What to do?

[owoody]

We are at our wits end and can`t see our lawyer until the 20th ,so I turn to the next best thing..You guys!
We are in Oregon and make 80,000. a year and a family of 2.We were going to do a ch 13 and have quit paying our C.C`s as instructed by lawyer 2 months ago..She said the payment would be app. 1500.00 monthly.We have not filed yet . Yesterday I learned I will be losing 1 of my jobs that pays $2500.00 a month at the end of the year.Im self employed ..Now what? File 13 now and then change it later or wait.The only problem with waiting is We are worried about getting sued before then.
I also have a car that is paid for and KBB says its worth $8000.Its worth about $6000 since 1 seat is ripped and the paint is not the best. Can I sell it now and pay the IRS or is that a No No? If I keep it will they make me pay to keep it since our exemptions don`t cover it the $8000. Yes,we owe the Irs and know they won`t be covered in a 7.
We were also going to keep our house in the 13,but without the $ 2500.,we cannot afford it.If we are going to give it up then when do we stop paying on it?
Sorry for so many questions Thanks so much

[DEBTCHAINS]

Just a couple things I can add, others with more experience can help out more with the rest.
Personally, I would wait. Do not worry about being sued by CC companies. They are buried in backlog right now. If you've stopped paying for 2 months, I'd bet you have at least 6 months to a year before you even start seeing anything. First, you'll get collection letters. Then, you'll get offers from the CC companies to settle. Don't! Just turn off your phone or get caller ID and don't pick up. That's the most annoying part of this process when you first start. You DO NOT have to worry about being sued until you are PHYSICALLY served with papers. You're FAR from that right now.

Is your house worth anything? I would stop paying it. If you're going to lose your income, you may be eligible for a refi with better terms, especially if you've lost income and are upside down. It's in the banks interest to keep you there. If you don't care if you lose it, and it's underwater, you might get to live in it rent free for up to a year while the mortgage company figures everything out. It's a mess right now in that industry, I have a friend who lived in his condo for 16 months without paying a dime before he finally had to leave.

Do you guys qualify for a 7? Have you looked into that? We did a CH 7 and kept our house. There's a lot of options.

I was in your shoes not long ago. Keep calm, and know everything isn't as bleak as it seems. I can't stress enough, do not stress over being sued, you have plenty of time to get things rolling before worrying about that. I was served by Citibank after about 11 months, and at that point, I hired a lawyer, got filed, and it was still close to 45 days after being served. I didn't even show up to court to dispute it within the 30 days, the lawyer said to not worry about it. Never had to bother with it, it's a done deal now.

[owoody]

Thanks alot for the Info.
Worried about the IRS since we called them and told them we were filing a 13 and they told us not to pay right now then. They then sent us a Notice of Intent to Levy cause we hadn`t paid.We called them again and after an hour of talking to them,they said they would send all paperwork to another Dept. Haven`t heard anything again .Waiting and worrying.Thats why I was thinking of selling my car and just paying them.
As far as the house goes,we don`t care if we keep it since its underwater by $25000. and we pay $1500 a month which there is no way we can do that after the paycut of $2500.
After January when my income drops,we will qualify for a 7,but what about the 6 month lookback? Any problem there?
Thanks again

[SMinGA]

If you decide to let the house go - then stop paying the mortgage. Use that $ to save for deposit on a rental, and investigate your state's foreclosure process to figure out how long you'll have in the home.

Losing $2,500/mo income will change your finances in a major way. It does not seem wise to go into a ch. 13 knowing that in a few short months things will change so much. The $1,500/mo estimate was based on your finances as of NOW. Income & expenses. You know your income will change, and if you move your housing/utilities/etc. will change also. Start researching rentals - to get an idea of what you'll be paying in rent. You can get a ballpark estimate to see where your new DMI will be once all the dust settles.

Selling the car to pay the IRS: probably not a problem. Just sell it for market value, don't 'sell' it to a friend for $500 if its worth $6,000. Using funds to pay the IRS is not likely to be a problem, since they would be a priority creditor anyhow.

