Chapter 13 questions.

[momisery]

Last October hubby lost his job and has not found much out there. It is a long story, we do own a home in GA that we rented out and we have our home in GA. Currently the home is GA has no equity to speak of and we just lost the tennats and can't afford to replace them. We are not making payments and we have asked for a deed in lieu with is into 3 months no of no payments.

We went in to talk to and attorney and thought chapter 7 but were told that we make too much. I make about 31,000.00 and hubby makes 1200 in a good month and this month maybe 500 that is gross. But we had rental income until June. So they added in the rental income and his best months and my income and said we have to do chapter 13. And that we have to stop using credit cards for 90 prior to filing period, so we can not file yet and I am not sure how I can live 3 months like that without not paying for the house we live in. I am not sure how I can pay all the bills without the credit cards!

Plus 8 months ago we took out a loan to pay off the cars and give us extra cash to help us out with debt. We have been told we have to keep paying that so all I can not pay is about 200.00 per month in credit cards. That will not help much since they want about 1400.00 to start this mess.

At what point do they not count the rental income, I mean our payment was 300.00 per month and we are losing that place. And why do we have to continue paying the loan just because it is 8 months old? At the time we thought things would be okay, we thought the car business would turn around. But they are afraid that the loan company will object because it is not secured. I live in Missouri, did I just have a bad attorney experience?

[lrprn]

I am not sure how I can live 3 months like that without not paying for the house we live in. I am not sure how I can pay all the bills without the credit cards!

That's the hardest part about bankruptcy- learning to live within what we actually bring home.

Once you don't have to pay the credit cards and other unsecured debts, do you have enough then to pay mortgage and other asset payments plus minimal living expenses with all luxuries cut out?

Plus 8 months ago we took out a loan to pay off the cars and give us extra cash to help us out with debt.

How much are your cars worth right now in their current condition? Can you protect both with Missouri's auto exemption of $3,000? http://www.thebankruptcysite.org/exe.../missouri.html (Unfortunately I don't think Missouri's exemptions can be doubled when a couple files )

You didn't realize it at the time, but unfortunately paying off your cars will make keeping them harder if you do file bankruptcy You may end up having to surrender one or both or pay your trustee for what they are worth over $3K that can't be protected by MO's auto exemption.

Also, is the loan you took out secured or unsecured? (I'm betting secured since your lawyer told you the loan payments have to continue after filing since you apparently want to keep all your secured assets.)

We have been told we have to keep paying that so all I can not pay is about 200.00 per month in credit cards. That will not help much since they want about 1400.00 to start this mess.

It sounds like you aren't going to gain much income at all by filing bankruptcy. You may have to make the hard decision to give up secured assets to free up more income to live within what you two make every month.

At what point do they not count the rental income, I mean our payment was 300.00 per month and we are losing that place.

The Means Test calculates income by totalling all income received back six full calendar months before the date of filing. To not have the $300/month count in your income, six full calendar months have to pass with no rental income.

And why do we have to continue paying the loan just because it is 8 months old?

As I said earlier, if this loan is secured, then if you want to keep the assets, then you have to pay the loan secured by those assets.

But they are afraid that the loan company will object because it is not secured.

Now I'm confused. Who is "they"? If the loan is unsecured (check the papers you signed to be sure it is not secured), then unsecured loans will be wiped out when you file bk just like credit cards.

So....is this loan you took out to pay off your cars secured or unsecured?

[momisery]

We had a free consulatation and the paralegal told us that we would not need to keep paying the unsecured loan with a payment of about 450.00. Then when I mentioned we took it out 8 months ago, it was for 30,000.00 and I used it to pay off the car loans which gave us a little extra cash in the loan, and paid off both cars. That also lowered the payment by about 200.00 per month and I thought we would be okay. The paralegal then ran in the back to ask the attorney and came back saying we should keep paying the unsecured debt. It has something to do with taking out the loan in the last 8 months for such a large amount and the creditor could go to the judge and complain about it. I am not sure the terms she used now, but it has something to do with the amount and the time frame. We hoped the job market would turhn around, but it has not turned around. So, hubby made 400.00 this month is what it looks like. Since Oct. we have pretty much been using credit cards to get by hoping that things would change. Coming from having credit scores of almost 800, and never being late on any bill, this is a hard thing to take. But I net less than 2000.00 per month and then this month his 400.00 puts us in a bind. The house alone is 784.00 that is without the taxes and insurance. Our cars are worth a bit, so we tried to go chapter 13 and take on some debt to keep the cars. We can not work without cars, this is so stupid I think. There is no way we can pay utilties, and the bills for cell pones and internet hook up for his job and food on my income and the house and pay that unsecured debt.

