Chap 13 & Earned Income Credit + more

[987654]

I'm getting ready to file Chapter 13 pro se. I just can't afford a lawyer.

In the past two years I have received $3k back each year thanks to the earned income credit. I am self employed so this is truly a 'credit' and not a refund (i.e. it wasn't taken out of my check during the year). I am planning to count this as income under my proposed plan, which means it will be paid out to creditors under the plan. I am assuming that this will pass the muster and the Trustee will not try to 'take' this refund/credit each year, since it's already included, is that correct?

Secondly, I have a question about cramming down a car loan. I owe around $12k, the vehicle is worth $6k trade in value, but worth $8-$10k 'retail on he car lot' value depending on whether you use NADA or Kelly. Which figure do I use?

Lastly, my eldest child is graduating high school next week, and my child support will drop $300/month (I will still receive child support for our younger child). Since income is based on the last 6 months, will I still be safe using the new child support figures when I state my income?

[lrprn]

I'm getting ready to file Chapter 13 pro se. I just can't afford a lawyer.

If you've already stopped paying your unsecureds (credit cards, etc) and you still can't build up enough money to pay a downpayment to an experienced Ch 13 attorney over 4-6 months, then bankruptcy alone isn't going to solve your financial problems.

Almost all Ch 13 lawyers ask for a partial payment of fees and then the rest is rolled into your plan to be paid over the life of the plan. It's not like Ch 7 where all the fees have to be upfront before filing. If you interview a Ch 13 lawyer who wants to be paid in full before filing, then move on to another lawyer who fits your financial needs better.

Did you have 3-4 free initial consultations with experienced bk lawyers in your area already? If not, please do yourself a huge favor and set those appointments up. Chances are you can afford to have an attorney for filing. You likely need one because 95% of self-filed Ch 13s fail and are dismissed. You want to do this right the first time.

I am assuming that this will pass the muster and the Trustee will not try to 'take' this refund/credit each year, since it's already included, is that correct?

This is going to depend on how much cash you can protect with your state's exemptions over the life of your plan, and also on your Ch 13 trustee's customs. There's little consistency between trustees regarding how extra income is treated during an active Ch 13 plan. This is a great question to ask during your free initial consultations.

Secondly, I have a question about cramming down a car loan. I owe around $12k, the vehicle is worth $6k trade in value, but worth $8-$10k 'retail on he car lot' value depending on whether you use NADA or Kelly. Which figure do I use?

You cannot cram down a car loan in Ch 13 unless the car in question was purchased more than 910 days before filing. When did you purchase this car?

What current value source is used also varies widely between bk courts and trustees. Here's another question to ask during your free consultations

Lastly, my eldest child is graduating high school next week, and my child support will drop $300/month (I will still receive child support for our younger child). Since income is based on the last 6 months, will I still be safe using the new child support figures when I state my income?

More info please. Will the $300 disappear completely or be reduced until your eldest is older?

Whatever child support you are ordered to pay by the court is the amount you need to include on your B22C forms and Schedules. The amount that will be allowed is the amount you are ordered by the court to pay as of filing day.

Please at least make the 3-4 appointments with experienced bk lawyers in your area. It will cost nothing but a few hours of your time. I think you might find out that you can afford to have a lawyer to file. We want you to be successful. Filing a Ch 13 on your own requires a tremendous amount of research, a tremendous amount of your personal time, and a excellent sense of the legal system and its procedures and processes.

Don't be one of the 95% Ch 13 pro-se filers that don't make it and needlessly complicate their case.

[tigergem]

I had a secondary source of income that I was actually receiving at the time I filed, but with documentation that it was ending about one month after my filing. Although I received this income for the 6 months prior to filing, this amount was not included in calculating my plan payment, and my trustee was fine with that, because I submitted the documentation that showed it was ending.

In cramming down a car loan, you have the right to use the wholesale value. The wholesale price is whatever the dealer is willing to pay for the vehicle if, for instance, it was repo'ed and sold.

