New on here...13 question ....settlement was intent without 13 ...

[ssscamaro]

{I}Have a ton of questions.

{I}Hired an attorney that claimed he could settle my unsecured debt of approx $125k at 15-25% which at the time thought was doable on my part.

My income is good over the median by quite a bit..married wife doesn't work.

Anyway {I} took his advice stopped paying the unsecured( mortgage still current have never missed any payments on it) had never missed a payment on anything to that point.

{I}had a 780 FICA (payments were out of control as rates got higher and higher and balances climber robbing one to pay another just not enough cash to continue ..sinking ship).

Anyway {I}...he did what he said for 6 months. {I} {had}Nearly no calls from lenders. So came down to another law firm sending me to court (collection for one of the cards) lawyer said he would take care of it and not to reply.

{I}Didn't reply...law firm won the case. So next I know my atty is talking chapter 13 with me! I had so much confidence that the settlement position would work!

{I}Never thought I'd need to go this route. Reviewed the petition paperwork tonight etc.

My big question is....should I contact the lenders( 2 are with law firm collections now and won judgements in full) one last time (atty has power of attorney and has always urged me NO contact with lenders) and see if they a willing to settle as a last ditch effort?

{I}Dont want to negatively effect anything with 13 if its my only route but feel like I need to at least try.

I can get some $ from my 401k (loan) to do this and have enough available to pay off if they all settle for 20-25%...which would be more than they will get in chapter 13. I know 401k loan not great but at least it would be a 5 year loan back to myself and is doable. I think 5% would be more than the 401k made me last 5 years !

Will post more questions that is enough for now.

Thanks

[AngelinaCat]

Folks, please break your posts into easy to read paragraphs. I am getting ready to do the above now.

I know that we live in an age that grammar, punctuation, and just plain courtesy regarding posts, are not taught in school anymore. Everyone lives with a tablet and two thumbs.

I am sorry, but we cannot do that here. If you wish us to take the time to read your posts, PLEASE make them easy for us to read.

Thank you,
AC

[AngelinaCat]

Hi ssscamaro! Welcome to the Forum.

I am sorry to have to greet you the way that I did, but we are finding it harder and harder to read posts when everything is jumbled together and in a 'shorthand' form. You actually did pretty well; I only needed to clean it up a little bit.

My DH, 'Hub and I are a CH7 Asset Case. We do not have experience specific to a CH13, so we cannot advise there. But in many ways, a CH7 Asset Case, is a razeed CH13, meaning a 'cut-down' CH13. I can explain more in detail later.

My point of this post is to tell you: DO NOT TOUCH YOUR 401K

Any type or retirement plan is exempt from BK, meaning the trustee cannot touch it. You NEED that account for your future.

We cashed in 'Hub's 401K--first by taking a loan, then liquidating entirely, trying to stave off filing for BK.

Guess what? We are paying HUGE fees and penalties to the IRS for liquidating that 401K, and I have to pick up aluminum cans on the side of the road, trying to make the ends at of the month, or at least greet each other and shake hands!!!

In other words, LEAVE THE 401K ALONE.!!!

[dmc-2008]

Sounds like atty misrepresented everything! If you want to keep house it might be only way to go. Look at it this way your credit will be shot anyway but for only 24 months more after a discharge fm bk.
good luck!

[LadyInTheRed]

Don't touch the 401k! Your credit is already shot. Settling won't change that. Besides, creditors with judgments are less likely to settle and don't usually respond to threats of BK. File the 13 and start the clock on getting the debt behind you.

[Sammie]

As the others have said DO NOT TOUCH YOUR 401K

We, and paid $14,000 to the IRS for early withdrawal & still had to file Bk. and now we don't have a 401k.

[pamkev]

It can't be said it enough DO NOT TOUCH 401K.

Hubby and I almost went that route so thankful we found this board before we took the journey

Pam

[ssscamaro]

Thank you for replies and my apology for poor spelling and grammar. Was a very long day post was at 12 am.

Advice understood on the 401k. To be clear this would be a "loan" not an out right taxable distribution. Payable back to myself at 5% over 5 years. I honestly feel that is better rate of return than it had last 5 years!
Since settlement does not seem an option mute point anyway.

Question as I review the schedule I and J and the petition(which had very erroneous numbers somehow improperly in putted from law firms website). I am curious what would outcome be if schedule j expenses exceed monthly income from schedule I ?
Would filing party therefore be ineligible for chapter 13? Would it become a chapter 7? Would it still become a chapter 7 if filing parties median income exceed the standard for chapter 7 means test?

[ssscamaro]

Also ..please explain the post regarding "if you want to keep the house" ? We have never been late nor missed any payments on our first or second mortgages. Upside down some but believe it can be overcome in a few (?) more years.
Is there anything I am missing regarding jeopardizing our home while filing chapter 13 for our unsecured debts?
Thanks again

[AngelinaCat]

Advice understood on the 401k. To be clear this would be a "loan" not an out right taxable distribution. Payable back to myself at 5% over 5 years. I honestly feel that is better rate of return than it had last 5 years!

Dear ssscamaro, we only INTENDED to take a loan from 'Hub's 401k also! Life intervened and we could not pay it back in the time frame we had. We tried borrowing from American General Finance, to help pay back the 401K. It didn't work for us, nor has such a scenario worked for many other members of this Forum.

Please do yourself and family a HUGE favor and 'forget' that you even have a 401k.

[LadyInTheRed]

Question as I review the schedule I and J and the petition(which had very erroneous numbers somehow improperly in putted from law firms website). I am curious what would outcome be if schedule j expenses exceed monthly income from schedule I ?
Would filing party therefore be ineligible for chapter 13? Would it become a chapter 7? Would it still become a chapter 7 if filing parties median income exceed the standard for chapter 7 means test?

Your schedules I and J must show enough disposable income to fund a feasible plan. Otherwise, your plan will not be approved.

It sounds like you are under the impression that you can't file a Chap 7 if your income is above median. That is not the case. You can pass the means test even if your income is above median. You should find out if you can pass the means test and file a Chap 7 if you can.

Is there anything I am missing regarding jeopardizing our home while filing chapter 13 for our unsecured debts?

I think DMC-2008 must have misread your post and thought you were behind in payments. Whether you are filing Chap 7 or 13, if you are current on payments and don't have non-exempt equity, your home will not be jeopardized as long as you can continue to make payments. In a Chap 13, you can be behind in payments and have non exempt equity and still keep your home if you have enough DMI to pay the arrears while keeping up the regular payments and also pay to your creditors at least the value of the non-exempt equity during the life of the plan. Doesn't sound like you need to worry about that.

[dmc-2008]

LITR is correct I misunderstood, sorry! :-(

[Mummy22boys]

We borrowed from our 401 k long before filing chapter 13. We thought that was the best route. DO NOT DO IT!!! We landed ourselves right back where we were before and had to file th chapter 13 anyways. So we are now still paying that 401 K loan back and now making $700 a month payments to the trustee. Leave the 491 k alone.