Chapter 13 HELL!!!!!!!!!!

[hyg1974]

Hi all!
Found this wonderful forum several months ago, read every day, but this is my first post. Filed BK13 3/31/09, had 341 6/12. Payment was 200/month on 148unsecured, no secured. Lawyer paid up front. Trustee disallowed some expenses, raised payment to 275, which was still doable. Confirmation hearing was scheduled for today. Yesterday,I received a call from lawyer stating that our district has a new judge (old one retired), and the new judge will not accept my actual expenses, but uses the means test to determine payment. Wants to confirm at 1300 a month. At this figure I would only be able to pay rent and utilities and 401k loans (which all went to the creditors!!) No money available for food, car insurance or health insurance.
Also, I have huge medical and dental problems and take many meds---no $ for this either.
My lawyer says cut out cell phone, cable and internet to pay for insurance.
He recommends that I see a credit counselor to find out why I need so much to live on. My rent and utilities are 2,ooo a month, average for this area (NY)
I have not been to a movie in over 15 years, cut my own hair, have never been on a vacation (I am 55 years old and single).
I work 6 days a week, 12 hours a day. I have no assets except for a 2005 chevy which is clear and constantly need huge repairs.
At the confirmation hearing today, my lawyer asked for a postponement until the claims bar date (Aug). He wants to see if the rest of the creditors file claims. So far 112,000. are in out of 148K.
I can't confirm at a 1300 payment. I don't have that kindof money left over after paying household bill.
If any of you have any ideas or experience in any of this, please respond.
I am scared to death. Thank you so much.

[sharina]

can't say much to ease your pain. No Chapter 13 is cut and dried, but what is cut and dried is that the trustee's job is to get as much as they can for the creditors and if you show means to pay that is what they will go for. The only way you do not have to pay all disposable income (usually) is to pay 100% to ALL creditors, including unsecured and be able to pay them off in 5 years or less.

Do you have proof of all your medical expenses to show trustee? It seems weird to me that your lawyer proposed a plan that had such a major dollar difference in the payment amount.

Chapter 13 is no piece of cake - in my case, it just stopped the outrageous credit card interest rates so I can actually pay off the debts and never use another credit card.

[njguy1972]

I am sorry to hear your story

I live in NJ and work in the NYC area so I know how rents are.

If you are in Manhattan I think $1500 is the going rate for a 1 bedroom (not including utilities) in a non doorman walk up. Of course the IRS chart probably has a much lower figure. It sounds like yours is closer to $1750 probably in a nicer building with an elevator and maybe a doorman.

In NJ the guidelines are around $1300 for rent and utilities.

When I was working with my lawyer before I was fortunate enough to go another route I had a similar fear. I was trying to exempt 401k contributions,transportation slightly above the guidelines, a student loan payment, and some other costs that were above the guidelines. The lawyer told me we could try but he believed the trustee would stick to the guidelines for expenses and that many of these requests would not fly with the trustee. For my student loan I have paid it down from 35k to 29k but if I was forced to defer payments the amount would grow back up to the original 35k after 60 months.

The system is not perfect. Maybe your lawyer can challenge the trustees decision.

Basically the trustee is telling you that he believes 2k a month is too expensive and you should probably look to move to one of the outer boughs where you can find a garden apt for about 1k per month. If you are in an outer borough he wants you to move to a lower rent place.

With renters it is tougher to use actual rents vs owners with a mortgage. The trustees see rents as more mobile while an owner can not always get out of the property that was purchased.

[Nick9075]

I am sorry to hear your story

I live in NJ and work in the NYC area so I know how rents are.

If you are in Manhattan I think $1500 is the going rate for a 1 bedroom (not including utilities) in a non doorman walk up. Of course the IRS chart probably has a much lower figure. It sounds like yours is closer to $1750 probably in a nicer building with an elevator and maybe a doorman.

In NJ the guidelines are around $1300 for rent and utilities.

When I was working with my lawyer before I was fortunate enough to go another route I had a similar fear. I was trying to exempt 401k contributions,transportation slightly above the guidelines, a student loan payment, and some other costs that were above the guidelines. The lawyer told me we could try but he believed the trustee would stick to the guidelines for expenses and that many of these requests would not fly with the trustee. For my student loan I have paid it down from 35k to 29k but if I was forced to defer payments the amount would grow back up to the original 35k after 60 months.

The system is not perfect. Maybe your lawyer can challenge the trustees decision.

Basically the trustee is telling you that he believes 2k a month is too expensive and you should probably look to move to one of the outer boughs where you can find a garden apt for about 1k per month. If you are in an outer borough he wants you to move to a lower rent place.

