Chapter 13 process

[yank1]

My wife & I are contemplating bankruptcy. More than likely, chapter 13 because our income is pretty high. We have a consultation next week with an attorney. My question is, what is the process for filing bankruptcy? What happens at this consulatation? What happens after that? When do we stop paying our creditors and can we tell them that we are going to file bankruptcy?

[SinkingFast]

Meet with more than one Attny. Have several Consults with different attnys. You'll find that each one takes a different approach. Some may be more liberal with your budget while others are real Scrooges about expenses. So don't just go with the first attny you talk to. Also, as you Consult with attnys, look at them and think to yourself, "Can I live with this person for the next 5 years of my life?" 'Cause if you do wind up Ch 13, in a 5 year plan, you need to be able to work with the attny if problems arise.

Just because you have higher income doesn't mean you'll automatically be Ch 13. You may have secured debt payments, alimony, child support, and such that will eat away at your income/month.

http://www.usdoj.gov/ust/

Consults, you basically discuss what brought you to the attny to begin with. Did you loose a job? Do you gamble? Did you have huge, unexpected, uninsured medical bills? Are you a shopaholic? How much do you make/yr, how many dependents, etc. The attny can get a good feel from a general conversation which Ch you'll need to file. Unless you're borderline. If you're borderline, they'll say, "We have to see what the Means Test says."

Don't pay an attny a retainer, don't get your pre filing BK Cert until you've met the 70/90 day requirements. 70 days on Cash Advances/90 days on CC purchases. At that point, the burden of proof shifts from you to the Creditors.

If you need to stop paying your CC's to live without charging anything, do it. More than likely, collections calls won't start until you've missed the 2nd payment. Deal with the collections calls from your CC's but don't mention the BK word until you have all your ducks in a row. Have your attny picked, meet the minimum 70/90 day period, get your attny's fee set aside, and basically get ready to file.

Getting ready to file can be a chore in and of itself. If you're like most of us, you have no clue how much you spend/month on anything except the bills that come in the mail. Gas, electric, water, cable, telephone, cell phone, and such. You'll need to know how much you spend for groceries, auto maint and gasoline, cleaning supplies, entertainment, gifts, newspaper or magazine subscriptions, medical expenses, you name it. Take a look at Schedule J of a BK petition to get an idea of what you need to know about your monthly living expenses.

There are documents you have to gather. Last 4 years of income tax returns, last 6 months of pay stubs, life insurance policy statements, IRA/401K/Retirement savings statements and such.

Each attny you visit will give you a list of docs they want.

[aa06a47]

Your attorney will tell you to quit paying your creditors as soon as you have made the firm decision to file Bankruptcy.

What happens at your consultation really depends on the lawyer or law firm. I went on several, and only one of them actually spent more than 30 minutes with me. The one I went with spent 2 hours with me.

One of the things you need to start doing is getting advice from people on how to protect assets. I'm not sure if you have to file soon to protect you home or car? There are some pre-bk financial planning that is allowed. If you share you case / concerns on this board, some will pipe in with some good advice.

I'll give you one example, if you have 100K in equity in your home, and your state allows 15K in exemptions, you'll more than likely have to fork over 85K into your plan (or 100% payoff whichever is least). Let's say though, you buy new siding, redo the broken up concrete driveway, put that new killer swimming pool in, wife wants a new kitchen, you want a new rec room, and damn roof leaks, so fix it...to do this you get a home equity loan for 85K. You now only have 15K in equity which is exempt (depends on state). You also have that 85K home loan which is allowed deduction, so you don't pay the unsecured creditors anything and you have a much nicer home. Hell, your new higher payments may even qualify you for a chapter 7? Also, why have a junker car when your allowed deductions for vehicals.

Of course, you cannot do this one day and file the next. It has to be part of the planning, like 6-12 months of planning. I didn't do all this planning, but I wish I would have.

[anonymuse]

There are some pre-bk financial planning that is allowed. If you share you case / concerns on this board, some will pipe in with some good advice.

You'll get that advice here--the attorney cannot provide that kind of advice to you.

[yank1]

If I stop paying as soon as we decide to file, will we be running a risk of a lawsuit? My wife works in an office where suits are filed and she is scared that she may have to file one against herself! We are not very behind right now on anything, just a couple of weeks, but those couple of weeks will turn into a month before we know it. Our house is not behind, we owe about $110,000, our last appraisal was at $107,000. There is no equity there. We have 1 vehicle paid for, 1 we owe about $8000 for. We have a furniture loan, an appliance loan, a jewerly store card, and about $70,000 in credit cards.

[SinkingFast]

What State do you live in? That will help us help you. Exemptions vary by State.

If you find you're gonna be in a Ch 13 plan, you may be able to skip a couple house payments to keep yourself on track elsewhere. With Ch 13, you can be in arrears on your mortgage and the arrears can be put in the payment plan.

