Howdy! It has been a while since I have checked into the BKForum, which seems odd since I was literally on this site all the time from November 2009 - September 2010. Funny how things change so quickly. I wanted to give an update on how everything worked out for my wife and I, and to thank all of the great folks on this site.
Sorry in advance for how long this is going to be. Think of it as my catharsis at the end of a crazy journey!
In November 2009 my wife and I decided that our only way out from our CC debt and 150k 2nd mortgage was through bankruptcy reorganization. We had been diligent savers for retirement, but unfortunately we were also pretty hefty spenders. With one child and around $200k annual income, we knew that a CH13 was in our future. Late one night I found this site, and it was one of the most fortunate things that could have happened. Right away I began taking the advice I read and setup my attorney interviews. I found one who best fit our needs and was friendly and easy to work with (best decision I could have made). He was also ok with the fact that I am also an attorney (not sure I ever mentioned that on here - sort of my way of staying annonymous). We were a good team, and were able to do some good pre-bk planning leading up to our filing in March (replace car, collect receipts, etc...).
Some quick stats:
$140k Student Loans ($80k me, $60k wife)
$150k Unsecured 2nd mortgage
$90k Credit Cards
$30k Casino Marker (like a line of credit, but backed by a check)
Two Rental Properties - one cash flow positive, one not...
Each of us has 3+ years history of max 401k contribution ($16k+)
Each of us had a 401k loan
Because collectively we were over the unsecured debt limit (either $336k or $360k) but individually we were not, we chose to file separate CH13 cases knowing that the Trustee would just administratively consolidate the cases (which he did). This was one of our first hurdles to clear - for some reason the concept was novel to our judge and trustee. But it went fine. So it was now as if we had filed a single case.
The Lien Strip was easy. Even though we owed only about $10k more than our property value, this was reflected in our appraisal, Zillow, and our tax assessment. The bank did not challenge it.
The 401k contributions and 401k loans were NO PROBLEM AT ALL. Aside from having to step up our plan when the loans were repaid, the trustee saw the history of contributions and did not object to either. To put this into perspective - our plan repayment would have been around $80k over 5 years and EVERY year we would be putting over $32k in our 401k contributions plus an average of $10k in per year for our 401k loans. So $80k to creditors, $210k to retirement account. Great result.
The casino marker was an odd one. The casino actually violated the automatic stay (a couple times) and we got them to agree to sanctions! Crazy! However we never made them pay (their attorney really seemed like a nice guy). That turned out to be a good thing later... (That also helped diminish the threat of legal prosecution for non payment of a check) For those who may be in the situaiton of not being able to pay a casino marker - The Clark County (Las Vegas) bad check division will only prosecute if they get the case BEFORE you file BK. Once you file, they view trying to collect as a violation of the automatic stay (some case law out there on this).
Oh, and in the middle of all this we had another child! Crazy.
So when all was said and done, we got confirmed in September at around 19% (about $80k against debt of $420k). Good deal, and one we were happy to live with.
THEN... I was fortunate enough to unexpectedly come into approximately $105k. Not something that I thought would ever happen when we filed. We had about 2 months between when we were confirmed and when we would potentially receive the money.
Once the $105k payment was confirmed, with a distribution date, my attorney started contacting creditors and began trying to work on settlements, to be executed once we dismiss. This sounds crazy, but the funny thing is that IT WORKED! Once we dismissed and then received the funds, we began writing out checks! Many of the CCs settled for 15%. The 2nd settled for 30%. The casino settled for 30%. However, some of the CCs refused to even talk with my attorney until after the BK was dismissed. All of these debts come with a full release of any further obligation. And because of the Student Loan debt, car loans, and mortgage we have no problem showing that we are insolvent by IRS standards (so no tax liability once we get the 1099s). After taxes and additional attorney fees, I will have used up the entire $105k. So instead of turning that money over to the trustee, I got to settle our debts and be done with the process only 3 months after confirmation.
Right now, here is where we stand:
Current on primary home (with ONLY ONE MORTGAGE! YEAH!)
Current on both vehicles
Current on cash flow positive rental
Waiting for BOA to forclose on cash flow negative rental (vacant)
Just about to settle with final 2 CCs (about $18k owed - expect $3k-$6k to settle)
Waiting for Student Loans to go back into repayment
All other debt has been paid or eliminated.
The only real unknown is the rental we are letting go. The mortgage is less than $25k, so not a ton of risk.
This has been one hell of a year. I would not have gotten through it as easily if it weren't for this site and all the great advice. And while I know mine is a unique story, I have learned an invaluable lesson. We are cash only for everything we purchase now. We buy what we need, not what we want.
