Quick Chapter 13 questions

[follyjune]

We're looking into possibly filing Chapter 13 soon in WI (reason to choose over 7 is that we have assets we'd like to protect, and have no issues with paying as much as we are able to our creditors). I want to be prepared before we meet with our lawyer, so I'm doing a ton of research on my own. I have read stories of lawyers not always doing the right/best thing, so I want to be armed with knowledge.

When evaluating our situation, we are below the median income for our area. So, from what I understand that means we do not determine our disposable income on B22C. So looking at Schedule I & J, I see places for things like recreation, clothing, etc. I'm not sure what we will be allowed to put there. Since money has been so tight, we just DON'T do any recreational activities, don't spend money on clothes (we'll go a year without purchasing any clothing for ourselves other than a little 2nd hand because we can't afford to). So just because we haven't been able to afford those expenses, are we not allowed to put something there then? Can we just put the IRS allowable expenses in? Pretty confused. (*I know that our lawyer will help us with all of this, but I also know that there are good lawyers and bad lawyers, and I don't want to get screwed if I don't know better, so I'm looking for some 1st hand experience.)

Thanks.

[irishonyx33]

My husband filed 13 in Eastern WI and we used the IRS allowable for everything except rent because our actual rent is $65 higher than the IRS standard. We put $100 for recreation. Like you, many of the expenses we listed we haven't actually used in a long time. Clothing, medical, pers. care, housekeeping, food, car..all of these are areas where we took the allowable but don't spend that much...the extra goes in our emergency fund. Our trustee recommended us for conformation with no objections to anything. Good luck.

[jeep75]

It's possible to protect assets in chapter 7 assuming they can be exempted. Are you sure that you have assets beyond what can be exempted under chapter 7?

[follyjune]

We are in WI, and from what I'm seeing, the most we can exempt for vehicles is $4000 (which I'm assuming can be doubled for married couples). We have 2 vehicles worth roughly $30,000 which we owe nothing on. Am I missing anything? We really have nothing else of value.

[lrprn]

@follyjune - if you do decide to file Ch 13 to protect your two fully paid cars, your lawyer needs to work with you to determine what are *reasonable* expenses for your family size and location that will be acceptable to your trustee. If you put down the bare-bones dollars you've actually spent and leave out what you haven't spent trying to stay afloat before filing, you won't be able to sustain that very low spending pattern throughout the years of your plan. It's a almost certain set up for dismissal somewhere down the line.

The Wisconsin auto exemption allows "one motor vehicle worth up to $4,000, plus any unused amount of the personal property exemption." (See http://www.totalbankruptcy.com/state...n/default.aspx) The Wisconsin personal property exemptions are "up to $12,000 worth of household goods, furnishings, clothing, keepsakes, jewelry, appliances, books, musical instruments, firearms, sporting goods, animals or other personal property." (Same source) Do you have any of these personal property exemption dollars left to protect your cars?

Also in Wisconsin you are allowed to use the Federal exemptions when you file. The Federal auto exemption is a bit less at $3,450 but the Federal exemptions also have a wild card exemption of "up to $10,825 of unused homestead exemption amount, for any property; $1,150 of any property" (See http://www.legalconsumer.com/bankruptcy/laws/#US ) This could allow you to protect up to $15,425 of your two cars' value if you don't need the dollars to protect other assets.

If you haven't yet, it's time to set up your 3-4 free initial consultations with experienced bk lawyers in your area. Discuss which set of exemptions and which bk chapter it makes the most sense to use in your situation.

Keep in mind that often it can be worked out with the trustee to pay off whatever value can't be protected by the auto exemptions and wild card over a specified time and keep your cars whether you file Ch 7 or 13. Discuss this possibility during your free consultations as well.

[ValleYum]

@follyjune - if you do decide to file Ch 13 to protect your two fully paid cars, your lawyer needs to work with you to determine what are *reasonable* expenses for your family size and location that will be acceptable to your trustee. If you put down the bare-bones dollars you've actually spent and leave out what you haven't spent trying to stay afloat before filing, you won't be able to sustain that very low spending pattern throughout the years of your plan. It's a almost certain set up for dismissal somewhere down the line.

The Wisconsin auto exemption allows "one motor vehicle worth up to $4,000, plus any unused amount of the personal property exemption." (See http://www.totalbankruptcy.com/state...n/default.aspx) The Wisconsin personal property exemptions are "up to $12,000 worth of household goods, furnishings, clothing, keepsakes, jewelry, appliances, books, musical instruments, firearms, sporting goods, animals or other personal property." (Same source) Do you have any of these personal property exemption dollars left to protect your cars?

Also in Wisconsin you are allowed to use the Federal exemptions when you file. The Federal auto exemption is a bit less at $3,450 but the Federal exemptions also have a wild card exemption of "up to $10,825 of unused homestead exemption amount, for any property; $1,150 of any property" (See http://www.legalconsumer.com/bankruptcy/laws/#US ) This could allow you to protect up to $15,425 of your two cars' value if you don't need the dollars to protect other assets.

If you haven't yet, it's time to set up your 3-4 free initial consultations with experienced bk lawyers in your area. Discuss which set of exemptions and which bk chapter it makes the most sense to use in your situation.

Keep in mind that often it can be worked out with the trustee to pay off whatever value can't be protected by the auto exemptions and wild card over a specified time and keep your cars whether you file Ch 7 or 13. Discuss this possibility during your free consultations as well.

Just an FYI: Federal Bankruptcy Exemptions can be doubled when a husband and wife both file for bankruptcy. No disrespect intended - just trying to be helpful.

I wonder if the OP is trying to protect equity in a home?

[follyjune]

Thanks for the info. No home equity to protect. Just our vehicles. Good to know that they can be doubled. That may be our answer.