Chapter 13 questions!!!

[jacket]

Hello...I'm preparing to file for chapter 13, took the mean test and passed. I'm very scared and need to know some info before I decide what would be the best. Here are my questions below...


Chapter 13:

-Do I need permission if my car has major breaks down to fix or to buy a new one?
-Do I need permission to refinance my mortgage?
-Do I need to submit tax returns and refunds to trustee every year?
-Do I need to tell my company's HR about filling chapter 13?
-Do I lose my company's corporate Amex card (I do lot of travel for my job and company requires to pay all expenses by corporate card)?
-Do I need to tell trustee every year if I get raise or bonus?


Thanks for your help!

[NowImDownInIt]

First, I would say that most of these things your attorney should clarify for you. Second...

-Do I need permission if my car has major breaks down to fix or to buy a new one? If you intend to do either of those on credit, then YES. You probably won't be approved to take out a loan or debt for car repair. Make sure you enter your BK with a vehicle you can make it the long haul with.
-Do I need permission to refinance my mortgage? Yes, a refinance is essentially a new loan. My philosophy is consult your attorney on anything financial that requires you to list your SSN.
-Do I need to submit tax returns and refunds to trustee every year? This depends on your trustee. Mine doesn't require it. I know that some do. All reserve the right to ask for it though.
-Do I need to tell my company's HR about filling chapter 13? Nope. The BK court will do this for you. You have NO choice in the matter if your districts trustee requires wage garnishment.
-Do I lose my company's corporate Amex card (I do lot of travel for my job and company requires to pay all expenses by corporate card)? As long as this is a corporate account completely separate from your finances then it should not be a problem.
-Do I need to tell trustee every year if I get raise or bonus? General rule is that a normal 2-3% raise won't raise any flags and it will not be a problem. I get OT off and on, it comes out to about 5% a year and I have had no issues. My trustee sent me a packet with his policies and yours might too.. or your attorney can give you an idea of how they treat modest raises.

[daglo]

I really need to keep reading all these posts. I have so many questions. I would like to know how they determine your monthly payment with a 13. I also think with no assets, 55,000 in credit card debt, and a home underwater by 350,000, would qualify us for a 7, and can we keep our home.

[flyinbroke]

Not in a 7 you can't...the home will go. As for qualifying for a 7, I have no home, no assets, 80K in CC debt and am stuck in a 13. I pay about 500 a month in student loans, but they are NOT figured into the means test or formula for payback.

The formula is more complicated but basically they take basic allowances according to family size and what the local trustee will allow, subtract from your income...and that is your monthly payment. You will have no money left over unless you do a ramen diet or sacrifice in other areas.

[daglo]

Not in a 7 you can't...the home will go. As for qualifying for a 7, I have no home, no assets, 80K in CC debt and am stuck in a 13. I pay about 500 a month in student loans, but they are NOT figured into the means test or formula for payback.

The formula is more complicated but basically they take basic allowances according to family size and what the local trustee will allow, subtract from your income...and that is your monthly payment. You will have no money left over unless you do a ramen diet or sacrifice in other areas.

I had read on this forum that some file a 7 and keep their house? Ours has a negative equity of about 350,000. I thought if you reaffirm the loan, you can keep it if it has no equity. Has anyone else heard this? If BK is so hard, what good is it? I cannot afford the 13 payment unless I forgo food!!

[becky20]

You can keep the house in a 7 if you are not behind on the loan, but if you have a 2nd mortgage and owe way more than the house is worth, you can not strip that 2nd mortgage in a 7, but could in a 13... But if the trustee feels that your mortgage payment is way beyond what you can afford, I think they can object (like if your mortgage payment is over half of your take home pay). If you're that far under on your home, you may want to just give it up if you are planning to do a 7.

[debtinohio]

Keeping the home should be a business decision only, not personal. $350,000 in -equity will NEVER be recovered.

[jacket]

Passed the means test but DMI is about $200 negative, can I still file chapter 13? How the trustee will handle this situation? Anyone here has any such an experience.

[SMinGA]

You must be able to fund a plan payment. If your budget does not allow anything extra, then it may not be possible for you to put together a reasonable plan.

A question:

How much priority debt? This would be mortgage arrears, taxes. And your atty fee if it is being paid in a plan. If you would be paying your car loan within the plan, then it will also include the loan balance and some interest. (The rate will depend on your district, probably in the 4-6% range.)

Your priority debt + trustee fee (5-10% depends on the district) determines the bare minimum that you must pay into your plan. If you have priority debt of $15,000 then you'd need to pay at least ~$439-462 per month for 36, or ~$263-$277 for 60.

Passed the means test but DMI is about $200 negative, can I still file chapter 13? How the trustee will handle this situation? Anyone here has any such an experience.

[jacket]

Hello SMinGa,

Thanks for the reply. My priority debts are around 5k and also I support my parents about 3k. That leaves me about 3k for rest of the expenses for two. My total unsecured debts are about 190k.

Is there any hope for qualifying to file chapter 13 in state of GA?

Thanks for your help.

[SMinGA]

Its not about 'qualifying' in the sense of how one must qualify for a mortgage, or qualify for other sorts of credit/financing.

Its about being able to fund a plan.

I don't know about how the $3k to support your parents will be treated. That is best left to a BK attorney. When you look at your income vs. expenses, do you feel you can fund a plan? If you're at $6k net (my assumption based on you saying you pay $3k monthly to support your parents and $3k monthly on your own expenses) then you're perhaps ~$8k gross. For 2 people in GA, I am pretty sure that would be above median so you'd have to do a 60 month plan.

Perhaps if you list rent/mortgage, utilities, groceries, transportation expenses, etc. etc. etc. it would give a better idea of where you stand? With only $5,000 in priority debt, you could possibly do a 13 with a relatively small payment. Perhaps $150-200 per month or less. (Depending on how your atty is paid.)

I'm in GA also by the way.