With renters it is tougher to use actual rents vs owners with a mortgage. The trustees see rents as more mobile while an owner can not always get out of the property that was purchased.

You are underestimating rents. Even in Astoria Queens, Spanish Harlem, or even as far as the Northeast Bronx near Co-Op city you cannot touch a basement one bed for less than $1,200. What are rents in the worst part of Newark or Jersey City -- not much cheaper after the outrageous run up in the past 12 years

I recently moved from Stamford CT where I was paying just under $2,000 a month for a one bedroom in an older non doorman building excluding utilities. Your $1,500 figure is probably more applicable to the outer boros than Manhattan. Even outside Boston on the North Shore (won't say where but in 'Essex' County ) I am paying just under $1,600 before utilities because of out the 25 rentals I applied to (before my credit really turned to crap was just bad before) this was the ONLY one who accepted me and even with offering 2 months, 5 months upfront the answer was still: NO -- you are declines. This $1,585 figure doesn't include utilties for this 'luxury condo' turned rental --- I will not use the A/C unless it is stifling hot and barely keep any lights on at home ever

At this point like I was when I was unemployed, you are in a catch 22- you can't afford your present housing but can't rent cheaper housing without a steady job history and better than average credit.

All I can advise the OP to do is whatever it takes to increase income and try to work out a plan with creditors outside of chapter 13 to pay them back. I am not going to judge but 148K for unsecured debt is outrageous --- I hope it was for medical bills. I finally saw the light after I lost my job and had over $70,000 in debt with a piddling income of $75,000 for just me and realized that I had to stop

[Nick9075]

can't say much to ease your pain. No Chapter 13 is cut and dried, but what is cut and dried is that the trustee's job is to get as much as they can for the creditors and if you show means to pay that is what they will go for. The only way you do not have to pay all disposable income (usually) is to pay 100% to ALL creditors, including unsecured and be able to pay them off in 5 years or less.

Do you have proof of all your medical expenses to show trustee? It seems weird to me that your lawyer proposed a plan that had such a major dollar difference in the payment amount.

Chapter 13 is no piece of cake - in my case, it just stopped the outrageous credit card interest rates so I can actually pay off the debts and never use another credit card.

Will this 100% include continuously accruing interest & fees. There is a HUGE difference is paying back say $70,000 in unsecured debt that is being claimed with no more interest/fees accrued and $70,000 at an average APR of 20%.

What I am asking is hypothetically if you claim $70,000 at the hearing but agree to pay it all back at 100% in five years which in my case I can do at this time at least would that be allowed without having to live on practically bread & water for five years.

What the OP is going thru is scary if she cannot pay for essential meds, food & insurance

[hyg1974]

The 148K is mostly interest at >30% . Took care of aging parents. for many years. missed a lot of work. Used credit to pay medical bill and rent when out of work. Havent used credit in years now. They have all been paid twice what I borrowed from them, but the interest just kept on comin!!! As for the rent, yes, this is the only place that would take me.

[Flamingo]

The hardest thing about a Chapter 13 is being able to make the life style adjustment that goes with it. When you are used to living on credit and have to cut to the bone and do it cash only for several years, it's a major shocker to those unfamiliar. You don't state your income. I am assuming it is high. The trustee will get whatever he/she can to pay the creditors as it is his/her job. You will have to learn to cut out everything to the bare bone and live an adjusted lifestyle in order to get through this and out from that debt burden. I would listen to your lawyer who knows your situation/finances best. Many people have high payments such as you depending on their circumstances. Our initial payment was $1700 per month and I thought it was a death sentence.

[HHM]

Your attorney has some room to fight this, but it will be an uphill battle.

1. How much over the median income are you that you must file a chpater 13.
2. On part 2 of the means test (this is the part the judge is using to determine the plan), how much disposible income do you show?

[paulf8]

alright this is a screw job if i ever saw one ,Two option quit job and file a chapter 7 or let them sue ya and get 25 percent of your pay garnished ,Your not going to have eny money enyways after this raw deal ,Another option is to drop the bankrupcy in that district and move to another ,Get a better lawyer also, Then file bankrupcy

[aa06a47]

alright this is a screw job if i ever saw one ,Two option quit job and file a chapter 7 or let them sue ya and get 25 percent of your pay garnished ,Your not going to have eny money enyways after this raw deal ,Another option is to drop the bankrupcy in that district and move to another ,Get a better lawyer also, Then file bankrupcy

I agree with Paul, Bk is suppose to be belt tightening experience, but basic living expenses should not be denied. There is no way you should allow a confirmation of a plan that you have no reasonable chance of paying.