[SMinGA]

ps-the credit cards are not likely to do anything quickly, and if/when they do act you would have weeks if not months before they could obtain a judgment. Rushing into bankruptcy now when your income/expenses are unstable could be more trouble than its worth.

Once you know how your finances will be after it all settles - you can then figure out the 7 vs. 13 question.

[DEBTCHAINS]

Once you file, NOBODY can attempt to collect debt from you, even the IRS. You can't get away from the IRS, eventually you have to pay. But, in during the BK process, you'll get a few months break from paying them. By law, they can't ask you for money during this period. If you choose, you can send them payments.
They do look back and use your income from 6 months back, so that could be an issue. You could ask your lawyer about starting a 13, and then what the costs would be to just file CH 7 when you qualify. People do that too. Your lawyer should give you this info and what he/she thinks is best.
If you don't care about the house, stop paying immediately. Save every damn penny you can. It'll be a couple months before the mortgage company starts to "attempt" to work with you.... and they probably will. That process, trying to refi or whatever, could take 6 months to a year, and I'm not kidding. If that doesn't work out, just don't pay anything until they boot you, and that could take up to a year. You can save a lot of money during that span.

BTW, my experience with the IRS has been great. They do work with you. They're easier to deal with than any CC company or mortgage company. Just keep in contact and be honest about everything going on, and let them know what you can and can't do. Bottom line, they're gonna get their money, but they're really pretty understanding. Have been for me anyway.

[DEBTCHAINS]

double post

[DEBTCHAINS]

ps-the credit cards are not likely to do anything quickly, and if/when they do act you would have weeks if not months before they could obtain a judgment. Rushing into bankruptcy now when your income/expenses are unstable could be more trouble than its worth.

Once you know how your finances will be after it all settles - you can then figure out the 7 vs. 13 question.

This is the short version of what I was trying to say. Stop paying everything, and relax. You have time.

[researchnerd]

If you decide to let the house go - then stop paying the mortgage. Use that $ to save for deposit on a rental, and investigate your state's foreclosure process to figure out how long you'll have in the home.

This is really, really important. I agree with everyone who says stop paying your mortgage, but you need to know how long you have in your house in order to plan for your move. In some states there are a lot of protections in place and you could have a year or more. In others, it's much sooner. In our case (GA) we were scheduled for foreclosure exactly five months after we missed the first payment.

[owoody]

Thanks again everyone....I agree with everyone else that says this Forum and the People on here are sanity savers


Been trying to work with the Irs and playing the waiting game is the worst.Guess we should have never told them we were going to file and just made payment arraignments.... I thought about using the mortage payment to pay them too while we still have the higher income if they will accept it.....I`ll do some research on the time frame for a foreclosure.


I`m worried about the 6 month income lookback and thats why I thought about starting the 13,but it seems like such a hassle when I know for sure that we will have to convert.We wont have any dmi with my new income and will be in the hole.

Did a quick check on rentals yesterday and can rent a decent house for $700 or $800 ,but can suffer along with an apt if we have too.We are lucky that our kids are all grown so we don`t have to worry about them like alot of people on here do.

As I said earlier,We had been planning for a 13 and have read so many hours on here to prepare and now I must start again learning the 7.It has been so much help that I can`t Thank You enough.....

[owoody]

If we are going to give up the house and stop making the payment then what would I list on the means test to see if its a 7 or 13? The $1500 house payment or the oregon standard for rent which is $700?
I also thought if I sell my car now to pay the IRS wouldn`t I lose a deduction for it? I could always sell it later........

[scorpion35]

If we are going to give up the house and stop making the payment then what would I list on the means test to see if its a 7 or 13? The $1500 house payment or the oregon standard for rent which is $700?
I also thought if I sell my car now to pay the IRS wouldn`t I lose a deduction for it? I could always sell it later........

i guess if u are giving up the house u can't claim the $1500 don't u think?

