Decision to enter Chapter for asset protection

[creditnewbie]

I retired in Oct 2009, in Oct 2011 I was felled by a catastrophic health issue. Subsequent surgery and recovery was completed Jun 2012. I acquired $11,000+ (a result of overlapping deductibles for 2 concurrent years) I was unable to meet my monthly obligations. In Nov 2012 after struggling, I found I had over $20,000+ in unsecured (credit card) debt, a (chattel) secured personal loan with a balance of $7,800+ and two auto loans with a combined balance of $12,500+. I also had combined tax liens of $2,500+ ($2000 to IRS, $500 to state), and $1,800+ in misc smaller debt owed to various creditors. Total indebtedness was $42,800+.

I made the decision reluctantly to default on my unsecured debt and concentrate on the tax liens, medical exp, secured chattel, auto loans & the misc small debts. I tried to work within my budget in the beginning, I called all my unsecured accounts and asked for lower interest rates and hopefully a reduction of principal but none were receptive except one. I now owe a total of $15,703 to the 6 unsecured credit card accounts, the last statements dated in Mar - May 2013 show a balance owed of $17,468, I have eliminated (paid off) all the other debt.

I have no credit cards, loans or other debt, only my credit union debit card. I just want to clear up the outstanding unsecured debts. There have been no judgements awarded, I receive garnish protected income and I'm 'collection proof', no assets, savings, or life insurance. I did sent all previous DV's and C&D's CMRRR. I'm now in a better position to pay these accounts with reasonable fees and interest but because of the time lapse and legal considerations I need professional help and financial protection through a chapter 13. I have a meeting with my lawyer on 04/20/2015 and hopefully be filing very soon.

My questions:

Will they use original amount at default time or the final amount showing on the last available statements?
Does the trustee negotiate for a lower principal and a reasonable interest rate?
What usually is a ball park figure for interest rate?
Will I have a choice of length (I can do 3 but 5 is better) since I'm not concerned about my CR or FICO score?
Can you make balloon payments once a year (tax refund)?
If yes, do you make a modification to original terms?

[May2014]

Have you been to the Chapter 13 Trustee's website for your area? Mine has the interest rate (currently 4.75%) listed on the main page.

Your plan will dictate how your tax refund is handled. We get to keep anything up to $1500, after that we pay half. We also must pay half of all bonuses. These payments increase our plan base, meaning that by the end of 5 years, we will pay more into the plan than was initially slated and unsecured creditors will get more money.

That's all I can really answer...

[LadyInTheRed]

Your debt amounts included in your BK are the principal balance plus all accrued interest and penatlies as of the date you file. After the filing date, no further interest is paid on unsecured debt. Secured creditors are paid interest. Your attorney will know what rate is used in your area, if not the originally contracted interest rate.

The minimum length of your plan is called the "commitment period." If your gross annual income is above median for your state and household size, your commitment period is 60 months. If your income is below median, your commitment period is 36 months. If your commitment period is 36 months and you have minimum amounts that must be paid in your plan such as tax debt, arrears on secured debt or non-exempt assets you must pay for, then you can propose a longer plan in order to make the payment management. But, the plan can not be longer than 60 months. Regardless of your committment period, your plan will end if you pay 100% of allowed creditors' claims, trustee fees and any attorney fees included in the plan.

You say that you are collection proof, but that you need to protect assets. Those statements seem inconsistent. What assets are you trying to protect? Are you sure a Chap 7 is not a better option?

ETA: I have trouble posting links on the device I am on, but to find out median income for your state and household size google "US Trustee means testing information"