[13inIN]

You run the risk of ending up being in trial for fraud is what it amounts to. I had a group after me due a spike in debt with their client. Without a change of circumstances to stand on, I ended up settling out for a guaranteed amount to them. I didn't want to keep racking up attorney fees on both sides and run the risk of owing all of it, plus the fees. So I negotiated a settlement to bar the debt from discharge and I pay the remainder in 18 payments after the Ch 13 ends. Reality is.... I'll owe them about a grand when the 13 is done.. so it wasn't a hard decision. They were just balking hard due to the low ball my attorney was trying to toss through early on. In a nutshell, B22C showed our DMI at -$17. We're above median though, so move to I and J and we arrived at a payment of $217/wk. That would have paid in $56k. Fast forward, after some more dancing, we'll be paying about double that. Not sure how related all the events are, but I will say that I'd advise you to stay low on the radar.

[momisery]

Thanks for the response. Hubby was in the car business for most of his life. You never were secure in a job for about the past 10 years. You see all the ads about salespeople needed at the same dealerships over and over. If they are not selling, they want more balloons, more feet on the ground, and more meetings. Nothing ever really helps then, in fact they must spend a ton in help wanted ads.. or perhaps they get a discount? Anyhow, so losing his job was no surprise. The surprise was there were simply none left out there to get except at the two dealerships in town that run ads every week. Those places do not keep staff and you make nothing on their "plans" even though they promise the world. Fraud was not our intention, the intention was to survive while he got another job. I guess age and a sign of the times has destroy that. I guess our best option might be holding off on filing, don't use the cards, and report our income later in the year which will not include rental income because rental income was less than the house payment we had to kick in 300.00 per month, but they still count it as income??? geesh. We need to talk to another attorney I guess. But I can tell you paying off 784 plus taxes and insurance, 453, and our utilites and 200.00 in Credit card payment can not happen out of a take home of 1900.00 per month without not eating. Our gas bill is high, our food bill, and of course electric, cell phone for hubbys job that pays crappy and internet service. But what do they care, they are hugh businesses that want all the money.

[rrockinggramma]

I think that waiting to file is your best best. Because then I think you would qualify for a chapter 7. You should wait about 6 months.

Let the house go back and include all of your other debt.

Live on cash for the next 6 months. the creditors will call etc but there is nothing you can do about it except don't answer the calls.

And don't feel bad. I am 59 and just finished up my chapter 13.

[momisery]

I feel horrible. My credit has always been good, never bounced a check, never late, never not paid anyone in my whole life and I am 59. I will say we did stupid stuff besides the economy being an issue. I think we will talk to an attorney and decide what to do next. Stashing cash... not much to stash.. we will have to pay utilities and taxes and insurance plus everydays costs. But, where will we live after this all falls apart? We are in MO and family is in CA and AZ. We have no one here... if we lose our home we are in the streets is my fear. The big money for us would be my salary I guess I need to stop my medical. But, what if hubby finds a job or starts making money.. we lose it all and still have to pay for it all?

[13inIN]

Go talk to a couple more attorneys. The fraud comes down to a good faith/bad faith judgement. It is normally not contested in chapter 13, but is more common with ch.7 cases. Can you at the time say by looking at the numbers that you thought you'd be able to pay it back? That's the base argument that you may have to answer.

Again, not sure if I could have won it in our case, but it just wasn't worth pressing it in our case.

The feasibility of your case swings with this issue though.. so I'd definitely go seek more consultations. Hopefully you'll get face time with the attorney so you can ask direct questions.

Just keep in mind that bankruptcy is there for a reason. We are a lot harder on ourselves than the system/laws/etc are. We too had perfect payment history... just some bad, bad decisions and the debt death-spiral was underway. CH13 was our best option and I can tell you in hindsight that it was definitely our best option for the long run, even if we end up paying 100%. We're learning how to do it right this time.

[momisery]

We are going to do that, talk to more attorney's if we can. It seems the free consultation is with their paralegals so far and little info is given out really. I can see that we simply do not have the income right now. Less than 2000.00 per month puts us pretty much in to losing everything because I can not see a workable pay back plan. I told hubby we need to let the house go, it is worth less than we owe on it. In MO in the good times the growth rate for housing is 3-5% so, if we are upside down by 10,000.00 even in 5 years we would be underwater. If we have to go out we might as well give it all up and start over again. Rent, maybe move some place closer to family. But he does not want to move to CA. I keep telling him that he needs to give up sales and work at something to pay the bills. His job costs us more than he makes, and I have told him that moving in with family makes better sense then not having a roof over your head. He says he doesn't want to lose the house, but I don't like it in this state. Everything is far to expensive in Springfield, MO. The healthcare is crazy no HMO's at all. Food is expensive, and Doctor charge what they charge in larger cities...but the wages are horrible. I hate to keep talking to him, I am sure he feels bad about not having a better job. But he will not give up sales and it just does not pay. I guess the pain of it all makes us all a bit nuts? We are almost 60 so I would say our lives are over ... we will never have good credit again.

