2 ??'s for NC Chap 13 filers...

[secondtime2]

What's the procedure for tax refunds? Do you have to give it up in NC? AND
I need to BORROW against my 401 K to file a Chap13 which is ($3200 here), how will that look or is that a bad idea? I really have NO income right now 'cause DH works in commssion and is screwed,etc.

Any advice greatly appreciated...

[BNKRPTinNC]

First question only

I would have to say that whether or not you have to give up your tax refund would depend on which trustee you get. I filed in the middle district and was able to keep my refunds (state & fed), so far. I can only speak for my case as I have not had any contact with others that filed 13's with this particular trustee. Never thought to ask the atty either as the subject didn't come up.

[mynameainttracy]

I am in NC, Raleigh to be more specific. It will probably depend on what district you are in, but our trustee doesn't want them or require you to submit copies of returns after you are confirmed. We are allowed to keep our returns.

[lrprn]

AND I need to BORROW against my 401 K to file a Chap13 which is ($3200 here), how will that look or is that a bad idea? I really have NO income right now 'cause DH works in commssion and is screwed,etc.(

It's very unusual to have to pay a Ch 13 lawyer in full before filing. Usually you pay a portion of the total fee and the rest is rolled into the Ch 13 plan. Are you assuming you will have to pay the whole fee, or did you interview a bk lawyer who told you you had to pay the full $3200 fee before filing?

No matter what, you need to talk with 3-4 experienced bk lawyers in your area to find one that doesn't require you to pay the full retainer before filing. Most have free initial consultations. I strongly encourage you to set these up before doing any borrowing, especially from your 401K. Some local Ch 13 trustees will fight allowing you to include paying back a 401K loan as an expense when you file your 13 because they don't think it's ok to pay yourself back over paying back creditors.

Continuing to contribute to your retirement account during Ch 13 has case law to back up allowing that, but paying back retirement loans as an allowable expense is a big gray area. What will you do if your trustee is one that won't allow you to include the payback expense after filing? That could be a big mess for sure, and it could have been avoided if you'll get solid information first about what to expect before doing anything.

Have you stopped paying your unsecured debts yet? (Credit cards, payemnts for assets you intend to surrender, etc.) This can free up cash to pay the minimum payment required by a Ch 13 bk lawyer pretty quickly. It's a far better option to gather that needed cash together.

Borrowing from your 401K really has to be the absolutely LAST resort you take - it's just not a good idea, period - especially with all the potential issues you could face from your trustee afterwards if you don't know beforehand how your local court and trustee will deal with making the payments.

[secondtime2]

It's very unusual to have to pay a Ch 13 lawyer in full before filing. Usually you pay a portion of the total fee and the rest is rolled into the Ch 13 plan. Are you assuming you will have to pay the whole fee, or did you interview a bk lawyer who told you you had to pay the full $3200 fee before filing?

No matter what, you need to talk with 3-4 experienced bk lawyers in your area to find one that doesn't require you to pay the full retainer before filing. Most have free initial consultations. I strongly encourage you to set these up before doing any borrowing, especially from your 401K. Some local Ch 13 trustees will fight allowing you to include paying back a 401K loan as an expense when you file your 13 because they don't think it's ok to pay yourself back over paying back creditors.

Continuing to contribute to your retirement account during Ch 13 has case law to back up allowing that, but paying back retirement loans as an allowable expense is a big gray area. What will you do if your trustee is one that won't allow you to include the payback expense after filing? That could be a big mess for sure, and it could have been avoided if you'll get solid information first about what to expect before doing anything.

Have you stopped paying your unsecured debts yet? (Credit cards, payemnts for assets you intend to surrender, etc.) This can free up cash to pay the minimum payment required by a Ch 13 bk lawyer pretty quickly. It's a far better option to gather that needed cash together.

Borrowing from your 401K really has to be the absolutely LAST resort you take - it's just not a good idea, period - especially with all the potential issues you could face from your trustee afterwards if you don't know beforehand how your local court and trustee will deal with making the payments.

Well we're in the whole pretty deep 'cause my DH gets only commission and he took some payday loan which i was unaware and now he's stuck paying fees. So in essence, when he gets paid (approx. $300-400 bi-wkly) it's to pay those fees and barely paying the mortgage and I just got a job so it's like we have NO way out. I'm treading water......