First Questions

[viking64]

While I'm going to go for credit counseling, I'm pretty certain I'm headed for Chapter 13. $60k credit cards, $29k student loans (in abatement until 4/2010), $10k in timeshare loan (financed as mortgage), $24k back taxes (on payment plan), and not making current estimated payments so in same cycle again regarding taxes. While I have a steady job, I don't see myself making any headway on debut reduction, and at 44 - retirement will loom too soon.

Basically, I'm hoping to restructure so that I can pay off all back taxes, be current on estimated payments, pay off student loan, and whatever percentage of consumer debt the rest of of my DMI can cover, then start over on the right track.

Stipend is $39k and housing is provided.

I'm current on all bills (except on estimated taxes). I've got some questions about timeline and what I might be able to keep.

First Question:

We (partner and I) have a trip scheduled in late September to our Disney timeshare for our 2nd anniversary. Points are paid for since we are current, we already have Annual passes from a previous trip, flights booked ($100 RT), no car needed - so our only real cost there is food. We don't want to lose the opportunity of taking this trip given belt tightening for ch 13.

I'm taking a fully funded sabbatical in 2010, which includes 2 months in South AFrica in March and April, 2010. Again, this is fully funded by a grant to my employer and covers all expenses (travel, lodging, food, incidentals) so it's totally work related and not income to me in any way.

I know I will need to be at a 341 hearing. When should I file, given two trips planned to avoid a hearing scheduled during a trip? I've not gotten an attorney yet, but am seeking referrals. My thought is early October, but I don't want to endanger the sabbatical.

Will I have further required appearances after 341?

Second Question:

Since I am clergy, payroll deduction gets very tricky in terms of employment issues (word would obviously get out in the congregation, which could jeopardize my position, or at least compromise my effectiveness). Does NJ require payroll deduction?

Third Question

We don't own a home. My Corolla is 10 years old. There are two things I want to do my best to not lose:

The sabbatical (not likely given it's not my money - just a timing issue);

The Disney Vacation Club Timehsare (About $9K balance - Resale about $9kl). While partner is not on mortgage (and can't be because of an IRS payment plan he's on), his income is enough that he can cover 100% of payments and fees. He currently pays me for 50% of the monthly payment/fees.

Would the Trustee let me keep it under those circumstances?

Fourth Question

I'm assuming that because I'm partnered (though civilly united in NJ) that I'm treated as single under bankruptcy laws since they are federal and the US isn't allowed to recognize same-gender unions. I file US taxes as Single. I don't want this to hurt him in any way.

Thanks for any advice/answers.

[lrprn]

While I'm going to go for credit counseling, I'm pretty certain I'm headed for Chapter 13.

Frankly credit counseling is very likely not going to help you much. There's nothing to compel your creditors to cooperate by joining your debt management plan. We did credit counseling for eight months. I did the math and realized that after eight months of making $800/month payments ($6400 paid), we were a whopping $900 ahead. That's when we realized that Ch 13 was our only option. Chances are you will realize the same.

I'm current on all bills (except on estimated taxes).

Frankly most creditors won't work with you until you are at least two months in arrears on your payments, even when working with a credit counseling outfit. Just so you know to expect pushback.

We (partner and I) have a trip scheduled in late September to our Disney timeshare for our 2nd anniversary. Points are paid for since we are current, we already have Annual passes from a previous trip, flights booked ($100 RT), no car needed - so our only real cost there is food. We don't want to lose the opportunity of taking this trip given belt tightening for ch 13.

Two observations. First, timeshare payments are generally not allowed in Ch 13. A timeshare is considered a luxury, not a necessity. However, each local trustee can be different, so you'll have to talk with several experienced bk lawyers in your area to see how timeshares are handled in 13s in your local court.

Second, although we all understand the desire to have one last fun time before filing, do understand that Ch 13 will be one long lesson about budgeting to live within your means over five years. It's not too soon to get into that habit. But there's nothing around filing bk that's stopping you from going to enjoy yourselves as long as your costs for the vacation are reasonable. Life doesn't stop just because you file bankruptcy, and trustees understand this.

