13 Payment Plan - No kids' activities??

[junquemayle]

It's 3:20 in the morning, but based on my first attorney meeting, I can't sleep.

I am over the median with no chance at a 7. I am current on all my secured debts (1 car @349, mortgage @1744, 2nd mortgage @130), as well as my student loan ($413), but I finally ran out of money to pay the minimums on the CCs (I somehow have amassed $130k in cc debt). This was kind of a snowball effect when I was late by 1 day on 1 card about a year ago. That card raised my rate to 29%, and all the cards (but one) raised my rates, too. My minimum payments tripled, and I depleted all my savings to try to keep up with about 3500/mo in minimum payments. Starting 2 weeks ago, I am missing all of my cc payments (although none at 30 days yet). The calls from Chase have started twice per day.

Today I had a 1 hour consultation with the attorney, who has me confused and panicked. I know I didn't ask all the questions I should have, because I was shocked when he gave me feedback on my monthly expenses.

I have 3 kids (2 teenagers), so I was ready for him to push back when I mentioned my cell bill of $150, but I was not ready for him to tell me that 900/month for groceries, and 250/mo for clothing were way too much. (He thought 750 would be excessive for food. Have you tried to feed a 15-year old boy?!. We actually spend about 900/mo on groceries.) That's only 1150, and the IRS standards for the means test is 1633 for Food/clothing allowance for 5-person house. He said we'd be lucky to get $850 combined (food & clothing).

Then I told him that I planned on getting a new car (our minivan is falling apart). First he told me not to, but then told me that if I did, I should limit the payment to under $200/mo. I don't see how I can get a late-model, minivan with low miles for under $450/mo. I had just gotten approved for a CapitalOne Auto Finance "blank check" loan for 6.67% up to 30k, so I was thinking of getting a newer (<30k miles) minivan or SUV. He also said I couldn't get more than $250 for the maintenance/repairs total (even though I have more than one car. The car I am making payments on needs about $1000 of work, I have a 16-year old pickup truck with 250k miles that is worth $600 and is actually in good shape, and another 13-year old paid-for car that died in my driveway 4 months ago, and I haven't had the money to fix it. It's only worth $2000 (if it was running).

He said that the trustee in my district used to be a creditor's attorney, and heavily favors creditors.

I had been thinking that I could use coupons and buy bulk to save enough on food and clothing to cover the cell phone bill (which is really the only "luxury" that we have), and that the IRS auto allowances would help offset "unknown" expenses that come up, letting me build a little bit of a safety net in case the 45-year-old boiler finally blows up, etc.

I also have some much needed house repairs, including a leaking roof, no kitchen counters (been living on plywood!) and a blue tarp hanging off the side of the house where water damage took the siding. He told me no future house repairs beyond maybe $100/mo unless I get some estimates. Ok - I can do that.

Then he told me no, no, no on every kids' activity - little league, karate, soccer, school ski club, etc. It's bad enough that I messed up my expenses, but it absolutely kills me that my kids will have to suffer like that. I'm not asking for vacation trips to Disney. Just to have enough to let my daughters play softball, and my son to continue karate.

Instead of a fresh start, this feels much more like a punishment to my kids. I know it's my own fault for letting the cc's get out of hand. I've depleted all my savings and cut back on everything (except the cell phones).

I'm going to make an appointment with another attorney on Monday, but I am not too optimistic right now...

[andysmom]

Hi,
I was just as nervous & scared as you (still somewhat am) but i'd suggesst you see another lawyer FAST! We're in PA (&luckily i found a fantastic lawyer). we're a 3 person house- myself,husband & a 3yr old- just slightly over the median income- only secured debt is our mortgage. We do have a 401k loan (silly us- took out to try & pay cc's) and over $100,000+ in creddit card debt. We are going to be filing a chapter 13 in May; we were going to the end of this month but we're waiting for our income tax refund which hasn't come in yet.
Our atty also said we can claim something like $200 or so a month for our cars even though they're owed outright & are more than 5 yrs old.

