Wimp lawyer, should I let it dismiss?

[repuman]

Our lawyer talks proudly of the 'good working relationship' he has with our trustee. It's true, whatever she says/wants, he says we have to do, no question, comments on how he avoids dealing with her..he's obviously intimidated. We have 'Mr. Peepers'. Long story short, she's objecting to wifes 401k loan payback, wants her to 'refinance' it to lower the payment, thus increasing payment to her. We just found that we need a new furnace, and wife will need 2 dental implants. Question...how difficult are creditors to deal with if we dismiss, has anyone worked out a plan(s) with them without bankruptsy?
Perhaps we're just frustrated and need a better lawyer...but if we refile in 6 months we'd still have to deal with the same trustee. Could we file in a different county?

[frogger]

Perhaps we're just frustrated and need a better lawyer...but if we refile in 6 months we'd still have to deal with the same trustee. Could we file in a different county?

It's not as simple of a matter as filing in a different county. Many counties might be in the same district. You can file in another district however, provided you have met residency requirements. I believe that it takes a minimum of 6 months of residency in order to meet the requirement.

[LadyInTheRed]

I think you need to push your lawyer to fight the trustee on this. Ask him to review Section 1322(f) of the Bankruptcy Code and tell you why your wife should agree to refinance the loan.

(f) A plan may not materially alter the terms of a loan described in Section 362 (b)(19) and any amounts required to repay such loan shall not constitute “disposable income” under section 1325.

A loan under Section 362(b)(19) includes a 401k loan.

Remember, you are the one who makes the final call here, not your attorney. He can't modify the plan without your signature. If you refuse to modify the plan, the trustee would have to object and it would be up to the judge to decide.

[repuman]

Lawyer provided new, higher payments to trustee hoping that would help, no go. Trustee doesn't like fact that wife contributes 15% of pay to 401K, wants that stopped/reduced to put even more into plan. Not sure if attorney
misunderstood trustee about the refinance 401k loan deal, he didn't mention that in email today. We're considering walking away from this and perhaps trying to work this out on our own with the creditors, or even using a *gasp*
debt relief company, if a decent one exists. Opinions? Or, back out, find new, improved lawyer.

[LadyInTheRed]

So, a refi of the loan is a bargaining chip to allow for the continued 15% contributions. This may not be a case of a wimpy lawyer. My understanding is that most trustees will object to a contribution to the a 401k if you are also making payments on a 401k loan. A 15% contribution is pretty high, even without the loan repayment. It does sound like something is going to have to give. But, a lot of this depends on the local customs. If you don't settle things with the trustee, it depends on how the judge views the issue. One factor may be your wife's age and how much she's saved for retirment. A debtor who is within a few years of retirement with little retirement savings, may have a better chance of getting a plan approved that include a higher contribution/loan repayment combo. Your wife may need to lower her contributions for a while. What is the trustee willing to allow? Sounds like you need to have a strategy meeting with your lawyer to figure out what you may be able to get the trustee to agree on and what you stand to lose if the judge has to get involved.

Settling with creditors and debt relief companies are rarely better options. Some would say they never are. Before giving up on the BK, think about how much debt will be discharged compared to how much in savings your wife would give up. Is it worth having to deal with the debt so your wife can continue to contribute to her 401k at the level she is? A Chapter 13 does require some sacrifices.

[shark66]

Remember, you are the one who makes the final call here, not your attorney. He can't modify the plan without your signature. If you refuse to modify the plan, the trustee would have to object and it would be up to the judge to decide.

Exactly.

Two things you need to bear in mind:

a) Trustee can object all he/she wants, the final decision - if and when push comes to shove - is up to the judge.

b) You can always walk out of a Ch. 13 case, simply by not paying. Having said that, I'd never advise anyone to agree to a plan that they're not comfortable with. Five years - even three if you're amongst the lucky ones - is quite a long ride.

Good luck.

[hanginginmd]

Don't get involved with a debt relief company!!! You're justing throwing money into a bottomless pit.

[newbie2]

Your problem (from the way I interpret what you wrote) is that the your wife is paying back a 401K loan while at the same time contributing 15% to the 401K. If that's the case, I don't think you have a "wimpy" lawyer, but rather a trustee that is seeing too much money being withheld from unsecured creditors. (The trustee is there for the creditors, not for you. Never think otherwise.)

