Ch13 and Unemp Comp Debt

[spearmint]

A few years ago I was unemployed for a year and when I finally began working I continued the unemp comp for a while to catch up. To make a long story short, I now have to file Ch13 to pay off the debt. It seems that the penalties can be reduced but not the principal, so I am told. It also seems I will be strapped for money for five years. Is there any way at all to get rid of this debt?

[Flamingo]

Did you consult with an attorney to see if the owed Unemployment Compensation can be included in your Chapter 13? Unemployment is paid by your State so if one can put State taxes owed in a Chapter 13, I am sure Unemployment could probably be included and paid out to the State during your Plan. If you have not yet done so, call and make an appointment and get a free consultation to review your situation. Take with you a complete listing of all your debts, monthly payments, sources of income, paystubs, listing of assets and a copy of your most recent federal and state tax returns. Best of luck to you!

[spearmint]

Did you consult with an attorney to see if the owed Unemployment Compensation can be included in your Chapter 13? Unemployment is paid by your State so if one can put State taxes owed in a Chapter 13, I am sure Unemployment could probably be included and paid out to the State during your Plan. If you have not yet done so, call and make an appointment and get a free consultation to review your situation. Take with you a complete listing of all your debts, monthly payments, sources of income, paystubs, listing of assets and a copy of your most recent federal and state tax returns. Best of luck to you!

Actually, I talked to one attorney and he said it is a debt that is not dischargeable. The penalties are but the principal is not. I just can't believe, though, that there is not some sort of clause somewhere that can get me out of this. I want to pay it back but much preferably NOT in Ch13 and not with 40K penalties! The state won't budge on the penalties so they are driving me into Ch13!

[spearmint]

Another question on the unemp comp issue why is it not fully dischargeable in a 13? Did it used to be dischargeable before the bk reform in 05?

Can an attorney try to discharge it 100% and wait to see if the creditor objects? How likely are they to object?

[Flamingo]

There are certain items that are just not dischargeable in bankruptcy; federal and state taxes, overpaid state unemployment compensation, student loans, etc. They were not dischargeable prevoiusly prior to October 2005. They are paid back in full during the course of a Chapter 13 and spread out in the payments making them less of a problem to pay back and they would be paid by the Trustee.

[HHM]

Can an attorney try to discharge it 100% and wait to see if the creditor objects? How likely are they to object?

That is the worst possible thing to do. You need to understand that when it comes to certain debts, the burden is on the DEBTOR to prove the debt can be discharged. Many uninformed pro se debtors screw this up all the time.

I can't tell you how many times I have read on this forum
"I included my student loans in my BK, the lender didn't object, so aren't my student loans discharged?". Uggg. The BK code specifically lays out which debts can, and cannot be discharged.

To the OP, what ever you do, do not liquidate your 401K, you are far better off going chapter 13 than liquidating your retirement.

[spearmint]

That is the worst possible thing to do. You need to understand that when it comes to certain debts, the burden is on the DEBTOR to prove the debt can be discharged. Many uninformed pro se debtors screw this up all the time.

I can't tell you how many times I have read on this forum
"I included my student loans in my BK, the lender didn't object, so aren't my student loans discharged". Uggg. The BK code specifically lays out which debts can, and cannot be discharged.

To the OP, what ever you do, do not liquidate your 401K, you are far better off going chapter 13 than liquidating your retirement.

Now I understand. It is not dischargeable, period! Doesn't matter if the creditor objects or not.

[spearmint]

It's the weekend and all sorts of questions are coming to mind (

As I mentioned this Ch13 will have me financially strapped for 5 years but I have to pay back unemployment comp which is not dischargeable.

What happens if, say, one year into the plan, something happens such as job loss or family emergency, ill health, etc. that results in my not being able to keep up the payments?

I know Ch13 can be dismissed and refiled but what happens in the case of someone not being able to continue payments on something that is not dischargeable?

[lrprn]

What happens if, say, one year into the plan, something happens such as job loss or family emergency, ill health, etc. that results in my not being able to keep up the payments?

If the income reduction or expenses increase is significant and long-lasting, then your Ch 13plan can be amended to reflect your changed situation. If your income drops far enough that a six-month lookback falls below your state's median, you can convert your Ch 13 to a Ch 7.

[spearmint]

Now I understand. It is not dischargeable, period! Doesn't matter if the creditor objects or not.

In trying to understand Ch13, I thought I'd contact another attorney to see what he would say. I researched attorneys and found one that had an excellent rating and called him.

He told me that unemp comp is not quite like taxes in this case because the burden is on the creditor to PROVE it was fraud. He suggested filing Chapter 7 and waiting to see if the creditor objects. He said that they might in which case I would lose the lawsuit BUT there would then be a chance to negotiate what's paid back.

He said if all fails, I could convert to a 13.

Any comments?

[BigJohn]

Is the interest, etc. really $40,000?

[spearmint]

Not interest, penalties

[spearmint]

In trying to understand Ch13, I thought I'd contact another attorney to see what he would say. I researched attorneys and found one that had an excellent rating and called him.

He told me that unemp comp is not quite like taxes in this case because the burden is on the creditor to PROVE it was fraud. He suggested filing Chapter 7 and waiting to see if the creditor objects. He said that they might in which case I would lose the lawsuit BUT there would then be a chance to negotiate what's paid back.

He said if all fails, I could convert to a 13.

Any comments?

bump

[spearmint]

Please see my last message. I have now received two conflicting stories from two different BK attorneys. What should I do? Seek a third?

[spearmint]

In trying to understand Ch13, I thought I'd contact another attorney to see what he would say. I researched attorneys and found one that had an excellent rating and called him.

He told me that unemp comp is not quite like taxes in this case because the burden is on the creditor to PROVE it was fraud. He suggested filing Chapter 7 and waiting to see if the creditor objects. He said that they might in which case I would lose the lawsuit BUT there would then be a chance to negotiate what's paid back.

He said if all fails, I could convert to a 13.

Any comments?

When you receive conflicting stories from two different BK attorneys, what do you do? After all, I do not know the law myself and was asking them for guidance.

How do you know when you have a good attorney?