Opinions wanted on chapter 13 plan proposal

[jal1129]

I have been down the bad renters road myself. We filed chapter 13 about 15 years ago due to bad renters.

[daisey]

It seems like they have more rights to our property then we do. The home owners association is making things tough on us too, they nit pick us and the renters to death. If it were me I wouldnt want to stay lol. But these renters take it and try to make the POA mad. I see where Samantha wrote if we file bankruptcy before they forclose that they cannot seek a difficient balance...........if this is true them my worries are over. That is my only concern left with this case for the most part. Our lawyer says we are set unless they seek one...........I am praying that Samantha is right. Come on ya all pray with me..........we can also pray that the idiots who made these inpossible laws find themselves victim to them as well. Of course don't get me wrong it is not just bad renters alone and idiots in congress who put me here it was our decisions to stretch our credit to the max. Live and Learn and and do what you can to right the wrongs you have done.......what more can they want.

[AMISLANDER]

There really is some benefit for a chapter 13. Even people with decent income can get over there heads, have business that fail, investments that go belly-up etc. Or they have a decrease in income but still make more than would allow them to file Chapter 7. A chapter 13 puts YOU back in control of your creditors. In most chapter 13 plans, even 100% payback, interest stops accruing on the principal (that is huge, when you consider the default interest rates on credit cards are 30%).

In the end, chapter 7 is for the truly broke, chapter 13 is for those that have had set-backs. Chapter 13 is more a financial management tool.

Gotcha! I am the truly broke!

[AMISLANDER]

Chapter 13 is the wage-earner's bankruptcy plan. First, not everyone pays back 100% to their creditors - it's typical to pay back a lower percentage than that. Second, frequently not every creditor asks to be paid back through the Ch 13 plan - they just write off the filer's debt and move on - so those debts are completely wiped out. Ch 13 allows assets to be kept that aren't possible to keep in a Ch 7, and also you can be in arrears on asset payments in Ch 13 and still keep the asset when you file - again unlike Ch 7 where you have to be current on payments to file. Lastly, you can pay your lawyer a partial payment and still file because the full retainer is paid through the plan as a priority.

Again, Ch 13 isn't for everyone, but when it's right for a filer's personal financial situation, it can stop a home foreclosure and also stop creditor and collector harrassment in its tracks as effectively as a Ch 7.

gotcha! you both explain it much better than my bk attorney ever did...he just wanted me in the 13, adding my boyfriend's income and I stopped that one real fast....from the experience of other's from this site!

[SamanthaJones]

Daisey- I now recall why it's better to file BK before foreclosing.

Because if they foreclose before you file, you can get a 1099 for the balance of the loan the lender lost- and that's taxable income, and you cannot discharge taxes unless they are three years old, and other criteria. Anyway, that's what I recall- before I get to the point of BK I will certainly be well-prepared for any eventuality, thanks to this site.

[AreSoonParted]

1099 on a property

I sort of got a little lost on this thread, but thought I'd through this in. I had my previous home get bought right before foreclosure. To complete the sale I had to sign a promisory note for 35k with the Mortgage Insurance company. I also got 1099'd for 56k. My heart almost stopped when I added this into my income...seems like I was getting slammed twice.

Anyhow, I went to a CPA for my taxes and he determined I was insolvent (Note... I still have not filed bk and am current with my CC's) because of my debts and no real assets.. So I didn't have to pay taxes on the 56k for the 1099.

Don't know if this is a realistic option, but I thought I'd throw it out my experience... I'm probably still going to file for a bk at some point, mainly due to the cc debt I accumulated trying to keep the above mentioned house out of foreclosure.

Good Luck

[no_it_all]

Second, frequently not every creditor asks to be paid back through the Ch 13 plan - they just write off the filer's debt and move on - so those debts are completely wiped out.

Am I reading this right? Why on earth would a creditor tell the trustee that they don't want to be paid?

[HHM]

Am I reading this right? Why on earth would a creditor tell the trustee that they don't want to be paid?

There are several reasons creditors end up not filing proof of claims but it has nothing to do with not wanting your money...

For some, it is because the creditor is a large bureaucracy and frankly information about the BK does not get to the right people at the right time. Second, and I think the main reason not everyone files a POC is, to file a proof of claim, you have to be an authorized user of PACER in each district (proof of claims have to be e-filed like any other document), for smaller creditors, that is not cost effective. Sometimes it is the fact that the bank you think has your card merely "services" the account and they are not the actually creditor, and the servicer merely lets the account go. In any event, the reasons some creditors do not file proof of claim is that, in the grand scheme of things, it is not cost effective for them to do so).

Because if they foreclose before you file, you can get a 1099 for the balance of the loan the lender lost- and that's taxable income, and you cannot discharge taxes unless they are three years old, and other criteria. Anyway, that's what I recall- before I get to the point of BK I will certainly be well-prepared for any eventuality, thanks to this site.

Samantha, that information is not entirely accurate. First, in most states, mortgage holders (on a persons primary residence) are generally forbidden by state law to seek a deficiency balance. Second, even if a mortgage holder is allowed to seek a deficiency balance, you only get 1099'd on "forgiven debt" not on loses by a creditor. If you were correct, that would mean that any time a creditor "charged off" a balance (i.e. stated it as a loss for corporate income tax purposes), then a consumer would be 1099'd, but that is simply not the case. Moreover, generally speaking, to give rise to "forgiven debt" tax liability, there needs to be a mutual agreement between the creditor and debtor that the debt is forgiven (i.e. settled), you generally don't get "one side" settlements. Finally, even after all that, must people that would be hit with forgiven debt tax liability can usually get around paying it by claiming insolvency with the IRS. If you qualify as insolvent under IRS guidelines, you do not pay income tax on forgiven debt.

