Freaking out! Literally!

[tic1975]

I am two Xanax in for the evening. Our bankruptcy cannot be put into a 7. I half expected this, so it's no real shock. With that being said, I cannot help but freak out that in a 13 we will have nothing to live on. I am almost in tears (and will be once my little one and hubby go to bed) because Easter is so close and I don't know if I will have the money for an Easter basket. I can't live with the depression of me growing up in poverty (not poor, poverty) and now my daughter will have the same fate. I am trying to tell myself it will be ok, but I am having such a hard time believing it. My daughter is so excited to go camping this summer, I don't have the heart to tell her we will no longer have our camper. We have gone every year since since she was born. I see no light at the end of the tunnel...

[justbroke]

Bankruptcy is certainly stressful and being in a Chapter 13 is no walk in the park. Take it from someone who has been there and done that. Having wrote what I just wrote, it should not be so stressful. A lot of the issues that people actually have with a Chapter 13, is that there are people who can't or refuse to budget.

Until you know what your actual payment will include and how that affects what you typically budget, there is absolutely no reason to freak out. In fact, a Chapter 13 budget, if done by the right attorney, can be so flexible, that you may not even realize you're in a Chapter 13. Seriously! A well planned budget includes things for food, clothing, shelter and the like. You can even keep that camper if you can afford to pay at least the "non-exempt" value of that camper to your unsecured creditors. There are so many factors that go into the "magic number" -- the disposable monthly income (DMI) and the payment to the Trustee -- that it confounds even the most tenured legal professionals. (I'm saying that even bankruptcy attorneys are confounded at times.)

A really good attorney will make sure you have a really good budget. Most of the numbers are fixed and come from the United States Trustee Program (USTP) as set by law. Let's give you some ideas!

• National Food and Clothing allowance for three persons: $1,249. Includes;
  • $660 - Food
  • $209 - Apparel and Services
  • $251 - Mischellaneous
  • $ 65 - Household Supplies
  • $ 61 - Personal Care
• Vehicle "Ownership" Allowance : $517 per car
• Vehicle "Maintenance" Allowance: $262 per car
• Non-Rent/Non-Mortgage Expense (e.g. Heat/Electricity/Water): $500-$600+ a month (depending on county)

If you're over-the-median, the vehicle allowances are nice because you literally keep the difference in your budget. For example, your car ends up being $300/month. That $217/month is in your budget (the difference between the allowance and the car payment). (I'm speaking very generally as some Districts will also look at your actual budget on Schedule I and Schedule J.)

What I'm trying to show is that if this is done right, you can have as much as several hundred dollars in buffer in your budget. You just need to save that buffer for either a rainy day or to build a strong savings account.

As for the camper, did you attorney say "no camper", or have you come to realize that you just can't afford the camper?

[tic1975]

A previous attorney said unless we pay 100% back! the camper would be disposable income and we wouldn't be able to keep it

[justbroke]

A previous attorney said unless we pay 100% back! the camper would be disposable income and we wouldn't be able to keep it

Was that just on a consult? Your current attorney will need to look at the numbers. There is something known as the Chapter 7 liquidation test. It goes something like this. The minimum amount paid to the Chapter 13 unsecured creditors must be as much as they would have received if you filed Chapter 7 and your non-exempt assets were liquidated. It's a complex test and without plugging in ALL your numbers and exemptions, you can't just guess at whether you would need to pay "100%" back. Most attorneys, during a consult, may say that you "may" need to pay 100% back. Without doing the liquidation test (also known as the "best interest of creditors" test), there is no way anyone could predict a 100% payback plan.

For example. Say you make $70,000 a year. Say you owe the IRS $50,000. Say that you owe unsecured creditors about $10,000. Say that you own a home and the camper. You have no equity in the home, but you own the camper outright and have $6,000 equity in the camper. With that scenario, you may not need to be in a 100% plan because you kept the camper. The fact is that the IRS is a priority "unsecured" creditor. They would be paid first in a Chapter 7, so your "liquidation" test would show that you had no money left after "liquidating" your property (the camper) since $50,000 - $6,000 = (negative) $44K. That means that you are not "required" to pay 100% according to the liquidation/best interest test.

Now, you may just have enough disposable income (DMI) to pay the $10,000 of creditors since that's only $166.67/month in a 60-month plan (5 year plan). But, I can't speculate or even tell you what your DMI would be. This is why you would sit down with your new attorney and review all the numbers. You can ask them how the numbers would work "IF" you wanted to keep the camper. In fact, most people in Chapter 13s keep all their property.