Something must be way off between what you first brought your attorney compared with what the trustee is seeing. Your attorney must have screwed up bad to be that far off from what the trustee considers confirmable and the one he prepared for the filing.

I'm in my 3rd year of the plan, and the new law was new when I filed, so I am not sure what all has changed. My attorney stated back then, so much stuff was in flux, alot of stuff will fly back then when it might not in the future. I was given a very workable plan. Easy, no, but can I make it 5 years...yes, unless I lose my job.

Take a pencil / paper, figure up all your mandatory expenses, medical expenses, ...ect... and figure in a movie or two each month. Take whatever amount you figure you can actually pay to the attorney and tell him this is the max you can afford, bring the documentation where you figure it, and tell him to present it to the trustee. I think he has to. I didn't know it back then until I went for the confirmatoin, but it almost seemed like a used car purchase to get confirmed....trustee kept wanting more...attorney amended it 3 times due to trustee objections (even though his office told her the figure they would accept prior to the amendments).

[hyg1974]

The hardest thing about a Chapter 13 is being able to make the life style adjustment that goes with it. When you are used to living on credit and have to cut to the bone and do it cash only for several years, it's a major shocker to those unfamiliar. You don't state your income. I am assuming it is high. The trustee will get whatever he/she can to pay the creditors as it is his/her job. You will have to learn to cut out everything to the bare bone and live an adjusted lifestyle in order to get through this and out from that debt burden. I would listen to your lawyer who knows your situation/finances best. Many people have high payments such as you depending on their circumstances. Our initial payment was $1700 per month and I thought it was a death sentence.

Yes, I realize this has to be a belt-tightening experience. I have not used credit in a very long time--just trying to keep up with 30+% interest rates!! Everything is already cut to the bare bones. I haven't seen a movie in 15 years, never had a vacation in my life! Cut my own hair, don't buy clothes. Do take prescription meds that I need and I have even cut down on the dosages to stretch them. This payment does not allow for car insurance or health insurance or meds. It allows 100/mo less than I currently spend for food--ok, I can eat cheaper foods. But I do need my phone and internet. There's really no other place to cut out.I've already had one heart attack--I'm not interested in having another.

[hyg1974]

Your attorney has some room to fight this, but it will be an uphill battle.

1. How much over the median income are you that you must file a chpater 13.
2. On part 2 of the means test (this is the part the judge is using to determine the plan), how much disposible income do you show?

I'm way over the median. I expected a CH13 and have no problem with that.
But now that I've been hit with this shocker of a payment, I look at the means test and see that there is no allowance for health insurance, car insurance, work uniforms,etc. The means test shows disposable income of 1300, but this is just not true. I could not make the household bills with a payment like this!

[HHM]

Well, auto insurance is wrapped up in Vehicle ownership cost, but health insurance should be covered somewhere, it's been a while since I looked at the form.

[Nick9075]

I'm way over the median. I expected a CH13 and have no problem with that.
But now that I've been hit with this shocker of a payment, I look at the means test and see that there is no allowance for health insurance, car insurance, work uniforms,etc. The means test shows disposable income of 1300, but this is just not true. I could not make the household bills with a payment like this!

You also have to worry about future insurance rate increases & rent increases. From my experience even if you are making 3 times the monthly rent in gross monthly salary it is very difficult to find an apartment to rent if you have anything less than 'less than perfect credit'.

I was denied at over 25 places in the surrounding area of Boston that were by no means trendy areas and I was well over either 3 times monthly rent = gross monthly income, or 40 times monthly rent = annual income.

Car insurers are really weighting credit score in setting premiums so it is likely you can see a nasty increase in rates. Since you are in the NYC area, can you possibly sell the vehicle?? Cost of repairs, insurance & gas must take a good portion of your take home pay.

I haven't done a means test in my scenario but I am thinking close to $2,000 a month but I am paying close to that in total minimums now and cannot make any headway on this debt.

[Nick9075]

Yes, I realize this has to be a belt-tightening experience. I have not used credit in a very long time--just trying to keep up with 30+% interest rates!! Everything is already cut to the bare bones. I haven't seen a movie in 15 years, never had a vacation in my life! Cut my own hair, don't buy clothes. Do take prescription meds that I need and I have even cut down on the dosages to stretch them. This payment does not allow for car insurance or health insurance or meds. It allows 100/mo less than I currently spend for food--ok, I can eat cheaper foods. But I do need my phone and internet. There's really no other place to cut out.I've already had one heart attack--I'm not interested in having another.

I know I am in this mode as well and I make well over the median 'household income' in the states of Massachusetts & NY. Its sad because one of the consequences is that you become a loner. No one wants to hangout with someone who doesn't wear the latest fashions or who doesn't hang out at the trendy places every night after work.