[SinkingFast]

(And so far all of them have been lackadaisical with details, and left me absolutely untrusting of their ability. I am going it alone, if BK must happen down the road!)

You're having a bad opinion of BK attnys during your Consults is partly due to unrealistic expectations. You think the attnys are gonna run the Means Test and tell you everything about how they intend to proceed??? It ain't gonna happen.

http://www.bankruptcyforum.com/showt...ion+means+test

Read Post #6 of that thread. You'll get an attny's prospective of what a Consultation is and isn't.

[SamanthaJones]

No sinkingfast.

When a lawyer tells me I need a CH13, when I have no job? He's trying to steal from me, or he's totally incompetent. I don't ask anyone to do anything for me, until I know how to do it myself. (Another lawyer told me 'you can choose any house you want to claim homestead on- you don't have to be living in it.). Sure. I WANT to throw 1000's at that type of representation. You may think using a lawyer is the only option- but you need to stop forcing that on other people that have realized it can be done solo. How many folks in here, after the 341 and then nothing happened....would not have liked to have the $2000 back they paid a lawyer? THAT would be a sweet new beginning, eh?

[SinkingFast]

You just need to keep Consulting with attnys then.

If you had been here last spring, you would have read the woes were having finding an attny.

We walk in, below the Median for our State, and attny after attny was trying to push us into Ch 13??!!

One guy said he could annualize forward payments we were supposed to make on a house we were giving up. Turns out, other attnys thought the same thing, and that arguement has been fought out in BK Court. Contractually liable payments being annualized forward even tho the property is being surrendered.

We'd researched enough we could have probably filed Pro Se successfully. But ours wasn't a straightforward, no asset, Ch 7.

We had to use Out of State Exemptions.

And our choices for Trustees,.............. Well let's just say that's a laugh! One younger, unmarried woman who doesn't know that families with small children have different expenses than families with teenagers. And a stern, old man, who's made a minor fortune for himself and his family off the backs of debtors.

We would have been insane to go into that tempest in a tea pot without a well respected attny at our side.

You're wanting to file Pro Se and you own Rental properties, from what I've gathered from your other posts.

What looks to you like $2K spent because nothing happened in our case, (( so far, we aren't closed yet )) could have well been the best $2K we ever spent in our lives.

You want to walk into the Lion's Den unarmed,........... Well then I say,........ Good Luck to you!

[JollyGG]

You may think using a lawyer is the only option- but you need to stop forcing that on other people that have realized it can be done solo. How many folks in here, after the 341 and then nothing happened....would not have liked to have the $2000 back they paid a lawyer? THAT would be a sweet new beginning, eh?

Actually I have never seen SinkingFast force her ideas on anyone. She is a knowledgeable contributor who has done her research.

Some of us here have used lawyers and some have gone prose. This site is a great resource for both groups of people wanting to educate themselves.
People are simply repeatedly pointing out to you that there are major pitfalls to going prose. Some find it to be worth the risks and are happy they did so. Some run into major problems. Others use a lawyer and are happy they did even when they have a simple BK where nothing happened. We each must find our own path through bankruptcy.

It seems strange to me that you have managed to find 3 incompetent lawyers as most members of this forums experience would lead me to believe that while there are incompetent and greedy lawyers they are not all that way. It is wondered if you simply don't want to hear what the lawyers have to say so have convinced yourself that you know better. I hope this is not the case and I hope that your prose case is painless and easy. You seem to be working very hard to educate yourself through this process

[jal1129]

Speaking only for myself, if I pay the money to the lawyer and then have a completely smooth sailing bk where nothing happens I would consider that money well spent!

[ChainSmokin]

Samantha,

I hope you share your pro se experience with the forum, I got a feeling it would be very educational.

[BKTango]

I'm curious...Samantha you have not filed BK yet, have you done your pre bk counseling?

Of course you would know this has to be done before you can file, IF you file. But I am more or less curious as to have you considered consulting with them over your options? You seem to have had a bad experience with every lawyer you have visited and I am sure that is quite disheartening, but this is no joke, nor something you want to go into without the benefit of SERIOUS knowledge. Going to a court/DOJ approved counselor will do several things for you. 1. They will look at your income/expenses and give you idea of what your options are. 2. They will more or less give you a "second" opinion on what would be a good option for you. If they say something completely different...i.e. you don't have funds to pay for debt services or ch. 13. then yes, the lawyers may have been mistaken. If in fact they say you do have too much income and it will be considered for a chapter 13, then JollyGG is correct in saying you are hearing what you don't want to hear.

I would suggest if you haven't considered doing this to do it. We are all here speaking from personal experiences, we have mostly all already filed or have already been through the whole BK process. We are by no means pushing our experiences and ideas onto people, it's a take it as you want it situation as is life. But I can tell you, unless you are a straight CH 7 no assets, it is far more difficult to file pro se, not saying it can't be done. But it will be a challenge to get every i dotted and every t crossed and keep your ducks in a row, otherwise the big bad trustee comes a knockin'.

Whatever you do, I hope you become very informed about this whole process and good luck to you on your case. What we have all gone through and others are starting is a very difficult thing to have to face and own up to. It's a life changing situation for most. I have learned far more about BK and debt collection than I will ever need to know, but the life lessons I learned from this, are far more valuable. Sometimes that's what most people need to learn the most.