So, don't panic even if you have to give up the camper. Property comes and goes, but family is forever. (Are you still making payments on the camper?)

(Let me just add this. Now, if your means test shows that you'll payback 0% and you're keeping the camper, expect the Trustee to make some noise. They like to see the unsecured creditors to get some dividend when you're keeping property which is "not necessary for 'your' reorganization". You throw them a bone and see if they take it and walk away. I do not condone and I don't encourage keeping things that you can not afford.)

[dmc-2008]

Take a deep breath and go ahead and cry, it's a healthy response and you do not want to internalize that stress and make yourself sick! Put one foot in front of the other, do the best you can!

[LadyInTheRed]

I don't have a lot to add to the excellent informtion Justbroke has given.

I want to stress the part about the possibility that in a well drafted plan by a good attorney, you very well may not even notice you are in a Chap 13. I have one more payment in my 5 year plan. If it weren't for my participation in this forum, bankruptcy would have been the furthest thing from my mind most of the time. In fact, there were a couple of times that this board is what reminded me to make a payment! I had more cash to spend after I filed. That's not to say that things weren't tough at times. I had to get in the habit of spending as little as possible to build a savings sicne i couldn't just pull out a credit cards when things got tight! Those habits will serve me well in the future and help keep me from getting into debt again.

Don't panic based on what a former attorney without all of the details of your situation told you. In fact, don't panic even if you have to give up the camper. Tent camping is a lot of fun too! Getting a fresh start includes making adjustments to your lifestyle so that you can live within your means. Doing without a camper seems like a relatively easy adjustment. I loved camping as a kid, and still do, and have never had a camper. In fact we often just slept under the stars. Your daughter will be fine, as long as you don't let her get the idea, through your own attitude, that everything is terrible and your financial lives have come to an end. Your daughter's financial future is not up to fate. Teach her how to save and that you have to save to have and do the things you want. Help her learn from your experiences.

If your attorney tells you that you have to give up the camper, ask if it is okay to sell the camper before filing (to a third party at market value) and spend a few hundred dollars on some camping gear. It will be a lot easier to meet the Chap 7 liquidation test because of non-exempt camping gear then a more valuable camper.

[BriOS]

I don't have a lot to add to the excellent informtion Justbroke has given.

I want to stress the part about the possibility that in a well drafted plan by a good attorney, you very well may not even notice you are in a Chap 13. I have one more payment in my 5 year plan. If it weren't for my participation in this forum, bankruptcy would have been the furthest thing from my mind most of the time. In fact, there were a couple of times that this board is what reminded me to make a payment! I had more cash to spend after I filed. That's not to say that things weren't tough at times. I had to get in the habit of spending as little as possible to build a savings sicne i couldn't just pull out a credit cards when things got tight! Those habits will serve me well in the future and help keep me from getting into debt again.

Don't panic based on what a former attorney without all of the details of your situation told you. In fact, don't panic even if you have to give up the camper. Tent camping is a lot of fun too! Getting a fresh start includes making adjustments to your lifestyle so that you can live within your means. Doing without a camper seems like a relatively easy adjustment. I loved camping as a kid, and still do, and have never had a camper. In fact we often just slept under the stars. Your daughter will be fine, as long as you don't let her get the idea, through your own attitude, that everything is terrible and your financial lives have come to an end. Your daughter's financial future is not up to fate. Teach her how to save and that you have to save to have and do the things you want. Help her learn from your experiences.

If your attorney tells you that you have to give up the camper, ask if it is okay to sell the camper before filing (to a third party at market value) and spend a few hundred dollars on some camping gear. It will be a lot easier to meet the Chap 7 liquidation test because of non-exempt camping gear then a more valuable camper.

Read again what I quoted, specifically the bolded part.

[BNKRPTinNC]

Being from a different state, rules aren't the same. In our situation we had a (2003) fifth wheel that I thought for sure was going to have to give up. Owed $12k on it at the time. After all was said and done, bank settled for $8k and was paid thru the plan and we ended up in a 14% payback. So who knows.

No doubt the first year was the hardest for most and our 13 started just before Xmas. Keep your chin up and know that there are plenty on this forum pulling for your success. A year and half post completion and life is good.