[minan]

We are at our wits end and can`t see our lawyer until the 20th ,so I turn to the next best thing..You guys!
We are in Oregon and make 80,000. a year and a family of 2.We were going to do a ch 13 and have quit paying our C.C`s as instructed by lawyer 2 months ago..She said the payment would be app. 1500.00 monthly.We have not filed yet . Yesterday I learned I will be losing 1 of my jobs that pays $2500.00 a month at the end of the year.Im self employed ..Now what? File 13 now and then change it later or wait.The only problem with waiting is We are worried about getting sued before then.
I also have a car that is paid for and KBB says its worth $8000.Its worth about $6000 since 1 seat is ripped and the paint is not the best. Can I sell it now and pay the IRS or is that a No No? If I keep it will they make me pay to keep it since our exemptions don`t cover it the $8000. Yes,we owe the Irs and know they won`t be covered in a 7.
We were also going to keep our house in the 13,but without the $ 2500.,we cannot afford it.If we are going to give it up then when do we stop paying on it?
Sorry for so many questions Thanks so much

I'm in a 13 now because of back taxes while I was self-employed so I know how you feel. I just filed on 7/30/10. Over the last few months, they did a levy on my bank account and took everything in it. I also got a 2nd levy that finally made me realize 13 was the only option. I have a condo (the only home I have) that I want to keep, however I'm also starting to think that I may have to give it up (maybe not right now, but in about a year) because I need to make it through the 13.

I just did a FHA streamline with my mortgage, however with this new issue, I don't know what to do. I'm looking at everything...getting a second job, walking away from condo, etc....

I'd be interested also in seeing what folks have to say about when to stop paying on the mortgage.

[owoody]

Minan.........Yeah,being self employed is not that great sometimes when it comes to taxes.You plan on paying estimated taxes and then something comes up and you use that money for it instead or you get paid late and you use your credit cards to keep everything paid until you get paid.I guess business`s don`t understand that its my Paycheck for the month that they are delaying.Im a very small business and I depend on that check every month .My vendors also expect to get paid on time too.

How long did it take from the time you got the levy notice until they took your money? Im really worried about that part.We will see our lawyer on the 20th,but trying to get some answers now so I have some idea on what to expect.I also like to get 2nd or 3rd opinions cause it seems like the people who have been through this or going through this know alot more than most lawyers and you can get questions answered a helluva lot faster...............
I hope it all works out for you Minan

[minan]

Minan.........Yeah,being self employed is not that great sometimes when it comes to taxes.You plan on paying estimated taxes and then something comes up and you use that money for it instead or you get paid late and you use your credit cards to keep everything paid until you get paid.I guess business`s don`t understand that its my Paycheck for the month that they are delaying.Im a very small business and I depend on that check every month .My vendors also expect to get paid on time too.

How long did it take from the time you got the levy notice until they took your money? Im really worried about that part.We will see our lawyer on the 20th,but trying to get some answers now so I have some idea on what to expect.I also like to get 2nd or 3rd opinions cause it seems like the people who have been through this or going through this know alot more than most lawyers and you can get questions answered a helluva lot faster...............
I hope it all works out for you Minan

I got a lawyer in Feb to help me. The levy was issued in May. DO NOT BELIEVE THOSE TV COMMERCIALS. THOSE ARE FALSE. I got a lawyer from one of those commercials and they did nothing except take my money. It was too late by the time I found out about the levy. It was only when I couldn't use my debit card did I find out.

The IRS has to sent a certain number of letters to you letting you know they plan to levy. They usually come certified mail I believe. I had received the first letter and got on payment plan. However because I didn't get a check in Feb and Mar I was late in March. If you're a day late, the IRS will consider that default.

Just know the IRS is really desperate for money right now so they are going after everybody. I don't mean to scare you. Just want you to be prepared.

After the 1st levy, I didn't make any further deposits in that account. Got a local tax atty who told me to open an account at another bank. He said that the only way the IRS will find out is if you pay them from the new bank account. So I did. Thank goodness I did. In July they issued the 2nd levy.