Is the 36 mth. buyout now gone for real?

[bigreddog]

I just read the thread about this and it seems too vague and non definitive. Really, if I should add this to that one, please do so. But my question is this.

We're 35 months into a 60 mth. filed in May of "07" At the time our attorney TOLD us in a year we could buy out plan. Then the year came up and our bank said they'd refi us if the appraisal came in ok. The year passed and the rules became more clear and we didn't even try to do so.

I know that under the old BK laws, you could buy out at 36 mths. by paying the remainder of your plan.

Is it absolute that you can no longer do that? Obviously, next month is pmt. 36 and we've never been late and paid off all the loans out side of the plan. But being self employed, our income has withered to where we are surviving but that is it.

So yesterday, my wife goes out with our best friends for lunch, (they paid), and they offered to give us the money to buy out our plan. Can that be done with the balance due, which is about $17,000, $9,000 of which is secured to IRS and State. If not, we still owe $140,000 if we had to pay 100% of what we owed to secured and unsecured.

Also, if the buyout would be 100% of what was originally owed, the original amount was jacked up by every credit card fee almost 30% just in fees and late penalties. What would we HAVE to pay to close this out? If it's what ever the unsecured creditors "wished" to crank it up to, than that's totally out. Even if they don't, that's not an option.

The biggest reason for asking this is, for the last 3 years, we've struggled with our business. Every winter we get behind on the Payroll taxes and last year we owed $6500 to the state and IRS. The year before we got back $3000. We catch up every summer and were able to actually pay the IRS and State just before the dismissal of our case was to be heard in court last summer. Business is picking up dramatically, but this winter was the worst. So we owe the IRS and the STATE much more. If we could buy out the plan now, we could set up a 12 mth repayment plan easily. AND we'd be out from under the BK.

Is it specifically stated that buyout even at 36 mths. would be at 100% of everything? Three years ago we were just over the median income. Now we're well under it. Go figure.

Has ANYONE here or anyone know of anyone who has successfully bought out under the new plan? It's been almost 5 yrs. since the new laws took affect. Thaks.

[Flamingo]

Unfortunately, no. You are correct that prior to 10/05 after 36 months in a Chapter 13 one would be able to investigate buying out if at all possible and would be able to buy out at the confirmed plan percentage; when October 2008 came around, no one in a Chapter 13 in this forum at that time or since who posted on here was able to buy out at the confirmed rate when they checked. It would have to be 100%. The new BK laws pushed more people into filing Chapter 13s that were able to pay back at least some of their debt and as many have found out, filing BK is not the easiest thing in the world and way tougher than pre-10/05.

[newbie2]

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The biggest reason for asking this is, for the last 3 years, we've struggled with our business. Every winter we get behind on the Payroll taxes and last year we owed $6500 to the state and IRS.

Is it specifically stated that buyout even at 36 mths. would be at 100% of everything? Three years ago we were just over the median income. Now we're well under it. Go figure.

.

It is specifically stated in the bankruptcy code that an "early buyout" can only be done if you are paying back 100%. It also is stated that way on the yearly statements that I receive from the trustee regarding our plan.

Quick question: When your company withholds the payroll taxes from the employees, why isn't that money put aside in to a separate account so that it is there when the quarterly taxes are due?

Edited to add: We just started year 5 of our plan and have paid more than the base amount. The unsecureds will be getting more than what was originally stated in our plan. At no time did we get a call or a letter stating "You've reached the %, you can stop now!". It's 100% or the full 5 years.

[SMinGA]

If your income, etc. has changed - perhaps contact your attorney (face to face meeting may be more productive than a phonecall) and discuss modifying your plan?

[bigreddog]

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Quick question: When your company withholds the payroll taxes from the employees, why isn't that money put aside in to a separate account so that it is there when the quarterly taxes are due?