As far as the food & clothing allowance, i don't remember exactly what we got but it was the IRS bankruptcy standard for 3 people & he put that down- he said that's what the trustee allows /expects and that I wasn't claiming enough for food at $600/$700 mo.
As far as kids entertainments, i don't know about that since mine is only 3 and will be just starting preschool is Sept. I do take him for swimmiing at th YMCA in the summer, but I didn't include that as an expense as it's only about $25/mo for 3 months & I figure I'll find it somewhere.
We also have a leaking roof- hence why we're waiting for income tax refund to get it fixed before hand.
Our lawyer said (at least in this district I guess everyone's must be different- which I don't really quite understand) that it's all math and the numbers are what they are- that our trustee accepts all of the irs standard deductions without a blink of the eye- it's the "other" stuff when people try to squeeze in things that he considers not really neccessities- but he said food, clothing & transportation are definately neccessities and the irs standards are what we use.
I don't have a copy of the paperwork he worked up yet, because we haven't filed yet- we will be soon; but he did go everything with me and with normal expenses and not even claiming our full cable/phone/internet bill, we still come out negative dmi so he's expecting a low payment of less than $100/mo (mortgage paid by us outside trustee payment).
Our atty does just bankruptcies/ handles everything himself- no paralegals & has been doing this for over 25+ years. I completely trust him.
Again, I, too am only at the begining of this journey, but my best advice is find a great lawyer- one your are comfortable with- 5 years is a long time
Good luck & I'm sure there will be tons of great people to come along here and give you the very best & most knowladageble advice. They are all wonderful & have saved me from many many sleepless nights.

[getback]

I agree with the other person. Get another lawyer. In my ch 13, I was allowed $200 in rec allowance. I am single and I never had any issues with that figure. I guess it depends when you file.

I got a little lucky when I filed. Oil was at $148 per barrel, so I was allowed a little more money transportation.

Note there are two parts to the transportation section. First part is ownership cost associated with the car. Second is a sum of car maintenance and fuel costs. At the time of my filing, my car was 9 years old. My lawyer told me that for maintenance, he saw that New Hampshire allowed a monthly maintenance fee of $275 per month....I think that is provided that your car has over 75K miles.

I think my total transportation cost was at $450. Note that this is based on fuel (oil was at its peak) and older vehicle maintenance costs.

[Flamingo]

It can be a shock when one actually confronts the huge amount of debt they have and what they are up against. Been there, and also been there along with the Chapter 13 sleepless nights, tears and emotions. The hardest thing you will have to confront is how to change your lifestyle. Anyone going into a Chapter 13 will find that is the HARDEST thing to do...your finances are not your own anymore and are under the control of the Trustee. In order to successfully complete your Plan and get through it all, you must seriously change all your spending habits. That includes your kids, shopping habits, no more weekend mall splurges, vacation changes, etc., etc. You will have to learn how to say "no" to your kids for many things. Older kids may understand but those that are younger may not so you do have your hands full. I had one daughter just going into high school when we filed but she did not miss out on any school trips, learned to drive and put on the insurance, etc. but she knew excess frills were out of the question. For your kids in order to keep up with their activities you will need to cut back in other areas; stay home more, shop bulk/use coupons, etc., etc. We saved change at the end of the day in our pockets and after several months used that for gifts, a trip, etc. In plain words, you will now have to learn how to budget which, you will find out, is a very good thing and Chapter 13 forces you to learn how to do so to get through successfully. When you emerge from a Chapter 13, you will see how your lifestyle is different, you will think you were crazy at having to have that pair of shoes in 9 different colors or that you really did not have to have the new gizmo that the neighbors down the street put out on their front lawn for all to see.

Get some more BK consultations; everything depends on your income and assets, your State requirements and a good attorney. And also you...you need to change your lifestyle and right now the thought of not have a credit card to use shocks you. Believe me, it does get better...