[Pandora]

we've all been in the "freak out" mode when we were in the beginning stages - hang in there! Agree with JB and the others...until you sit down and actually fill out paperwork, you really wont know. Ch. 13 isnt meant to be punitive, is it hard? yes...will it test you to the limits? Absolutely. Is it doable? Yep, but it takes some budgeting skill and determination. If you've never learned how to budget, thats the first thing you MUST learn to do hands-down. If you can't do that, you will fail.

There are many many many (can't repeat that word enough ) MANY ;0) topics on this forum over the past 5 years I've been on here on how to save money, thrifty articles, couponing, etc while in a Ch. 13. You can search for them and start to read and get some tips and tricks of the trade. Number 1 - coupons. To answer your concern about Easter Baskets - you can do a very elaborate (and filled to the hilt) basket for your daughter for less than $10 if you go to Walmart and get their boxes of .98 cent candy (the kind that cost you $4 at the movie theater and are name brand). Thats a start - then use home-made coupons for other things: mom / daughter mani-pedi at home day; hair day, silly day, etc. Doesn't cost a thing but your time (which most kids would take over $ any day). Start thinking outside the box.

As far as the camper goes thats not a lost cause either. We got to keep ours, although it was paid off, we were afraid they'd take it (Ch. 7 test applied) to pay creditors, however they didn't. If they do, then you figure it out as you go - tents arent that bad either . Your daughter will adjust and you'll be better off in the long run - you'll also be teaching her money skills in the process if you do it all correctly and that material things arent that important in the big picture.

Take a deep breath... you'll be okay.

[dmc-2008]

99 cent store is a great way to make it work! If you embarrased, just take your own bags. But there is no shame in being a smart shopper!

[justbroke]

I make 3x the median income in my state. I go to the Dollar Store and Five Below myself. There's no need to be embarrassed; no need for stealth mode. I have never liked paying full price, with a limited exception for electronics. I actually like buying distressed products (or products that are no longer in style) from retailers like Big Lots.

[LadyInTheRed]

99 cent store is a great way to make it work! If you embarrased, just take your own bags. But there is no shame in being a smart shopper!

There's no need to be embarrassed; no need for stealth mode. I have never liked paying full price, with a limited exception for electronics.

LOL. I was on the elevator with a co-worker this morning who was carrying a Whole Foods bag. Somebody else said to him in a judgmental tone "Whole Foods, huh." My co-worker just said "Yeah." And the guy went onto say that they were owned by Safeway and my coworker said he didn't think that was true and the guy insisted it was. As he got off the elevator he said "produce at the farmers' market is better anyway." My coworker agreed and told him that he doesn't buy produce at Whole Foods, he buys cheese and meat. We laughed at the guy and talked about how we thought he was wrong about the ownership by Safeway, but that there was no point in arguing about it because he was so certain he was right. I checked later and he was wrong. I'm not sure why we are supposed to care even if it is true. They are both large chains.

The point is, people who want to judge people will find something to judge you about, whether it is for being a smart bargain shopper at Dollar Store or paying the high prices at Whole Foods, sometimes for higher quality, but also sometimes for the exact same products that you can get cheaper elsewhere. Stop worrying about what people like that think.

[dmc-2008]

Big lots rock!! My furn is torn to piece by my fur baby, its my fault, i was horrble about clipping her claws! Anyhoo, they have a couch on sale for 299.00 and i am gonna go get it this weekend. Also gonna try to find a 20% off coup. I love all the discount stores!

If my cat trashes (i have to keep her clipped) but if she does, its not a 1000.00 couch! I will still be mad at myself, but not at a huge cost.

[dmc-2008]

Changed my mind on furniture, car air conditioner needs repair first!

OP, you just learn to adapt!

How are you?

[switch625]

Big lots rock!! My furn is torn to piece by my fur baby, its my fault, i was horrble about clipping her claws! Anyhoo, they have a couch on sale for 299.00 and i am gonna go get it this weekend.

I am tempted weekly by that Big Lot ad because our sofa needs to be kicked to the curb yesterday, ruined by two kids and the dog.

My wife is an aggressive couponer and has score some great deals and really cut the grocery bill. I just recently filled up the SUV (20 gal) tank for free because of gas point purcashes at our store. The key is to buy what you need, don't do it for the deal itself. Don't be like the extreme couponers show where that have a basement stuffed with a five-years supply of toilet paper and laundry detergent!