Visit sites such as AutoTrader and Cars.com and check the Dealer prices for your vehicle. Try to determine an average price for vehicles with similar features and mileage. Then deduct approximately $2,000 from that price (the $1,500 average profit and perhaps $500 for the Dealer's inspection, reconditioning and advertising costs). Then see if there is a consensus with the trade in value at Kelly and NADA.

What I did for mine was take an average of wholesale and low NADA, which seemed reasonable to me. Submitted a Motion for Valuation, showed the method I used, there was no objection, and no arguments with the Till rate either.

Do check and double check that you purchased the vehicle at least 910 days ago, though, before you proceed. Don't miscalculate that date.

[987654]

Thanks TigerGem, that's what I assumed would happen since it will be well documented with court papers that the amount of child support I receive has been reduced.

I bought my vehicle in February 2007, so I have owned it for roughly 1200 days. I will do the research you said plus stop by the local dealership to see what they would value it at in a repo situation.

Regarding getting an attorney...I will set up a few consultations, but I used to work as a paralegal and figure I can work my way through most of this rather than pay $3k+ for a lawyer. When I spoke to one last month he wanted $1k up front plus the filing fees, so I was looking at $1300 out of pocket upfront. Right now I can put that money to MUCH better use keeping my business afloat and trying to turn it around. If I get stuck or need an attorney I will certainly hire one, but I'd like to give it a go on my own.

[tigergem]

It may depend on your trustee if it works out that way for you, re: the child support. My trustee and my judge apply what I like to call the "unwritten local rules of common sense".

Run your calculations both ways, with it in there and not, so you'll know what you're up against if your trustee objects. You know that procedurally, you'll have the opportunity to change your schedules if you have to include it. Hopefully you won't.

I found the comment that "If you've already stopped paying your unsecureds (credit cards, etc) and you still can't build up enough money to pay a downpayment to an experienced Ch 13 attorney over 4-6 months, then bankruptcy alone isn't going to solve your financial problems." to be fairly presumptuous and arrogant. I hadn't paid mine in years, and couldn't afford an attorney. And filing chapter 13 turned out to be one of the best things I ever did for myself. I only wish I had done it sooner.

Having said that, you do know that more pro se chapter 13s get dismissed than not? Probably due to procedural errors. But it sounds like you might know your way around or be able to figure out your way around LRBPs and FRBPs.

Also, if you begin your case pro se, you probably won't actually be able to hire an attorney to take over for you. So be sure that's what you want to do, before you actually file.

Don't forget to check out the pro se board, 987654. You'll get a lot of help there for the pro se angle of it. I would also suggest that you download Best Case, if for nothing else, the calculations are good. Mine were spot on to the penny.

Just be very careful. Ask whatever questions you need to ask. And good luck.

[lrprn]

I found the comment that "If you've already stopped paying your unsecureds (credit cards, etc) and you still can't build up enough money to pay a downpayment to an experienced Ch 13 attorney over 4-6 months, then bankruptcy alone isn't going to solve your financial problems." to be fairly presumptuous and arrogant.

Since that was my "presumptious and arrogant" comment, TG, allow me to explain

What I was trying to say is that if you aren't paying your non-secureds and still can't scrape up enough to pay a downpayment to an attorney over many months, then filing bankruptcy *alone* (the key word here) may not be enough to get you solidly back on your financial feet.

If there's still no money left over after stopping all unsecured payments, then *in addition* to filing bankruptcy, you need to take a hard look at your finances. The only way to balance them into the black in this situation is to (1) Bring in more income; (2) Reduce expenses; or (3) Surrender one or more assets to reduce your financial load.

Presumptious and arrogant, eh? Certainly wasn't my intention. Just trying to help the OP see that filing bankruptcy alone may not be enough for them to get back on a solid financial footing. Regret that I apparently accidentally pushed a hot button for you. Wasn't my intent either.

However, my suggestion to the OP remains the same. In too many tough financial situations, it isn't enough just to file bankruptcy. You have to look past bankruptcy to see if you can financially support keeping everything you want to keep long-term and still have a life.