Question on VA income & foreclosure (again) and student loan disbursement

[basketsbears]

Hi,

Just when I thought I had things clear in my mind, our situation changes. Ugh

So, long story short, I had taken a different position on 11/28 that was to help with school tuition, etc. I was going to work 24 hours per week which I did at my old job. New job decided they had hired too many people so I went back to old job. Now, I have not cancelled my student loans, and when the funds are disbursed the end of the month (prob. will hit our checking account in January) - does that count as income? It will be around $5,000 give or take. Can I use the money as I have in past for school & living expenses since I am not working full-time. If we file before end of December, does it matter? If we file in January, do I have to have it spent before we file? Can I turn the money back to student loan (federal student loans are what they are - not private) or would that be considered preferential payment?

The attorney that I like the best, told us that the VA income my husband has does not count as income for the means test. About a 1 or 2 ago we spoke with another attorney in the area and another we spoke to recently said it is income. Is there a way to find out? We live in Indianapolis, would be southern district in Indiana. That makes a HUGE difference. Plus, even though she took a lot of time, etc, if she doesn't know that, which I would think would be "common knowledge" should we still keep looking???
The other attorney we liked wanted to file in the northern district because that is where the property we own that is being foreclosed on is. My understanding is one has to file where we reside.

Last, but not least, (sorry so many questions all the time), the rental house that will be going back to BOA is vacant. They have been there twice, and posted they will be changing locks soon (they have visited twice). We have received a letter from the State of Indiana saying that BOA may initiate foreclosure on our property. Also have rec'd letter from BOA's attorney. So timeline I cannot figure where we are. The one attorney that wanted us to file in the northern district (where the property is) felt that he could push to get something I think it was called satisfaction of deed or something through better up there than in southern district - so at that point we would be done with it??? Also is foreclosure actually when they take physical possession, or when it is sold at sheriff's sale. Should we be filing BK sooner than later according to what has transpired so far with BOA???

Sorry this is so long, and I so appreciate all the great wisdom on these boards.

[ValleYum]

In our case, Hubby's VA $$ from his Chapter 33 GI Bill housing allowance counted as income as well as his military retirement pay for both the Means Test and Schedules I/J computation.

Maybe your attorney knows that they don't know (or just overlook) to count VA benefits in that specific district?? Maybe one more free consult is in order?

But I did find the case of In re Redmond, 2008 WL 1752133 (Bankr. S.D.Tex. 2008) which found that VA benefits are included in means test on Line 10. Since you can't "unfile" a Chapter 7, you want to be super duper sure so you don't get a UST objection. I found these, too: In re Hedge, 394 463 (Bankr. S.D.N.Y. 2008) and In re Waters, 384 B.R. 432, 437-38 (Bankr. N.D. W.Va. 2008) They say the same thing: Veterans benefits are income.

This link is to a document handed out to Trustees right after the new BK Laws went into effect with the US Trustee's position regarding the Means Test about each line item. NOTE: Some of the VEHICLE INFO is now outdated due to the Ransom decision from 01/2011 (IE: You can't claim Vehicle Ownership costs unless you are making a car payment) - but the other info still is fairly pertinent. http://www.justice.gov/ust/eo/bapcpa...ne_by_line.pdf

According to this document, on the info for Line 10 - Income From All Other Sources - it says Loan Proceeds, SSA Benefits and Tax Refunds do not count as income. So that is good for your Student Loan, IMHO.

About the foreclosure - our attorney said (if you don't have a huge HOA fee) that it was better to file before foreclosure because of how the creditor could potentially list 'negative items' on the Public Record section of your credit report. If you got foreclosed on then filed BK the lender could legally list both FC *and* BK. If you file BK first, *most* are found to be reporting only the BK.

Foreclosure is more of a drawn-out process than an single happening, IMO - but as I understand it, you are still the owner until your name is taken off the deed after the sale is completed.

I hope that helped. Double check with your attorney, as always!! This stuff is so darn mind-blowing!

PS: A lender not listing Foreclosure on the public records section of your credit report does not mean a mortgage lender won't find it. They will.

[DYLAN150]

I visited two different attorneys and was told yes, it counts as income by both attorneys here in Washington state. (VA disability)

[basketsbears]

Thanks! I thought it should be counted. And you are right, I do not want to end up with an objection, etc.

I guess another "free" consultation is in order!

Lynn

[mountanddo]

Thanks! I thought it should be counted. And you are right, I do not want to end up with an objection, etc.

I guess another "free" consultation is in order!

