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[4forme]

We retained an attorney in September. We have a lot of unsecured debt appox. $43000. My husband changed jobs 2.5 years ago and is making about 20000 less a year. When we made the change we were in the process of refinancing. We were told by bank of America it would be no problem as we have a lot of equity in the home. Well three monthes later we are turned down and job change is done. We struggled and with a lot f overtime made minimum payments on all but two loans that we could not catch up on. we saw no way of digging out and our van was going out. Attorney advised us to purchase vehicle which we did at high interest rate. We also went ahead with our daughters braces as advised. We quite paying all unsecured debt ad payed our attorney a monthly payment. He wanted us to drop some to all of the overtime and re run means test. We will not be able to file chapter 7 as our disposibleincome is to high. Which is fine as we do make decent money. We are a family of six and right now our attorney has us being able to pay $800-&1000 a month. This would be more than our debt over five years, so we should be paying back 100%. He recently advised us to file our income tax and get back with him. We are getting $5700 back. He said we could use it for home repairs and such prior to filing. He says we are not in a hurry to file??? Has anyone been turned down for doing this?
We were also served a summons in early January for small claims by a debtor. Court was for the 23rd and we were advised not to attend. Now I see we are in default. Our attorney aid to monitor this and that we should file quickly after a judgement is made???? How long could that be? He said there was no hurry.... I'm confused! The amount is $2500. The bankruptcy is embarrassing enough we don't want our wages garnished.
Please advise based on your experience. This is so scary!

[SMinGA2]

Have your attorney explain what the proposed payment of $800-1000 includes. That might include your vehicle payment, for example. A % of it (5-10% depending on the district) will go to your trustee, and that may also include some of your attorney's fees.

Dropping the overtime is probably a good idea. If you can't be sure that it will continue thru the next few years, you want your plan to count your real, reliable income.

Using the income tax refund for needed items sounds reasonable also. Waiting to file after this could save you some $ in the long run. Has your attorney discussed the idea of adjusting your withholding, to take less money out of each check? Slightly higher net pay now, less refund later.

Filing ch. 13 will stop the legal process begun by your creditor. If you missed the court date, that may have resulted in a default judgment. I'm not sure how long it would take for the creditor to garnish wages or attach your bank account.

Have you discussed your budget in full with your attorney - to make sure it covers all you need to live on? Vehicle & home maintenance, medical out of pocket and copays, insurance, and so on.

[4forme]

What my attorney said is it looks like we have $800-$1000 of disposibleincome ever month.... Not sure where it's going??? Doesn't that mean the amount we will likely pay ? Also it sounds like the tax refund will be figured in as income for the last 6 monthes as well. Good news is the interest will stop compounding and we can be debt free in at least five years.

[SMinGA2]

I think you may need to ask your attorney to explain some things for you.

If you don't really think you have $800-1000 per month in disposable income, then you may want to go over the budget you've submitted to your attorney. Is it accurate - reflecting what you really need each month on groceries, gas, and every other category? Is everything accounted for?

The tax refund would perhaps be counted in the means test figure for income over the past 6 months. But that is not the same as schedule I/J income & expenses - those should be actual/looking forward. Those should determine your plan payment.

[Jf24]

The tax refund would perhaps be counted in the means test figure for income over the past 6 months. But that is not the same as schedule I/J income & expenses - those should be actual/looking forward. Those should determine your plan payment.

My attorneys aid said I should file 13 before I get the refund because it will go into figures for DMI for the payment plan. Is she wrong? Is it better to get the refund before filing? I would be filing in March since March has 3 pay checks for me and would be counted if I wait till April.

Also, I have 2 months of no overtime so far and not by just not doing it, there is non available. Is it nessasary to go a full 6 months with no overtime or will they get the picture that there is no more overtime and take it ouT of DMI calculations for a payment plan?

[SMinGA2]

Based on my understandings...

If filing in one month vs. another will keep you below the median income, then you should plan your filing date so as to have the lower income to have the option of a 36 month plan. The tax refund (if counted in the means test) could mean a higher average income for the means test. But your DMI is based on schedules I & J, not the means test. The refund can't count in your DMI, because you already got it.

From what you indicate, if you:
file in April - it counts Oct-Nov-Dec-Jan-Feb-Mar, and March has 3 pay periods for you.

