to get my 13 dismissed or not

[brokenymom]

so here goes. i am looking for input so please help me. i filed chapter 13 in 10/09. i owe 80k unsecured and 15k in secured. for the last 10 years i was the breadwinner. the house is in my husbands name only. i have lost over 30k in income last year and continued to live like we didnt which is why i am here. my chapter 13 hasnt been confirmed due to trustee wanting to raise my payments by $700 month. this is the amount of my 401k loan that i still pay back my monthly until 7/2011. i cant afford this. i have called attorney office several time since jan to get this fixed modified ect. so i called today and paralegal told me she hasnt gotten to it i go back to court on tuesday. i have the option to cash in mutual fund that is joint with my mother to payoff 401k loan and reborrow to settle with my creditors. majority of debt is owed 2 boa which was sold to portfolio recoveries, 18k to citi and 20k to discover. am i better off doing this and trying to settle as it would make my life and familys much better as there would be more income on monthly basis? someone please give me input my husband is sooo mad at me and after 16 years of marriage im not throwing in towel. thanks in advance

p.s im on clip to make another 20k less this year from last.

[Bkman2]

I filed 12/28/09 and the trustee wants to see my income (self employed) from Dec to Jan 2010. My plan is $255 a month and attorney said it looks like they want to bump it up with the new income. Attorney said if they do raise it I can strech it out to go up over time and then in 5 or 6 months convert to a chapter 7. Feb income is zero and unless something changes in the next 2 weeks April will be a zero also.

Keep pushing your attorney to do something. If your income keeps going down you can adjust your plan.

[LadyInTheRed]

The payment on your 401K loan is deductible from your income when determining DMI and your plan payment.

U.S. Bankruptcy Code Section 1322(f):

(f) A plan may not materially alter the terms of a loan described in section 362 (b)(19) and any amounts required to repay such loan shall not constitute “disposable income” under section 1325.

A loan described in section 362 (b)(19) is a loan from a 401k and other similar retirement plans.

Ideally, your attorney should propose a step plan so that the payment is increased by $700 only after the loan is paid off. However, I believe I've read that not all trustees will allow step plans. So, it may be that your plan payment would average over the length of the plan to take into account the fact that you won't be paying the $700 for the entire period of the plan. Even then, the plan payment should not increase by the entire $700 loan payment.

Keep calling your attorney's office and stress that you want to know how they propose to respond to the trustee's objection to your plan. Point out when you call that there is a hearing on Tuesday so whoever you talk to or leave a message for doesn't have to look at the file before they understand the urgency. If the paralegal doesn't have an answer, ask when you can expect a call back. If they don't call back, call again. Be persistent.

If you haven't already, tell your attorney about your expected $20K decrease in income. While that probably cannot be factored into your plan now, you will need to modify your plan when the decrease happens. Your attorney should be made aware that a modification may be necessary.

You need to figure out how to get your husband on your side. If he doesn't get over the anger, getting through a Chapter 13 will be difficult. You'll need his coopearation to stick to a budget based on your current income, not your old one.

Here are links to Section 1322(f) and the sections it refers to:

http://www.law.cornell.edu/uscode/11/usc_sec_11_00001322----000-.html

http://www.law.cornell.edu/uscode/uscode11/usc_sec_11_00001325----000-.html

http://www.law.cornell.edu/uscode/uscode11/usc_sec_11_00000362----000-.html

[LadyInTheRed]

Just to clarify, while the 401k is deductible from DMI for purposes of determining the amount of your payment in your Chapter 13 plan. It is not deductible from DMI on the Chapter 7 means test.