I'm taking a fully funded sabbatical in 2010, which includes 2 months in South AFrica in March and April, 2010. Again, this is fully funded by a grant to my employer and covers all expenses (travel, lodging, food, incidentals) so it's totally work related and not income to me in any way.

As long as the cash for the trip isn't deposited into your personal accounts, this should be fine. Many of us travel as a part of our jobs or do sabbaticals - again, most trustees understand this as a part of employment. Ask your lawyer about how your trustee will deal with this situation.

I know I will need to be at a 341 hearing. When should I file, given two trips planned to avoid a hearing scheduled during a trip?

You can't control when the 341 is scheduled. If you plan to file in October, then your 341 will happen before March/April 2010.

I've not gotten an attorney yet, but am seeking referrals.

Set up free initial consultations with at least 3-4 experienced Ch 13 bk attorneys in your area. You are looking for attorneys that file both Ch 7 and Ch 13, and file enough Ch 13 cases to be very familiar with your local Ch 13 trustee's and the local court's practices and case law decisions around Ch 13.

Selecting the right attorney is the most crucial thing you can do for yourself when filing Ch 13. Writing a viable Ch 13 plan is more of an art than a science. It will make the difference between getting a plan you can live on for five years or making your life a living hell for five years.

Will I have further required appearances after 341?

No.

Does NJ require payroll deduction?

Hopefully a NJ filer will come along and answer this for you. It's also an easy question to get answered during your initial consultation visits with your lawyer candidates.

The Disney Vacation Club Timehsare (About $9K balance - Resale about $9kl). While partner is not on mortgage (and can't be because of an IRS payment plan he's on), his income is enough that he can cover 100% of payments and fees. He currently pays me for 50% of the monthly payment/fees. Would the Trustee let me keep it under those circumstances?

You are filing bankruptcy, not your partner. If your name is the only one on the timeshare, then that's all that matters. As I said above, the timeshare is likely going to be an issue when you file. Ask during your free consultations about this to find out what to expect.

And remember, as hard as it is to see yourself living without the timeshare, in reality it's just a thing and things can be replaced eventually. The loved ones in your life are far more important and care more about you than a thing.

Filing bankruptcy needs to be a cold, hard, emotionless business decision, nothing more. You have to look long-term to see what's going to give you the best outcome in the long run. Many of us live without a timeshare - you can learn to do so as well to get out from under your crushing debt burden for five years. After that, you can get a timeshare again.

I'm assuming that because I'm partnered (though civilly united in NJ) that I'm treated as single under bankruptcy laws since they are federal and the US isn't allowed to recognize same-gender unions. I file US taxes as Single. I don't want this to hurt him in any way.

You will have to file as a single. Keep in mind YOU are filing bankruptcy, not your partner. Your bankruptcy can't touch him legally and won't impact his personal financial situation at all.

Hang in there. You are here getting information about bankruptcy to inform yourself - that's a great start! Keep asking questions - we'll help you sort things out as best we can.

[viking64]

Thank you very much for your replies. They are very helpful. I totally understand the issue of the timeshare and am prepared to let go if necessary, but I do hope to find a way to keep it. My hope, which might be totally unrealistic, is that if the payments aren't coming from my budget or my income, it could survive. If not, then when I get out of BK, I'll certainly have enough income to re-purchase (and loan-free) pretty quickly.

Regarding consumer debt - I was under the impression that creditors wouldn't work with you if you weren't current? I recognize it may not work, but I at least want a consultation. There is a good NCCC in our area that I plan to consult with - if nothing else, I can at least get the BK counseling out of the way.

In terms of credit repair after BK, is it better to have entered into BK while current, or should I just stop making payments when I know I'm about to begin the process?

Again, thanks.

