Pre Ch 13, but New Job, BIG bump in income. Now what?

[alliant1]

Hello to everyone.

I'm in a bind and each of your respective experiences / opinions would be beyond appreciated.

I started a business about 2 years ago, had some great success and some ugly failures on the way to seeing the business ultimately grind to a halt last month.

I had never had a credit card until June 2008. That's when I got my first card. I found them useful for financing my business and payroll during lean months. However, The debts piled up quickly. I incurred about $50K in less than a year.

When business got really lean, I started to selectively pay certain debts while ignoring others. I defaulted on an auto loan and voluntarily returned the car to avoid a judgment, incurring a $29K deficiency balance (and a judgment- some how the atty was able to slip the judgment through without filing a complaint for the $29K...). I haven't paid my mortgage for the last 4 months and have pretty much exhausted every cash reserve I've got... Haven't paid my student loans in 5 months... You get the picture.

Here's where things get interesting. I have several pending lawsuits for the debts I haven't been able to pay. Even a threat of "citation to discover assets" from the $29K deficiency debt if I "don't settle for $25K" by next week. Oh, I just received a note from my mortgage company today saying that they're going to accelerate my loan if I don't come up with $12K in 30 days. The repo crew is out looking for my wife's car... Again, you guys get the picture

FYI- the only way we've been able to pay any bills in the last 6-8 months have been based on my wife's salary. Important note: we protected my wife's credit lines, her mortgage on her pre-marriage home, etc. I basically took the hit because I knew my credit was already critically damaged. All of the debt in question / defaulted debt were originated before we were married and / or in my name solely- none of the creditors even know I'm married. Again, there are no assets, no income to manage this debt BUT...

Through it all, I've maintained a forward looking attitude and actively sought a W2 job in the last 30 days in the hopes of stabilizing the ship. And well, I landed a killer job last week. I'm earning quite a bit, as it relates to salaries in today's economy- about $12.5/K a month. I started 1 week ago. Here's my dilema- I want to start over with a fresh slate SO desperately, but don't want to lose the lions share of the new income toward repaying my business debt (although I secured personally, I do consider it business debt).

If I filed for Ch 13, what do I need to disclose about my improved situation? All of it? Some of it? Do I run the risk of perjuring myself if I don't disclose the new income? I ask these question because I'm not handling the threat of impending lawsuits, slick manuevering by the creditor's attys, the possibility that I'll receive wage garnishment at the new job, etc very well. It's totally distracting. By the way, how do creditor atty's find employment / wage garnishment info out if I don't disclose it on credit apps, etc?

Can any of you give me some thoughts / feelings / insite on this situation? I need to make a decision in the next 24-48 hours on whether I go for CH 13 or not. I realize it may appear that I'm trying to duck-out on my previously committed debts, but I simply want to put the past behind me. And for what it's worth- the debts that I incurred for my business over the last 2 years were primarily incurred to maintain payroll for my 3 employees. These debts helped 3 families live for almost 2 years. Your thoughts and insite are beyond appreciated. Thank you!

[rrockinggramma]

I would get to a good attorney in your area right away. The look back for income is 6 months. So plans are based on the look back period. However knowing that you make good money now and you have your wife's income as well will probably having you pay back more than you want to. But it sounds like filing asap to stop the repo man etc is your only option right now.

Others may know better than I how that works with the look back period. Many here wait to file while their income goes down. You need to file asap to capture the past 6 months I believe.

[zeezee]

You sound like if you did go in a 13 you would more likely be in a 100% plan. But since you will be making good money, what difference does it make?

Even if you had about $200k total debt to pay back you would only be paying back about $3,300 a month, and that's if you even had that much DMI after doing your schedules and means tests.

If it were me, (and of course you can see by signature that it is), I would want the peace of mind of knowing that you don't have to look over your shoulder, deal with creditors and you will done in 5 years!

[StartingOver08]

As to how much you have to disclose....you will have to disclose everything if you file Ch 13, or even if you don't file it sounds like you will have to disclose everything anyway at the discovery hearing you are facing now.

It comes down to how you want to handle the situation in which you find yourself now.

You could do as Treehugger is currently doing: allow one creditor to garnish wages at a time. Read his posts for strategy. Your state has a limitation as to how much any creditor can garnish, the limits seem to be anywhere from 15% to 25% of gross income, but you would need to check your particular state to know for sure.

The other way is to come up with a viable Ch 13 plan.

Are you current with your taxes and your former employees taxes? This is a critial componet of your decision. If you are not current, you certainly want to strongly consider a Ch 13 for a repayment plan to the IRS.

Because you owned a business, you probably will have to provide your information for a much longer period than 6 mths. The 6 mths look back period is just to determine repayment capability. Contact a good BK attorney to weigh your situation. Good luck.