160K unsecured and 75K second mortgage. We do have a $11,200 wild card in NJ. Is the stuff going into the payment eating up our wildcard? I don't know how that works.

We had our 341 on 2/10/09 and are meeting again with our attorney this coming wednesday. We have plenty of questions for him and have to sign an updated plan for the trustee. Here is what I want to ask him:

1. What will happen to our fed & state tax returns?
2. What is the wildcard and how does the stuff in the plan affect it?
3. How can we do an early buyout?
4. Should we adjust our W4 witholdings so the trustee does gobble up next years tax return?
5. Should we have done a 7 then a 13?
6. Will they garnish our pay for the plan?

So far it has been quite an experience. Very nerve wracking. We have discovered that a 13 is a long process. Well, these are some of my thoughts. Not nearly all of them. OK, I feel a little bit better now.

Thanks for listening. Or, should I say reading.

[optimistic1]

1. Depending on your Trustee, your tax return is required each year to be sent to them, your tax "REFUND" may or may not be required to be sent to them, depends on their policy. Just adjust your withholding allowances to get back a very small refund.

2. My state exemptions dont list anything like that, so I have no info for you.

3. Not sure on the early buyout either.

4. Yes you should, adjust it so the trustee does not get your tax refund, its called a refund, a return is different.

5. A Chapter 20 can be done, ask your attorney.

6. It's not really a "garnish", just a deduction from your payroll, a garnishment is totally different.

[Flamingo]

I can help you as to your early buyout question. Under the old law, prior to 10/05, Chapter 13 debtors had the opportunity, if they qualified, to buy out of their plans early but only after 36 months of paying into their plan and could buy out at the confirmed percentage rate of your payback for unsecured. Prior to 36 months, one could only buy out paying unsecured creditors 100%. Most "bought out" by refinancing as we did and paid off the balance of the plan and some, like us, used other funds obtained in the refinancing to do major house repairs. You needed Trustee permission to do that and all documents for settlement were reviewed by the trustee. In your situation since you are under the "new law", an early buyout may not be an option for you since it appears you can only buy out at 100% and not at your lower confirmed percentage rate. Not too many folks have been posting on here about early buy outs and it appears there has been a crack down as to that. Yes, ask your attorney about that but I would not count that as an option at this point.

[bksmith12345]

Thanks Flamingo. Disregard my other post asking you about your buyout. The thing that bothers me is that my attorney told me to my face and in emails that we could buy out early and we would be able to keep our tax refund.

Mind you, I have confidence in him and he, so far, knows his stuff. We are meeting with him on wednesday. I will make sure I get concrete answers.

Thanks again.

[ekorB]

.....my attorney told me to my face and in emails that we could buy out early and we would be able to keep our tax refund.

My attorney told me the exact same thing. I'm waiting for the 341 to find out if I believe him or not.

[woeisme]

Keeping tax refunds is totally trustee dependent. Mine allows us to keep any refund of $6500 or less. Not sure if he'd take all or part of refunds over $6500, but won't ever find out since I adjusted our withholdings so that we went from getting back $4000 last year to getting back $500 this year. (That extra $300 sure helped us make it many a month!)