Chapter 13 and Assets

[im42nut]

I am going to file Chapt 13 within a month and have a few questions.

First of all I have a pending loan modification since Feb 2009 and am giving up on it, and a free consultation atty said we can wrap the back payments into the bankrupcy - is this true?

I am expecting about $10000 medical pay from auto accident insurance - can we keep this in the bank for emergencies. I understand if I am paying about $800 a month for 60 months we can exempt assets as long as they are less than the total amt we are paying back - is this true?

We put my name on a motorcycle just for insurance purposes - it is being stored in a garage for my stepson who is in prison for a few years. Can this be excluded.

Thanks for any help you can give me. I stopped paying on credit cards a month ago and need to hurry up and get this started.

[becky20]

Hmmm, not sure about the accident settlement. Because you had the accident prior to filing, they may take that settlement. I think it depends on what state you are in and what the allow for exemptions. I don't think your statement about being able to keep an asset as long as it's less htan the total paid, that doesn't sound right. I think that if you have an asset that you want to keep that is not exempt, you have to pay that amount above and beyond your plan payment. So if the trustee and attorneys decide that you have 500 a month in disposable monthly income, then if you have an asset worth 10k, you would end up having to pay an 167 a month MORE in order to keep the asset... I THINK that's how it works anyway, but I'm sure others will chime in.

[im42nut]

So should I try to get the accident settlement before filing for bankrupcy? Then the money would be in savings and hopefully we can keep a savings for emergencies. This is what really worries me a lot.

[justbroke]

It wouldn't matter if the settlement (itself) was received before or after filing. What counts is when you had the accident. The accident itself is what "entitles" you to compensation. The mere fact that it's paid after you file, doesn't matter.

So, as eluded to in a prior post, this would depend on your underlying States exemption laws and what you can exempt. In almost all States, that I know of, you can exempt any amount that has directly to do with the cost of medical care. However, amounts above that may be non-exempt. Again, it wouldn't matter when it is paid, because you are entitled to the money prior to filing.

You should certainly file through an attorney and not do this pro se. The value of any potential settlement or even judgment will be property of the Estate and you don't want to mess up with anything related to exempting it.

I understand if I am paying about $800 a month for 60 months we can exempt assets as long as they are less than the total amt we are paying back - is this true?

It's not that simple. If your disposable monthly income (DMI) is already $800/month, and you have an asset worth $10K that you are keeping, the $167/month would be in addition to your DMI. That would make your payment $967/month.

I am also willing to go out on a limb here and say that a Chapter 13 Trustee is not going to let you keep $10K in non-exempt cash by offering to "pay it back" in the Chapter 13. The Trustee's job is to get as much cash to the unsecured creditors as s/he can, over the Plan life.