[pcn]

Why do you say no chance for a 7? Don't give up so easily. We are 20k+ over the median and qualified. It's all about expenses vs. income. A recommendation to purchase a new vehicle is almost universal with atty's and most people here. 5 years is a long time with no replacement vehicle. The money you were paying cc's can now be diverted to that payment, and it could help you in the means test. At first it sounds crazy to get more debt when debt is what put you here, but after thinking about it, it does make a lot of sense. I've seen married couples get 2 new vehicles , both for the safety factor as well as the means test help. SEE MORE LAWYERS. This first one sounds like a lemon. Find one who wants to WORK FOR YOU, not just file for you.

[sheilaE]

We in the same situation, with 3 children-2 are teens. We spend close to $900.00 per month on groceries. When I came here to this forum I learned TONS. Make sure you read all you can about chapter 13. We have yet to file, but when we do (this summer) I'm more prepared now with figures on our expenses and what's allowed then when I was when we went to meet the atty, who, like the one you met with-gave us a high payback figure. Once I came here and learned everything about the expenses allowed, I called him and we discussed it all. I feel so much better now.
One piece of great advice I received was DON"T SIGN ANYTHING, unless you are sure you can make it financially without having to eat Top Ramen every night. Chapter 13 is not a punishment. There's a list on here (somewhere) of item allowed
for expenses. Children are expensive (school lunches, school supplies, field trips, clothing. Also you can claim car monthly expenses, medical co-pays and don't forget about the pets because you can allow for them as well.
Talk to another atty-go in to your meeting fully prepared with your monthly expenses.

[momofthree]

SEE MORE LAWYERS. This first one sounds like a lemon. Find one who wants to WORK FOR YOU, not just file for you.

DITTO!!!!

That first attorney is crap! You'll need a new car, and the IRS allows up to $489/mo for a payment, so they can't really balk at that once it's said and done. We bought a brand new minivan ('10 toyota sienna) about 6 months prior to filing and no one blinked an eye over it. Find an attorney who will allow you the IRS allowances for food and clothing--that will give you the extra buffer you need to keep the kids in their activities. Since the trustee in your district is a hard ass, then he probably won't allow the activities to be listed individually on your budget, so you'll have to pad other areas. A good attorney will know how to do this for you, and will be on YOUR side.

GL in your journey, and chin up!

[Amadan]

Definately find another lawyer. Our first consult had us paying back 100% and basically told us we should plan on losing our house and everything else. They were of no assistance and even charged us during our "free" consult for filling out a means test and pulling our credit reports. The joke was the idiot who filled the means test out didnt even do it right.
I wouldnt recommend ANYONE go to a BK mill.
Try to get some other free consultations in before you decide on a lawyer. If you are only meeting with a paralegal or secretary, then its not worth your time to bother. The free consult should be a meeting with the person you would be hiring to represent you, not with their support staff.

You can also find info here on this forum for filing out your own schedule I & J and even taking the means test online, but even then you will only be scratching the surface of a very complex set of laws. The best advice I could give you is try to calmly sit down and pull together all your bills over the last year. You need to figure out exactly what you spend your money on. Then you can start putting together a realistic budget. The lawyer we hired explained that WE had to know what our budget was. YOU need to tell your lawyer what your true expenses are. Then you may have to realize the difference between luxury & neccessity, between want & need. After you get a realistic credit card free budget put together you WILL find a lawyer that can help you. Your best hope for success is being prepared, not panicked. And if you have read any of my posts you will see that I started out this journey as very panicked. While its still going to be hard, I am at least able to sleep some nights.

[researchnerd]

I can't help much, other than to echo what others have said and recommend finding another attorney. The BK lawyer is there to HELP you, not make you crazy with worry. You pay them, they should be working for you and trying to find every loophole possible to get you through the next five years.

The attorney you talked to clearly does not have children if he thinks you're spending too much on groceries. I have only one teenage boy and we spend close to $800/month just for the three of us. Find an attorney who will help you fight for at least the IRS standard amount, if not more. Feeding your kids is not a luxury, it's a necessity.

