Preparation for Chapter 13 - planning

[bvolvo]

well it looks that I too will be following the long line of folks seeking protection behind the law. I have a few questions that I could not find anywhere, though I am just certain they might be buried in here somewhere!
1. It is Feb 2010. I have not filed my returns, and I am anticipating a refund. Should I file and collect the refund before filing? My car needs work, and that is my only reason.
2. I will lose my vacation home in this plan. Since I will not have the burden of my vacation home anymore due to losing it in this plan, I can finally start a 401k plan, which we did not have prior to this. I started this today at the max %. It is something we are entitled to under the law, but I just don't want to appear to be in "bad faith" with the trustee. If I'm going to get my feet on the ground, can't I take every exception available to me? Comments?
3. I had a major water issue with the vacation home 12/31/09. The whole first floor has been gutted. The insurance claim is anticipated to be about $37,000. My husband is a contractor and can fix it, but would this be seen as bad faith also? He has no other work right now, but his 6 month avg gives him income to the plan, but there are no contracts in sight at this point.

Thoughts/suggestions are greatly appreciated!!

[forgotten]

well it looks that I too will be following the long line of folks seeking protection behind the law. I have a few questions that I could not find anywhere, though I am just certain they might be buried in here somewhere!
1. It is Feb 2010. I have not filed my returns, and I am anticipating a refund. Should I file and collect the refund before filing? My car needs work, and that is my only reason.
2. I will lose my vacation home in this plan. Since I will not have the burden of my vacation home anymore due to losing it in this plan, I can finally start a 401k plan, which we did not have prior to this. I started this today at the max %. It is something we are entitled to under the law, but I just don't want to appear to be in "bad faith" with the trustee. If I'm going to get my feet on the ground, can't I take every exception available to me? Comments?
3. I had a major water issue with the vacation home 12/31/09. The whole first floor has been gutted. The insurance claim is anticipated to be about $37,000. My husband is a contractor and can fix it, but would this be seen as bad faith also? He has no other work right now, but his 6 month avg gives him income to the plan, but there are no contracts in sight at this point.

Thoughts/suggestions are greatly appreciated!!

1) If you can exempt your anticipated refund there is really no issue with timing. If you can not then you may want to get it and spend it on nessicary items before you file (as you mentioned, car repair).
2) Chances are slim you are going to be allowed to contribute at the max percentage, most trustees will object at much over 5%. Everyone would just start putting all they could in to their 401k instead of repaying creditors at all if they could do that.
3) If you are surrendering the home there is no need to fix it at all. I would ask an attorney what to do about the insurance check money. Keep in mind, if you can keep the money and fix it youself any profit on the job would be income which would raise your 6 month average.

[bvolvo]

Oh thank you - that actually makes a lot of sense re: the 401k.

[rcoveles]

A friend of mine is filing, and the trustee demanded HER HUSBAND'S 401k contribution at work be included in HER plan (which also has an employer match), putting her at pretty much 100% payback. My wife has the same deal at work - 401k with match, that her boss considers her "raise" - plus we also save a healthy amount every month for retirement. This is one of the main things that is souring me on Ch13. We've been doing this forever - it is not something we just thought up to avoid paying. I'm self-employed, so my S.S. is gonna be next to nothing. That's why I'm leaning toward doing a 7 and just making a fresh start, where I can save what I want to save, and spend what I want to spend (within reason!)

[bvolvo]

Gosh - it is becoming more and more apparent to me that there are a lot of people out there that have ruined it for the rest of us! I am reducing my contribution to 3% from 6% so that my plan shows a payment to the trustee. I do agree that is fair, and I hope that the trustee things so too. I realized that the 6% was putting me at a negative, so in good faith I backed it off so that is is a win-win. Wish I could do a 7, but I am 120k underwater on my priary and we are stripping the 2nd. This is ugly business! Thank so much for the reply.

[NoTomatoCan]

bvolvo - have you spoken with an attorney yet regarding 401k? Forgotten is correct that, in general, most districts/trustees do not allow last minute 401k increases, but some (few) do. I don't want to get your hopes up, but it might be worth asking about.

The craziest thing about BK seems to be the total random inconsistencies from one district to another. It is hard to really make sense of what actions you should (or should not) take without talking with someone who is familiar with your local BK rules/customs.

This forum is a GREAT source of information! I have become much more knowledgeable and better prepared to file (beginning of March). I would be totally lost had I not found this site. However, after talking with several attorneys in my area (and settling on one I felt comfortable with), I did get some good advice specific to my district that allowed me to "fine tune" my actions leading up to filing.

Good luck to you!

[bvolvo]

Thank you - I will brace myself for my attorney's whip lash response on it! lol