But what about if you:
file in March - it counts Sep-Oct-Nov-Dec-Jan-Feb. Did September also have 3 pay periods? (It should have if you get paid every other Friday...)

Either way, there is a 3-pay period month counted in there.

NOTE: if you regularly get a tax refund, then you're having too much taken out. Otherwise you would have higher net pay; your DMI would be higher if you fixed your withholdings. This may be what your attorney is talking about.

If your attorney is basing your plan payment on your average monthly income from the 6 months past, and not the current income & expenses on I & J, then ask your attorney why.

[Jf24]

Thanks. I was just thinking about the other month with 3 three checks. So I should go for the refund before filing? What If i wait till after filing? It gets taken?

[SMinGA2]

I'm not trying to say what you should do - I am not in your shoes so can't know what is best. If there is something you're not certain of, speak to your attorney. IMO you should understand your DMI/plan payment and know exactly where the #s come from. Will tax refunds in your plan go to the trustee? That's another thing you should know, and your attorney should have an idea of where the trustee stands on that topic. Before filing, you may want to discuss w/ your attorney whether or not to adjust your withholding levels.

If you calculate income from Sept-Feb vs. Oct-Mar, and factor in the tax refund - are you close to the median income? Is there a timeline that works to keep you under? Keep in mind the advantage to being under is having an option of doing a 36 month plan instead of 60. In some cases, that may not even matter. Such as if you have a minimum $ that needs to be repaid (example: mortgage arrears) and your DMI is not sufficient to pay it in only 36 months.

[oicu812]

We were also served a summons in early January for small claims by a debtor. Court was for the 23rd and we were advised not to attend. Now I see we are in default

imo that is bad advice.the same thing happened to me.I researched that process.and found if you dont show up you default and they win.
since I showed up my debt case got reset for mediation 5 months out...that gave me the time to get my BK ducks in a row.
as far as garnishment they have to know you bank account # to garnish but if they can find it they can force you to give it up. at least thats what I found out in my state.

also ya might want to review what ya post about what the lawyer tells ya.im not sure he can advise some of that stuff.

[Jf24]

If your attorney is basing your plan payment on your average monthly income from the 6 months past, and not the current income & expenses on I & J, then ask your attorney why.

It's the one "handling the paperwork" that is telling me my payment is based on my prev 6 month income and to file before I get my tax refund.

Want to get my facts straight before I demand to speak to the lawyer himself.

Questions
I have no overtime in the last 2 months so my schedule I should reflect this and my payment should be based on this???

I should be able to do my taxes, get refund before I file and it wont count toward income for a payment plan? I need to buy an oil burner, should be a necessary expense?? Would this fly?

[SMinGA2]

In my opinion - yes. But keep in mind, its my opinion. And that is assuming you have no reason to expect the overtime to be a regular event going forward.

I'm not sure what you mean by the one 'handling the paperwork'. Have you already paid the attorney? Have you consulted more than one?

[OhioFiler]

Income tax refunds ARE NOT income. Your income tax refund has already been counted once as income because you start your Means Test and Schedule I with your gross earnings for the prior six months.

It appears your attorney gave poor advice about the small claims case as well as this nonsense about tax refunds being income. Sit down with the attorney and get this cleared up.

[Jf24]

In my opinion - yes. But keep in mind, its my opinion. And that is assuming you have no reason to expect the overtime to be a regular event going forward.

I'm not sure what you mean by the one 'handling the paperwork'. Have you already paid the attorney? Have you consulted more than one?

This was the third I consulted with and was paid a retainer. Been sending updated stubs and cc and mortgage statements. One I speak to may be a paralegal. I will ask when I call later. But want to speak to the lawyer there and wanted to be informed as much as I can before calling. Your opinion sounds good, thanks. What about the tax situation.

And no or very little overtime is expected. I was getting about 10 hours a week, got none in 2 months and if I get a little in the future I may be only 2 hours here and there but nothing like the past.

[Jf24]

It appears your attorney gave poor advice about the small claims case as well as this nonsense about tax refunds being income. Sit down with the attorney and get this cleared up.

Keep in mind I am not the OP
Sorry, maybe I should have started my own thread on this.

[OhioFiler]

Keep in mind I am not the OP
Sorry, maybe I should have started my own thread on this.

My advice applies to anyone who reads it.

You should always have your own thread addressing your unique situation.