[sheilaE]

Oh yes, I want to add about the car. After reading everything on here re getting a car while in or before filing a 13, I called the atty we retained and he said it's not a good idea to go into a chapter 13 WITHOUT a reliable vehicle. So yes, go car shopping. We tried in vain to get a new car so we wouldn't have the car repair issues we're having with one of our cars, but our credit was already shot. We had a heck of a time getting approved. Our credit score, after missing 3 months of payments, had already dropped into the 500's, but we did get approved for a 2006 Chevy Equinox. Payments are $388.00 for 4 years. They wouldn't do a 5 yr and our interest rate is at 23% I think once we file the interest rate drops, at least that's what I keep reading.

There is some fabulous information on here. I couldn't sleep at night, I was sooooo worried....until I found this site!

[SMinGA]

Another consult seems to be a good idea.

If you're below the IRS guidelines in food & clothing, I don't think you should back off from what you actually need there. But I'm not sure about karate, softball, etc. Those things could add up to a good amount and paying hundreds monthly on kids extracurricular activities could be seen as frivolous.

Getting a reasonable car for reliable transportation is a good idea, and seems to be recommended by most attorneys. And a reasonable amount in car repairs/etc. should not be a problem. My only thought there is to review whether or not you really need to keep all the failing vehicles on the road if you do get a newer van?

[junquemayle]

Thank you everyone for your input. I need to take a step back and really figure out where my money is going each month.

We need two cars, and right now I have a payment on one. The 3rd car I have is only worth 650, but is a pickup truck that I use for Home Depot trips etc. It really doesn't cost too much to maintain, as I probably drive it less than 1000 miles per year.

I was originally thinking of replacing the minivan (with the 349 payment) with a newer one. Now I am thinking that I might keep the minivan and its payment, and replace the junker car (that hasn't seen the road in 4 months) with a low(er) payment (<250/mo). That way, I will have one reliable car, and one for day trips when we need the extra space. I can't see how they could object to that. And, I'll look for a car with good gas mileage, to keep fuel costs down.

I'm going to go attorney shopping on Monday. After reading through the responses, it looks like there should be a way to make this work. I really don't have any luxury expenses or habits. We don't even go to the movies. We might rent a couple of movies or get a pay per view now and then, but usually only 10-15/mo. To compensate for all of the debt payments, we've been living pretty tight. The cell phone @150, (and I guess cable @135 - although that includes internet which is a work requirement that work no longer pays for) are the only places where I'm not living really tight. And of course, the kids' activities I never considered a luxury. Even the school teams have the parents subsidize the uniform costs, fundraisers, trips, etc.

I'll dive in deeper to the actual expenses this weekend, and seek alternative perspectives from other attorneys on Monday...

Thanks again for everyone's input.

[pete42]

I would definitely see another attorney. The 1st one we went to told us we would be paying back 100% of our unsecured debt. Then we couldn't get in touch with him ever again after the consultation and only could speak with his paralegal. We went to a 2nd attorney who worked by himself and he got us in a comfortable plan where we are only paying back about 25 cents on the dollar. So definitely shop around for a attorney you feel comfortable with.

[NeedOptions]

DITTO!!!!

That first attorney is crap! You'll need a new car, and the IRS allows up to $489/mo for a payment, so they can't really balk at that once it's said and done. We bought a brand new minivan ('10 toyota sienna) about 6 months prior to filing and no one blinked an eye over it. Find an attorney who will allow you the IRS allowances for food and clothing--that will give you the extra buffer you need to keep the kids in their activities. Since the trustee in your district is a hard ass, then he probably won't allow the activities to be listed individually on your budget, so you'll have to pad other areas. A good attorney will know how to do this for you, and will be on YOUR side.

GL in your journey, and chin up!

momofthree, will there be a problem if I buy a car that has payments of around $600/month before I file for BK 13? I understand that the ch. 13 allows $489 or so per car but what happens if your payments are over the allowed amount?

[SMinGA]

That could be a problem - and result in the trustee deciding you're acting in bad faith. I don't know the full extent of what they can do about it though.

momofthree, will there be a problem if I buy a car that has payments of around $600/month before I file for BK 13? I understand that the ch. 13 allows $489 or so per car but what happens if your payments are over the allowed amount?