Go have a sit down with your attorney (don't talk on the phone or via email) and see if you can work out something with the trustee. (IE, when the loan is paid off then contributions can begin again, or some such compromise.)

[frogger]

Don't get involved with a debt relief company!!! You're justing throwing money into a bottomless pit.

Unless the debt relief company is a lawyer that offers debt relief by means of bankruptcy......

The Chapter 7 0% repayment plan was my option.

[justbroke]

I'm a little late here, but let me interject. The Trustee can oppose a 401(k) repayment if you are also still making 401(k) contributions. It's either one or the other, and the caselaw pretty much supports this view.

[IamOld]

I'm a little late here, but let me interject. The Trustee can oppose a 401(k) repayment if you are also still making 401(k) contributions. It's either one or the other, and the caselaw pretty much supports this view.

Thank you! In EVERY case? I have 401k contributions (I just got his job last year Dec and essentially have ZERO in the 401k until now) and have an outstanding 401k loan for 1200 with $10/pay...so that means that when I file the Trustee can object to my 401k contributions (and my balance now in total is around 2000K and I ain't no spring chicken) because of my TEN dollars per pay 401k repayment???

[justbroke]

Thank you! In EVERY case? I have 401k contributions (I just got his job last year Dec and essentially have ZERO in the 401k until now) and have an outstanding 401k loan for 1200 with $10/pay...so that means that when I file the Trustee can object to my 401k contributions (and my balance now in total is around 2000K and I ain't no spring chicken) because of my TEN dollars per pay 401k repayment???

Absolutely! Whether it is $10 or $100, the Trustee needs to protect the rights of the unsecured creditors. Think of it this way. That $10 over 60 months is $600.

[IamOld]

Absolutely! Whether it is $10 or $100, the Trustee needs to protect the rights of the unsecured creditors. Think of it this way. That $10 over 60 months is $600.

THANKS! But that is wildly silly isn't it? - I contribute about $130/pay to get my employer's full match PLUS the $10 loan. If there is protest, I would be happy to increase my payments to the "system" by $10 - to me, it would be wildly contrary to "public" policy for them to tell me to STOP 401k contribs because of $10 - would it not be satisfactory if I offer (IF this comes up) to raise my contribution by the said $10??

And/but I'm quite sure I'm not the only one with a 401k loan going into bankruptcy.....

[justbroke]

THANKS! But that is wildly silly isn't it? - I contribute about $130/pay to get my employer's full match PLUS the $10 loan. If there is protest, I would be happy to increase my payments to the "system" by $10 - to me, it would be wildly contrary to "public" policy for them to tell me to STOP 401k contribs because of $10 - would it not be satisfactory if I offer (IF this comes up) to raise my contribution by the said $10??

Yes it is wild. However, the most Trustees are black and white. It would probably be best for you to payoff the loan and then keep the contributions at the maximum company match. The key here is that you are taking an "extra" $10/pay away from the creditors, since you are already making the "maximum" contribution to the system. (Most Trustees will only allow the "maximum" amount where you still get a company match. Anything higher would likely receive an objection.)

[IamOld]

Yes it is wild. However, the most Trustees are black and white. It would probably be best for you to payoff the loan and then keep the contributions at the maximum company match. The key here is that you are taking an "extra" $10/pay away from the creditors, since you are already making the "maximum" contribution to the system. (Most Trustees will only allow the "maximum" amount where you still get a company match. Anything higher would likely receive an objection.)

Sadly, I'm sure you're quite right and THANK YOU for the response.

Well, I reckon then I'm screwed, because between paying the very expensive atty, paying the mort car, etc., there's no way on earth I can pay this loan back. So then I hope that they accept me paying an "EXTRA" $20 per month to the creditors versus stopping my 401k. Oh well. I guess I'll be living in a box when I'm old - or better yet, I can declare bankruptcy again when I'm ready for SS, and be done with it...
NOW - I can ABSOLUTELY though show that this 401k loan went DIRECTLY to pay the lawyer!!!! and for NOTHING else.