Newbie

[Bodriver]

What a relief to find BK Forum. I am an attorney (not a BK attorney). With this Forum's information, I can get a pretty good handle on what's ahead of me. I will hire a BK attorney to handle my 13, but I want t learn all I can before I dive in.

Question: The Bulk of my debt is a home mortgage (1st and 2nd) and credit card/credit line debt. Preliminarily, if I strip the second mortgage and settle with creditors somewhere in the 20% range (yes, I read the earlier post and I realize to the % rate is just a measuring stick not a rule), I am left over with a lot of extra income. I want to put that extra income in the bank for my son's college, to repay my SEP account form which I borrowed and build up my savings.

Will the Court allow me to keep enough money to save for my son's college, repay my SEP account and build up savings?

[newbie2]

"Extra income" goes to your creditors. I've yet to hear of one trustee in any district who allows it to go into a savings account for a childs college fund.

[forgotten]

No. You will pay all of your disposable income to the trustee. You can not budget for saving up for sons college or building up savings.

Example: If you have say $50k in credit card debt and a $75k second mortgage that you manage to strip you will have $125k in unsecured debt.

If after your allowed living expenses you have $1000/mo left over then you will pay $1000/mo for 60 months. You will never pay more than 100% however, so if you only had $30k in unsecured debt you would be done in 30 months at $1000/mo.

[lrprn]

Question: The Bulk of my debt is a home mortgage (1st and 2nd) and credit card/credit line debt. Preliminarily, if I strip the second mortgage and settle with creditors somewhere in the 20% range (yes, I read the earlier post and I realize to the % rate is just a measuring stick not a rule), I am left over with a lot of extra income.

Firist, welcome to BK Forum! Since you didn't mention filing with a spouse, I'm assuming you are filing your 13 alone.

Ch 13 is all about debt reorganization. I'm assuming that you want to keep your home since you are discussing stripping the second mortgage - true? If your home's current value is worth less than your first mortgage, then yes, you can strip the second mortgage by filing a 13. How did you estimate the current value of your home?

Also how much you have to repay your unsecured creditors in a 13 depends solely on how much disposable income you show on the Means Test and Schedules. Your DMI will be figured *with* the second mortgage included when you file. Also, to strip your second mortgage, your lawyer has to petition the court to make that happen. Read the sticky here regarding how to strip a second mortgage to get the particulars about how this works and when the second will be considered officially stripped.

Have you set up appointments yet with 3-4 experienced bk attorneys in your area? (Highly recommended, even if you are an attorney yourself.) Creating a liveable 13 plan is much more an art than a science. Experience creating a solid plan is worth its weight in gold, so finding a really good bk lawyer experienced in creating plans you can survive for five years is *the* single most important thing you can do for yourself when filing a 13.

Will the Court allow me to keep enough money to save for my son's college, repay my SEP account and build up savings? I want to put that extra income in the bank for my son's college, to repay my SEP account form which I borrowed and build up my savings.

Ch 13 is designed to take *all* your disposable income as calculated on the Means Test and Schedules to pay back as much to your creditors as possible. There's no way to predict what your payback % to unsecureds will be until an experienced bk lawyer who files a lot of 13s completes your Means Test and Schedules using your individual financial figures to see what your DMI will be.

Sorry, but no Ch 13 trustee will allow you to include saving money for your son's college or to build up your savings in your plan when you file, period. As I said, all disposable income goes to your creditors. Frankly, your best hope to save for your son is to retain an excellent Ch 13 lawyer who can create a Ch 13 plan for you that frees up a bit of extra income each month that can go toward this goal if you wish.

Assuming your SEP plan is a retirement plan, payments to repay loans you already took from the account *might* be a possibility in your plan. It depends on the case law in your district regarding repayment of retirement loans while continuing to make contributions. Most of the recent case law decisions across the country allows repayment of retirement loans as a part of your 13 plan. This is a great question to ask the bk lawyers during your free interviews.