[woeisme]

If your husband won't face reality about your financial situation, some of it is because you have enabled him to hide his head in the sand. I know, because I am the enabler in my family, and I took on more and more of the financial burdens from my husband (very similar, he also is not working and I am the sole wage earner although he does get a disability check) until our situation became hopeless and we had to file. You are saying "he" doesn't want to lose the house, "he" doesn't want to move, "he" won't give up his sales job that brings in no money, but is "he" paying the bills? No. You are, and that is what is allowing him to refuse to face reality. In my case, hubby wouldn't curtail spending because I always found a way to pay the bills (robbing Peter to pay Paul, charging one credit card so we had $ for minimum payment on another, etc). He'd let bills go unopened and just continue to spend what he wanted, even having 3 judgments against him didn't change things, and I was worrying myself sick over trying to pay all the bills because he never had a dime left. At some point you just have to say enough is enough. I stopped paying the bills I didn't really care about (cable, internet, cell phone, etc) and he now either pays them from his check or we go without, which were all things he cares a lot more about than me so now he pays those first and with the Ch 13 we have no credit so he can't spend beyond what he has anymore. I still shoulder the lion's share, the mortgage, utilities, insurance, CH 13 payment, but since I make much more $, it is now at least somewhat fair, he has to pay some of the smaller bills and I cover the rest, but I no longer cover everything and his whole check is no longer "mad money" for him to spend as he pleases while I'd scrimp and scrape to get through the month. So what I'm saying is that your husband won't change until YOU change. You have to stop making it all work for him, stop making yourself sick covering for his indulgences, which working a job that costs more than it brings in is, an indulgence, a hobby, not a career. I know it's not that easy, there's always so many interpersonal dynamics at work that a stranger on the internet doesn't know about, but if your hubby won't change, you need to, or nothing is ever going to change. Best of luck to you!

[momisery]

Thank you for responding. I do get angry and I tell him that he needs to find real employment, but he is 59 and has always been in the car business all he knows is that or sales. Sales jobs don't pay that will right now, and he never bought in a ton when he was selling cars. He was much better at finanace or sales manager for a car dealership. But those jobs have a high turn over rate. He would go without a job for months, but then end up getting one. We moved from GA, we did not like it there and we had to very bad encounters and I am happy to be alive. So, our house fell out and we rented it and moved to get away from the violence. I can't say that I would go back. But since then this is a smaller area and he has not found a really good job, just a job. Most have paid okay enough to get by and I really thought we would be fine. But for a year it was a lay off after another in the car business. He did sales, but it is pretty hard when your knees are old and worn out I guess he could not rush out to meet the customers as quickly as some. So he went to insurance sales and we were making it on unemployment. He kept saying that it would get better, every time I talked to him about not making enough to not make unemployment he would get mad. I know it is hard to not have the income anymore, but geesh there is a point where you have to realize that the miles on the car and gas, the lunches out, business cards, have to have a cell phone that will text and a gps per the employer and add a lap top to that... interent at home.... on an on.. Mean while I am covering the healthcare at my job, and the bills. I did have his unemployment at least, but that is gone now because he made 1100 gross one month. Geesh... He is spinning his wheels.. but I can not get him to wake up and get a job. Where would you work that would not pay better than 100.00 a week, and expect all the bagage they expect you to buy? Today he has decided he will try out for a band and make extra money doing that. I am so upset that he will not just get a job! Like you said it is all about him and what he wants. We both don't like the weather here that well and he now would love to move to Tombstone. I told him from the last move the next time I move (4 times now for a "better" job), it will be home. So, I have told him we can not move to AZ. If we move it will be to his Mom's who could use our help she is pretty old. Our last visit I cleaned her house and found out how bad she is living out there. She is too old to vacuum and clean and she doesn't cook for herself and eats icecream. So I said I could try to get a job transfer and his reply was he did not want to move to CA, nor did he want to live with family. I told him the expenses would be lower, and we could help his mom since he is an only child. But, he will move to AZ but not to CA. I can't move to AZ, there are no jobs there, and I can not count on him. I am not so sure we will survive this financial mess, I am about tired of the "I can'ts" from him. But for now I have to deal with it. He hates to give up the house, I am afraid I will be stuck living here and paying for it while he plays in the band if I don't put it in the BK. Well, sorry to burden you as it sounds like you have dealt with this already. But thanks for listening.