[Ifonly]

Talk to your attny about your timeshare...my attorney has me paying my Disney timeshare outside of the plan...but I'll have to let you know if the trustee objects or not. My attorney seems to feel that because it's mortgaged and there is absolutely no resale market that I can exempt it. Also note, I did not exempt my home or a car - I surrendered both.

[viking64]

Talk to your attny about your timeshare...my attorney has me paying my Disney timeshare outside of the plan...but I'll have to let you know if the trustee objects or not. My attorney seems to feel that because it's mortgaged and there is absolutely no resale market that I can exempt it. Also note, I did not exempt my home or a car - I surrendered both.

That's helpful. I don't have a home to surrender (live in church housing), and I must have a car for my profession - but KBB values it right at the exempt figure ('99 Corolla, manual transmission). However, I will definitely work with the attorney to see what can be done while being prepared for letting go.

[Ifonly]

I'll let you know if my trustee objects. I am absolutely prepared to let it go if I have to. If I don't have to, I know that I will be able to use it to drive down to Hilton Head, etc and not spend a ton on a vacation for my family. Last year, when we went to Hilton Head we drove, the unit had a full kitchen, we bought groceries, packed sandwiches for the beach, etc. We treated ourselves to one dinner out that week - Sticky Fingers for ribs. I hope gas stays low compared to last year so we can do it again.

[viking64]

I'll let you know if my trustee objects. I am absolutely prepared to let it go if I have to. If I don't have to, I know that I will be able to use it to drive down to Hilton Head, etc and not spend a ton on a vacation for my family. Last year, when we went to Hilton Head we drove, the unit had a full kitchen, we bought groceries, packed sandwiches for the beach, etc. We treated ourselves to one dinner out that week - Sticky Fingers for ribs. I hope gas stays low compared to last year so we can do it again.

I read your 341 scheduling saga yesterday. I would be fried if my attorney forgot because I have to have the 341 before I take my sabbatical next spring.

Good luck, and I look forward to the results!

[viking64]

UPDATE on answers to my own questions

Had attorney consult the other day. I found her through Martindale.com for lawyer ratings after doing extensive research, and I'm very pleased, especially after other inquiries.

Anyway, my partner's income will count because it's household, but so will his expenses. She may be able to put me in Chapter 7 because of high NJ median and low amount of actual assets and low stipend compared to debt, but it will be close. IRS back taxes and student loans + expenses won't leave much for unsecured. If it's chapter 13, it's definitely 60 months.

My provided housing will not count as income, and I may get to still count the housing expense for means testing, but she's not sure. We both agree that it makes sense to not take the expense since everything is provided, but she says schedule is pretty clear that you apply it. She will consult. Anyway, that's why she thinks she may get me into a chapter 7.

My student loan is in forbearance until March next year ($410 a month), so we may get that re-started now to show expenses, too. I can also re-negotiate with IRS to increase my back-tax payment since current payment plan won't pay it off in 3 years as IRS prefers.

Partner has a little more debt than I realized (but nowhere near mine), so his expenses will be higher than I anticipated so his disposable is also lower than I thought. (aren't financial conversation good for building relationships? ;) He's been great, though.)

Given my assets, the amount still owed on DVC timeshare compared to resale value, and the low payments attorney thinks I'll be able to keep it, but we both agree to not count on that.

NJ does allow payment by money order so no one at work need know about this.

Sabbatical and travel plans are not an issue since sabbatical is through work, and travel is for business/family medical in July and the September trip is at timeshare and other expenses are already paid. Nothing will go on credit cards, though one card will be used for a credit hold for rental car pick-up in July, but the paid with debit upon return of car.

According to the attorney, for the area, my spending on myself is very low. It's all been going to consumer debt and back taxes so it's obvious I've not been living high on the hog the last few years.

I'm not happy about where I am, but I do see that the future is going to be OK and I'm already enjoying knowing exactly what's going on financially and getting that under control. Once filing happens, I will finally be current on everything (taxes, debt) for the first time in 3 years. That feels good.