Sorry again for the long post. I guess I just needed to get it all out.
Sorry in advance for how long this is going to be. Think of it as my catharsis at the end of a crazy journey!
In November 2009 my wife and I decided that our only way out from our CC debt and 150k 2nd mortgage was through bankruptcy reorganization. We had been diligent savers for retirement, but unfortunately we were also pretty hefty spenders. With one child and around $200k annual income, we knew that a CH13 was in our future. Late one night I found this site, and it was one of the most fortunate things that could have happened. Right away I began taking the advice I read and setup my attorney interviews. I found one who best fit our needs and was friendly and easy to work with (best decision I could have made). He was also ok with the fact that I am also an attorney (not sure I ever mentioned that on here - sort of my way of staying annonymous). We were a good team, and were able to do some good pre-bk planning leading up to our filing in March (replace car, collect receipts, etc...).
Some quick stats:
$140k Student Loans ($80k me, $60k wife)
$150k Unsecured 2nd mortgage
$90k Credit Cards
$30k Casino Marker (like a line of credit, but backed by a check)
Two Rental Properties - one cash flow positive, one not...
Each of us has 3+ years history of max 401k contribution ($16k+)
Each of us had a 401k loan
Because collectively we were over the unsecured debt limit (either $336k or $360k) but individually we were not, we chose to file separate CH13 cases knowing that the Trustee would just administratively consolidate the cases (which he did). This was one of our first hurdles to clear - for some reason the concept was novel to our judge and trustee. But it went fine. So it was now as if we had filed a single case.
The Lien Strip was easy. Even though we owed only about $10k more than our property value, this was reflected in our appraisal, Zillow, and our tax assessment. The bank did not challenge it.
The 401k contributions and 401k loans were NO PROBLEM AT ALL. Aside from having to step up our plan when the loans were repaid, the trustee saw the history of contributions and did not object to either. To put this into perspective - our plan repayment would have been around $80k over 5 years and EVERY year we would be putting over $32k in our 401k contributions plus an average of $10k in per year for our 401k loans. So $80k to creditors, $210k to retirement account. Great result.
The casino marker was an odd one. The casino actually violated the automatic stay (a couple times) and we got them to agree to sanctions! Crazy! However we never made them pay (their attorney really seemed like a nice guy). That turned out to be a good thing later... (That also helped diminish the threat of legal prosecution for non payment of a check) For those who may be in the situaiton of not being able to pay a casino marker - The Clark County (Las Vegas) bad check division will only prosecute if they get the case BEFORE you file BK. Once you file, they view trying to collect as a violation of the automatic stay (some case law out there on this).
Oh, and in the middle of all this we had another child! Crazy.
So when all was said and done, we got confirmed in September at around 19% (about $80k against debt of $420k). Good deal, and one we were happy to live with.
THEN... I was fortunate enough to unexpectedly come into approximately $105k. Not something that I thought would ever happen when we filed. We had about 2 months between when we were confirmed and when we would potentially receive the money.
Once the $105k payment was confirmed, with a distribution date, my attorney started contacting creditors and began trying to work on settlements, to be executed once we dismiss. This sounds crazy, but the funny thing is that IT WORKED! Once we dismissed and then received the funds, we began writing out checks! Many of the CCs settled for 15%. The 2nd settled for 30%. The casino settled for 30%. However, some of the CCs refused to even talk with my attorney until after the BK was dismissed. All of these debts come with a full release of any further obligation. And because of the Student Loan debt, car loans, and mortgage we have no problem showing that we are insolvent by IRS standards (so no tax liability once we get the 1099s). After taxes and additional attorney fees, I will have used up the entire $105k. So instead of turning that money over to the trustee, I got to settle our debts and be done with the process only 3 months after confirmation.
Right now, here is where we stand:
Current on primary home (with ONLY ONE MORTGAGE! YEAH!)
Current on both vehicles
Current on cash flow positive rental
Waiting for BOA to forclose on cash flow negative rental (vacant)
Just about to settle with final 2 CCs (about $18k owed - expect $3k-$6k to settle)
Waiting for Student Loans to go back into repayment
All other debt has been paid or eliminated.
The only real unknown is the rental we are letting go. The mortgage is less than $25k, so not a ton of risk.
This has been one hell of a year. I would not have gotten through it as easily if it weren't for this site and all the great advice. And while I know mine is a unique story, I have learned an invaluable lesson. We are cash only for everything we purchase now. We buy what we need, not what we want.
Sorry again for the long post. I guess I just needed to get it all out.
Bankruptcy Wizard
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