Lynn

It sounds like you have a fairly complicated case and that you haven't retained an attorney yet. This is only my opinion but I would think that you are going to get more substantial answers to your questions if you retain an attorney than from the free consultations. The attorney's on this site can chime in but I don't think there are a lot of attorney's out there that will answer specific questions regarding your case if you haven't retained them. General questions, yes but probably not specific ones. The attorney I went to answered my questions pretty generally saying things like "I think that might work out" or "you might want to consider". Each time you go to a free consultation you have to tell the whole story, situation and while the free consultations are valuable I think they are mostly geared towards finding an attorney that you are comfortable with more than getting the free legal advice. If you are getting different answers from different attorneys then you should research, research, research until you find the right answer.

I had a fairly simple case..low income, no assets, 15 year old car and no house. The attorney answered my questions based solely on what I told her and didn't look at any paperwork in my free consultation. She initially said my DMI would be about $200/month but after she received all my paperwork and we met to go over everything it ended up that we could get it to $100/month.

No attorney is going to give you all the information you need until you retain them. After all, they do need to get paid. The free consultation is there for them to "sell" themselves to you not to give free legal advice. That being said, if you have spoken with an attorney that gave you conflicting information from what you researched then I would continue to look. Just know that they are not going to have all the answers for you until they see your entire case and are getting paid.

[Drazil65]

Hi, we just filed (husband filed alone) and my husband received student loan funds in Oct (60 days prior to filing). Our attorney told us this is not counted as income BUT he wanted us to give him bank statements that show the money going into my husbands bank account and then him writing a check to my account as I pay all of the household expenses (including the mortgage) from my account. My husband has not income to speak of (small checks from a part time job) that help with gas mostly. You can clearly see the money coming our to pay mortgage and household expenses. Attorney said should not be a problem but statement should be in hand at 341 to show him when he asks about it.

[basketsbears]

Thank you Drazil that helps a lot.

Mountanddo - We are hoping to retain an attorney by the end of December. With switching jobs, my income is all messed up this month. Not getting full pay until the 23rd, and not even sure at that point (horrible experience). Anyway I guess I would have thought my question on VA income etc would be pretty cut and dry, that is why I wondered if anyone knew if they did count it in our district??? I really liked her a lot. She spent 1 1/2 hour with me during my "free" consultation. All dealings would be direct with her, no one else. Maybe I will just bring it up again before we file for her to double check before we file.

Thanks!

[ValleYum]

Miss Bears?

Just show her those cases and play sweet and dumb. "Oh I was Googling one night when I couldn't sleep and look what I found!?!?" Or you can say: "There is this insane woman in Washington state who insists I have to claim this as income".

Miss Mountan?

I think Chapter 7 consults are easier to get more info out of than Chapter 13.

I think Miss Bear's case has lots of small aspects that aren't seen every single day (very similar to how ours was). Sadly, when you have VA income, retirement income, job income and are in school *and* over the median income (LOL - we had all of that) no one attorney is (or could be IMO) an expert in all of that.

It's usually the VA Income that is the one least known about. Our attorney consulted with an attorney in a 'military town' (huge Naval base there) and was able to pin this info down. Our VA question was weirder than a disability payment as it involved a 2 year old program that was paying a 'housing allowance' based on a BAH rate of an E-5 in the zip code your school was located in. The general consensus was VA benefits = income and now it kinda appears cut and dried based on the cases I cited above. We claimed it as income and had no issues. Oh and we had alimony to hubby's ex (50% of his military retirement - paid through DFAS) and a vehicle reaffirmation thrown in just for fun in ours!

~~~~~~~~~~

But I know Miss Bears may be thinking and worrying with the "if she didn't know this what else doesn't she know?" syndrome about that attorney now. Miss Bears - what did she say about a new car being financed?

[basketsbears]

Ms. Valle-

She said some people do finance vehicles prior to to have more secured debt. One of our cars if financed at this time. We have kinda drug our feet, as not sure if we could get financed anywhere. I will bring that back up to DH, as his truck is a 1999 S-10, and I would hate to get thrown into a 13 and not be able to get a car.

Capital one turned us down. There is a dealer that we talked with, but haven't gone to see them yet. Any other places we could check on?

Thank you!

[ValleYum]

Most dealerships usually have a "challenged credit" department these days. A couple of phone calls around to the dealer(s) of your brand of choice would give you a good idea who has those. Good googamooga did we get a bazillion car financing offers *after* we filed but you need it before for the DMI shift in your favor. Maybe not call on Saturday though - weekdays are much slower on a car lot and you will likely get more assistance. Do make sure they have the time to perfect the lien before you file though. That can take a few weeks, just FYI. Your attorney can likely tell you how long you'd need to wait.

Try to have a wonderful weekend. It is sunny and chilly here today - rare in Washington in the winter!!

[basketsbears]

Thanks! I will have DH call them this week. Maybe that would be a smart thing if we could get it.

It is sunny and chilly here as well. Trying to get organized since the house is quiet.

Thanks!

Lynn