Chapter 13 Question

[John1]

1. How do you pick a good attorney that you can trust. I googled and found one, but I don't know if i can trust her or not. Haven't met with her. Still deciding to tough it out or file.

2. How does one go about filing when one is self employed and the business is construction based? So one basically every month I am trying to out run the bills. My health insurance alone is 800 per month.

3. I am the sole person on my mothers home loan. I helped her get the house six months before the market crashed and I had a good income and good credit. If I file, how will that affect her house?

4. Our lifestyle was built around a thriving economy. We have very little in unsecured debt. My wifes car is upside down, and with my credit damaged from fighting this crap for 3 years. I couldn't finance a tooth brush. My truck is for work and isn't in a negative equity situation. We have a mortgage and a heloc. We basically have an income crisis at this point.

Please advise
Thanks
John

[puggymoo]

I would find a lawyer that has experience in chapter 13. I had to fire an attorney because he didn't tell us he had never done a chapter 13 and then wouldn't file for 4 months. I would also check the state bar association and see if there has been complaints. Ask the attorney about cram downs on the vehicles since you have had them over 910 days. There are alot of attorneys out there that are trying to do BK's just because there are so many people needing them.

[John1]

Thanks for the info.

[momofthree]

So you have an auto loan, a mortgage and a HELOC, and "very little unsecured debt." What exactly are you hoping to accomplish with bk? All secured debt has to be repaid in full, although if your HELOC is completely unsecured, it could be "stripped." Unfortunately, BK will not help you with an "income crisis."

[keepsmiling]

You might want to give info as to what your loan balances are and what your property is worth.

[John1]

Momofthree,

Now you have me scratching my head. I am late on my mortgage. I am a month behind on both vehicle payments. I am at least 2 months behind on my equipment payment( used in business, but under my name). Oh, also behind on Heloc. So if bankruptcy won't help, what will?

My income has been greatly affected by the housing market. Income went down and cost of living went up! What would you do?

Thanks

[momofthree]

So you're wanting to use bk as a tool to bring your secured debts current over time so that you don't lose them. Yes, you can use bk for that purpose. However, if your financial situation hasn't improved, you're going to continue to struggle. You have to bring your debts current and continue to make timely payments on those debts as well. So, if it was a 1-time event or period of time that you've now overcome, then you should be fine, but if you are having on-going issues with your income, then ch.13 may not work for you and you may have to consider giving up some of your assets...

[John1]

Clarify this for me please. I am a contractor. So my income in the current economy can not be forecasted. All I could do is look at past months and come up with an average. So my thoughts were that Chapter 13 would keep all the creditors in " check" and the court would give me a payment amount based on my income over said period of time.

At the same time it would give me a chance to catch my breath. Would it not work this way? Or would the court say. Turn off your cable, shut off your phone, cancel your heath insurance etc? Little confused about how this works?

Is it feudal to contact a BK attorney in this situation?

Thanks for your help.

[newbie2]

Clarify this for me please. I am a contractor. So my income in the current economy can not be forecasted. All I could do is look at past months and come up with an average. So my thoughts were that Chapter 13 would keep all the creditors in " check" and the court would give me a payment amount based on my income over said period of time.

At the same time it would give me a chance to catch my breath. Would it not work this way? Or would the court say. Turn off your cable, shut off your phone, cancel your heath insurance etc? Little confused about how this works?

Is it feudal to contact a BK attorney in this situation?

Thanks for your help.

You can do what you are hoping to do, but will you have enough income going forward to support a Chapter 13 plan? That is something only you can answer. Note: Since you are behind in secured debts, the plan would include the arrears AND your normal monthly payments on those debts. Many plans also include part of your attorney fees, and there are ongoing trustee fees as well.

It won't hurt to have a couple of consultations with attorneys to review all of this for you. Good luck to you, and I hope the income picks up for you.

[keepsmiling]

It might be very worthwhile if you can lien strip. You might be able to cramdown the car as well. Then your payments would be lower and your income would go further.
Have you looked at loan mods/refis?
We can't tell you more til you give the loan amounts/values. Also, are you making the payments on your mom's house?
You are certainly allowed to have health insurance, phone and cable although exactly what kind of package might be worth discussing.

[momofthree]

Or would the court say. Turn off your cable, shut off your phone, cancel your heath insurance etc?

You are allowed basic living expenses, which will include health insurance, as well as basic phone, cable, internet, etc. You can view all of the IRS standard living expenses here: http://www.justice.gov/ust/eo/bapcpa...anstesting.htm

So my thoughts were that Chapter 13 would keep all the creditors in " check" and the court would give me a payment amount based on my income over said period of time.

If you had a high load of unsecured debt, bk would be able to help quite a bit because the unsecured creditors have to take whatever leftover scraps there are after living expenses and secured debts are paid--sometimes they get nothing (I'm in a 0% payback myself), so if it's unsecured debt dragging you down, ch.13 is a huge relief. It sounds like your issue is with secured debts though.

As far as how it works: The bk will "stay" the collection actions of your creditors. You would then pay your arrears (past due amounts) thru the bk plan and as long as you continued to make your full regular payments on time, then the creditors will not come after you and cannot repossess the property. The courts do not have the ability to change the normal payment amounts on your secured debts though. You will have to keep those payments current going forward or they can file to have the "stay" lifted and repo the property.

Perhaps providing an example would help.

I'll use round numbers just to make it easy.

Let's say you have $12000 in arrears on your secured loans.
An attorney cost of $4000
trustee fees at 10%

Your minimum bk payment would be around $292 over 60 months. If you have more DMI (discretionary income) than this, then you'd pay the higher amount and the excess would go to your unsecured creditors.

You would make this payment in addition to your regular mortgage/cars/equipment payments, which remain the same as they currently are (minus the arrears, of course). All of your secured payments will have to be on time while in your bk or you stand the chance of losing the asset.

[momofthree]

Consulting an attorney would be a good idea. Be sure to take the P&L statements for the last few months, a list of your debts, assets w/values, etc.

[John1]

Momofthree,

Guess I am a little "thick headed". Finally I get what your saying. Ok I guess I better come up with a better plan. Increase income and decrease debt. I am just tired and thought that the BK would give me some light at the end of the tunnel.

Thanks for your help.

P.S. Just out of curiosity. If things got real bad and they forclosed on the house and repo ed the cars. Could I at that point just file Chapter 7 and walk away from the whole mess? Worst case.

[momofthree]

P.S. Just out of curiosity. If things got real bad and they forclosed on the house and repo ed the cars. Could I at that point just file Chapter 7 and walk away from the whole mess? Worst case.

Yes.

[keepsmiling]

Again, I repeat... the Heloc COULD turn out to be unsecured and be stripped. The car could be crammed down. We don't know without the numbers.