Wow, that was an interesting question. We have 18 employees. The recession has but 6 of my competitors (within 50 miles) out of business. 90% of our business occurs between May and Oct. Our payroll taxes in the past have been as high as $2k a week. We're down to $900 a week now. We have never failed to make our payroll tax deposits weekly.But this winter, we've been living week to week. Clients who used to pay us when the job was done, or within 10 days, now pay 30 days +. Here's a funny one. It's our super wealthy clients who cry how they've lost so much money in Wall Street, they actually ask us for a 25% discount, or they'll get someone else who would do it for a lot less. These are multi-million dollar 2nd/3rd homes!
I used to get a $1250 wk. paycheck from my wife's LLC. That's what our plan was confirmed with. In the last year I was paid $13,000 and had $10,000 taken out for the IRS. And yet we still owe $6000. And $2500 to the state. We use Quickbooks Pro. I'm a certified instructor. I know the finances and how our company is doing. So not depositing the taxes is not a matter of choice. We pay our employees first and then the BK pmt., then the mortgage and insurance.. If there's money in the account we go food shopping. I personally have not spent 1 penny on clothing in two years. I don't own any toys. We've sold everything of any value (fully disclosed to Trustee). Went out to dinner once in the last two years. Haven't gone away for a weekend in 7 years. Work 80+ hrs. per week & I'm not even a lawyer. Then spend 42 hrs. a wk. sleeping and the balance is spent worrying about everything. BUT, we're still in business. We haven't laid off one single employee. And I hope somehow we'll catch up on all the taxes this summer like we did last year. But if we could have bought out, then at least we could setup a payment plan w/ the IRS and we'd actually be able to slowly rebuild.

But I guess my original main question has been answered. Thanks to all. You're an awesome support group..I would have time to go to a meeting for this kind of advice.

Oh, and our lawyer has been paid in full. So we don't exist anymore.

[newbie2]

Wow, that was an interesting question. We have 18 employees. The recession has but 6 of my competitors (within 50 miles) out of business. 90% of our business occurs between May and Oct. Our payroll taxes in the past have been as high as $2k a week. We're down to $900 a week now. We have never failed to make our payroll tax deposits weekly.But this winter, we've been living week to week. Clients who used to pay us when the job was done, or within 10 days, now pay 30 days +. Here's a funny one. It's our super wealthy clients who cry how they've lost so much money in Wall Street, they actually ask us for a 25% discount, or they'll get someone else who would do it for a lot less. These are multi-million dollar 2nd/3rd homes!
I used to get a $1250 wk. paycheck from my wife's LLC. That's what our plan was confirmed with. In the last year I was paid $13,000 and had $10,000 taken out for the IRS. And yet we still owe $6000. And $2500 to the state. We use Quickbooks Pro. I'm a certified instructor. I know the finances and how our company is doing. So not depositing the taxes is not a matter of choice. We pay our employees first and then the BK pmt., then the mortgage and insurance.. If there's money in the account we go food shopping. I personally have not spent 1 penny on clothing in two years. I don't own any toys. We've sold everything of any value (fully disclosed to Trustee). Went out to dinner once in the last two years. Haven't gone away for a weekend in 7 years. Work 80+ hrs. per week & I'm not even a lawyer. Then spend 42 hrs. a wk. sleeping and the balance is spent worrying about everything. BUT, we're still in business. We haven't laid off one single employee. And I hope somehow we'll catch up on all the taxes this summer like we did last year. But if we could have bought out, then at least we could setup a payment plan w/ the IRS and we'd actually be able to slowly rebuild.

But I guess my original main question has been answered. Thanks to all. You're an awesome support group..I would have time to go to a meeting for this kind of advice.

Oh, and our lawyer has been paid in full. So we don't exist anymore.

Thanks for explaining how the payroll taxes work. I was curious, as I know someone who is having trouble paying them also, and didn't understand why the money isn't put away immediately when withheld from an employees paycheck.

I also understand how difficult getting through a Chapter 13 can be. (We just started our 5th year, so the end is in sight. But by no means has it gotten easier.)

Good luck to you, and I sincerely hope that you can keep your business going and keep employing the people that you do now.