But if you go skipping house payments you risk Foreclosure. How quick that can happen depends on the State and the Lender. We haven't paid a payment on our house since December last year and the Lender will auction our house off at the end of this month. So there's 5 missed house payments in a Quick Foreclosure State. New York is a Judicial Foreclosure State. Every Foreclosure goes thru the Court system. It takes 15-18 months after the Lender starts the process to get to the actual auction. Also, you can whine a sob story to your Lender and get them to "work" with you thru your troubled time until your Ch 13 plan kicks in and takes over.

The big downside to skipping house payments is the mortgage will have to be put in the Ch 13 payment plan. If you are current on your house payments when your Ch 13 begins, you can carry the home loan outside of BK and have a positive reporting tradeline all thru your Ch 13 plan.

Lawsuits from CC's aren't likely if you're looking at only a few months missed payments before you file BK. CC's go thru a process. They generally give you 2-3 missed payments before they turn you over to internal collections. Your acct stays in internal collections for a while before you get turned over to outside collections. It can take a while to get to the law suit stage. Also, a lot depends on the Creditor and how much you owe them. There are people here who've gone over a year not making payments with no law suits. Other people here have been sued in as little as 6 months.

Auto equity may be an issue for you. What year and models of cars are you talking? Is the one that's paid for an old beater that's high mileage? Or is it a newer, lower mileage car/truck that may be worth more? Same thing for the one you have a loan on. The excess equity is $$ that will have to be paid in your 13 plan. Keeping 2 vehicles depends on the wording or your State's exemption code. Some States explicitly say A vehicle. Some States say "vehicle exemption of $X" meaning you can have as many as you can fit under the $$ limit.

When you hire an attny, typically they only require a portion, up to half at most, of their fee up front. The rest is taken out in your Ch 13 plan payments. The attny gets paid first before any unsecured creditors do.

[yank1]

Thanks for the info. We live in GA. Our cars: 1995 Ford p/u w/over 100,000 miles (paid off), 2003 Jeep Cherokee probably worth about $12,000. I really don't want to start skipping house payments. We're current on it and would like to keep paying it that way. Just a little scary to quit paying anything to the credit companies on the cc.

[SinkingFast]

I hear ya, Yank.

You just gotta adopt a different mentality.

You gotta do what's right for you and your family. And if filing BK is it, then so be it.

We're here to support each other. We've all been thru other people looking down their noses at us. BK isn't the type of thing you discuss over the fence in the backyard with the next door neighbor.

That's part of what makes this Forum GREAT!!

The other part is learning about things your attny won't tell you.

New Law, attnys are expressly forbidden from giving financial advice. You can ask "What if" scenario types of questions to probe answers from them, but you can't ask them what you should personally do. They can't tell you.

Here's a link for you about GA exemptions:

http://www.legalhelpers.com/legal_he...ptions_ga.html

I also read at another site, whatever Homestead exemption you don't use toward protecting your house can be used as a WildCard toward protecting other property. So if you're negative equity on your house, you may have extra there to use toward your vehicles.

[jane taylor]

It was hard for us to skip house payments and car payments, too. Filing BK was one of the hardest things I've ever had to do, but we knew that it was the only way for us to get on our feet. I am in my 40's and it is scary as h&*k to do this, but we had to start over. Medical bills and three job losses did us in along with the foolish spending.

This Forum is great. Most everyone here is kind and compassionate. Ignore the few "bad apples" that like to cause trouble.

Do meet with several attorneys and never stop doing your homework. Lawyers and trustees know who's done their homework and good attorneys aren't threatened by it.

Keep us posted and God bless--

jane

[NowOrNever]

I have kept all of our secured payments up-to-date, but this will be the third month I haven't made any CC payments. The absolutely worst part is the phone calls! I added caller ID to our phone and what a blessing - we just ignore the calls. The only letters we've received from the CC is that they're lowering our limit and those reminder letters - nothing threatening yet. Oh yeah, I got two packs of those convenience checks from two different companies last week. Wonder if they try to trick us into using them to get us on the 70/90 day use thing?

We have had to delay filing due to not being able to take off work, but we have completed the attorney workbook, had a couple of additional meetings with them and they have our papers ready. We are going in Tuesday to go over the pleading (? correct term) and sign. Then we will finally have a case number for those pesky callers.

You will feel better after your attorney consults. I know I went out to the parking lot, sat in the car and just felt like a weight had been lifted after I talked to the attorney we chose.

Good luck to you. I'm mostly a lurker here, but these folks are the best! It feels good to know you're not alone.

[yank1]

I received the forms that my attorney asked me to complete before our meeting. When figuring my income, do I take an average of my pay? In the past I've gotten a good bit of overtime, but lately I've averaged about 46-50 hours a week. Also, what can I consider monthly expenses, other than my normal utilities??

[anonymuse]

It's the average of the last 6 months of pay. Then, there is a section at the bottom that asks whether you anticipate any increase or decreases in this number and you can explain about the overtime decreasing.