Lawyer Meeting at Noon; Any last Tips?

[SMinGA]

One thought that might help you feel better about the possibility of a ch. 13... Its in the trustee's best interest to NOT put you in a position where you can't afford to live. The trustee keeps 5-10% of your payment (varies by district) as a fee to administer the plan. So while the trustee makes money off of a plan, they don't make much off of a plan that is doomed to fail.

[LALADY]

The 401k loan repayment does count in the means test if it is mandatory that you repay the loan as long as you are employed.

I know people think I am nuts because I keep repeating myself here. BUT my case has moved from motion for dismissal or conversion to 13 to "awaiting dismissal" in Chapter 7 because this attorney (and I've had a few now) knew what to do with significant 401k loan repayments. Was it worth paying close to $$$$$ to fight this? You bet. I can repay myself over $40K and stay employed, and not have to worry about being canned because of defaulting on the loan in a Chapter 13 because I could not pay myself back 100% and pay the creditors back 100%.

I'd like to say I'm in the 60 day club since pacer says "awaiting dismissal." I'll just wait to see the words "dismissed" before celebrating.

[andysmom]

Hi Lalady,
I don't think his is mandatory for employment because they are allowed to make withdrawls from their 401k's and on his statement is something about if you default or stop making payments, it'll be treated as a withdrawl with taxes& penalities. There was nothing about being left go for not paying it.

[LALADY]

Hi there!

So does mine, andysmom. That's why, when I was in my 341 and the UST specifically asked is it mandatory to pay your 401k back if you are employed (remember I am over median), I said I don't think so. Low and behold down the road I learn, it is mandatory.

He really should ask the question to his employer (the one who runs the 401k because that's whose letter and Declaration to the Court will be required) before you file anything: Can I take a hardship default on my loan because I think I am going to lose my house." See what they say. That's what I ultimately had to do, after the motion to dismiss was filed. Thank heaven my attorney forced me to ask the question -- even though I was so humiliated and embarrassed. I posted the IRS language somewhere here, but it's on the IRS website.

Withdrawals and loan repayments are two completely different animals.

It's cost me SO much not having been advised of this upfront by my first attorney. But the outcome having paid all these $$$$$ for someone who knows what they are doing is going to be my Godsend, I tell you.

Good luck in any route you end up taking!

[Mensa1]

... when I was in my 341 and the UST specifically asked is it mandatory to pay your 401k back if you are employed (remember I am over median), I said I don't think so. Low and behold down the road I learn, it is mandatory.

When askled a question by the TT, and you don't KNOW the correct answer it as advised that you state clearly: "I dont know hte answer to that question". Nothing wrong with not being sure and the TT can certainly check out those area of questions later or request docs to clear up the issue as a stipulation.

Not killing you over this LALADY, just stating for those following along at home that there is not a thing wrong with NOT knowing the answer to a Q.

[andysmom]

Honestly, even if the 401k loan reapyment is figured into the means test, I still think we would fail it and be a chapter 13. Our expenses are low & (low mortgage & no car payments or secured payments) and our income is pretty good. I do believe we have the ability to pay back some of our debt just not all of it and not at the ridiculous interest rates & terms the credit card companies are demanding.
Although I would rather a 7 and be done with it, I do believe that won't be our case & though it scares me to death to think of being involved with a trustee for 5 years, I don't think we really have any other options as there is no way we can pay all this off on our own.

[newbie2]

andysmom, don't panic if you are put into a 13 plan. You really have very little (if none) interaction with the trustee through the plan as long as you make your payments on time.

[andysmom]

Thanks newbie2! that's good to hear. That's one of my main concerns: one is i'm dying to get an idea as to what the payment would be & if it is doable (don't think there's any other choice anyways- but just want to know what to expect) and how much interaction there is in "life" with a trustee as long as you make your payment every month, how else do you have to interact or answer to a trustee?

[LALADY]

I know now, Mensa. As I previously stated, I initially thought my first attorney was great. Come to learn that first impressions, even working with the attorney after that first impression, can be quite deceiving.

Andysmom, My mortgage payment is low, have no car payment, no secured payments, only HIGH credit card debt. I was specifically told to convert to Chapter 13, unless I can pay the 401k repayments back 100% and my unsecured creditors back 100% (plus of course keep on top of the mortgage payment) (again, remember I am over median), I could not pay myself (401k loan) back 100% which would mean default under the 401 (which means being canned). Also, I was told in a Chapter 13, the trustee must pay the 401k back, not your payroll deduction, and the trustee gets 10% of whatever that payment is back to the 401k. These are questions you should ask your prospective attorneys. I would hate for you to find yourself in the situation I was in.