New to forum need advice

[lgeiger99]

Hi!

I'm filing a Chapter 13 pro se. The questions I have are regarding lien stripping. I live in Arizona.

I have 250k in unsecured debt and no assets, no money. I have two liens.

1. State of California for 2004; return filed 2008. Owe 4500.00 (original debt was 10,500, I've paid 12,500 already).

2. IRS - 2004 taxes, return filed 2008. Owe 44,000 (original debt was 33,900; I've repaid 25,000 already).

I have liens imposed by both CA and the IRS - the CA lien is 10k and the IRS lien is 50k. The liens are unsecured (they don't attach to any assets) and I filed my petition last week. Now, I am working on schedules, plan, Payment Advices Declaration, and Statemeent of Current Monthly income and disposable income.

I have one secured debt - an auto loan that I owe 16k on. I want to keep the car. I also want to use lien stripping on all 3 to my advantage.

Here's my questions:

1. Since the two tax liens are unsecured liens (don't attach to anything), can I have the tax debt stripped? (no assets for them to attach to and I don't own anything of value).

2. Regarding lien stripping of the car - I can get a re-repair estimate. It was damaged and I received a improper repair. I owe 16k, have an estimate from Carmax to purchase for 12k. I received a repair estimate for 8k from a reputable repair shop for 8k. Can I value the car at 12k, less 8,000 for the repair and possibly strip the lien to 4,000?

I'm unsure what the protocol for lien stripping is in Arizona. I've been researching and haven't found my answers yet. Tomorrow, I can go see a free lawyer for 20 min. at the court to ask questions, but would like to get a heads up on how to file for lien stripping.

1. Do I have to mention my intention to lien strip IRS debt and auto debt in my plan?

2. Do I file motions for each item and request an adversary hearing for each?

3. Do I have to do it right now or can I wait till my 341 meeting? At the least, can I file the paperwork mentioned above and file the rest in a week (my 341 is July 7).

4. Where is the best place to find answers to my questions on the net that relate specifically to lien stripping in AZ?

I'm sorry to jump right in with both feet, but I need help and I am filing pro se because I can't afford a lawyer. I will greatly appreciate any and all help I can get to point in me in the right direction, even if it is not specific to Arizona....your experiences will help me get going in the right direction.

Thanks!

[momofthree]

You can't lien strip a car. What you're referring to is "cramming down" the value. Did you purchase the car at least 2.5 years ago (910 days)?

I honestly don't know the answer to any of your questions though. It sounds like you have a rather complex case that should be handled by an attorney. Most attorney will roll a large portion of their fees into your payment plan.

[lgeiger99]

Hi,

Thanks for responding. Yes, then, cramming down the car is the issue as well as lien removal on my tax debt. I bought the car in 5-06 and it is the original loan.

I can't afford an attorney, they want 2k retainer to start and I don't have it.
Complex? Somewhat, I guess, but I am going to do it myself. Thanks for replying and I'm hoping I get other answers, but appreciate the time you took to reply.

Thank you!

[LVLV]

Hi, don't think I have specific answers to all of your questions...but you might find some answers to your tax lien questions at the nolo website and search for "eliminating tax debts in bankruptcy" We are in the same state, so as far as the vehicle cram down goes, it's possible but my attorney advised me it shouldn't surprise me too much if it doesn't happen...Good Luck, I hope the attorney is able to clarify some things for you tomorrow!

[tigergem]

For my cram down I filed a Motion for Valuation, and my judge's own prescribed proposed order. You should check your local rules for procedure on that... check for negative notice language requirements.

And don't forget to calculate the Till rate for the vehicle loan.

There are Five Rules to Discharge Tax Debts

If the income tax debt meets all five of these rules, then the tax debt is dischargeable in Chapter 7 and Chapter 13 bankruptcy petitions:

1. The due date for filing a tax return is at least three years ago.
2. The tax return was filed at least two years ago.
3. The tax assessment is at least 240 days old.
4. The tax return was not fraudulent.
5. The taxpayer is not guilty of tax evasion.

I wish you the best of luck.

[lgeiger99]

For my cram down I filed a Motion for Valuation, and my judge's own prescribed proposed order. You should check your local rules for procedure on that... check for negative notice language requirements.

And don't forget to calculate the Till rate for the vehicle loan.

There are Five Rules to Discharge Tax Debts

If the income tax debt meets all five of these rules, then the tax debt is dischargeable in Chapter 7 and Chapter 13 bankruptcy petitions:

1. The due date for filing a tax return is at least three years ago.
2. The tax return was filed at least two years ago.
3. The tax assessment is at least 240 days old.
4. The tax return was not fraudulent.
5. The taxpayer is not guilty of tax evasion.

I wish you the best of luck.

Hi!

When you say till rate, do you mean adding interest? Your remark caught my eye. I tried to google it, but nothing came up. I didn't calculate interest.

Thanks!

[tigergem]

Hi!

When you say till rate, do you mean adding interest? Your remark caught my eye. I tried to google it, but nothing came up. I didn't calculate interest.

Thanks!

I guess you didn't google it then. There are plenty of entries about the Till rate, which is the prime rate plus 1-3%, which should be the amount of the new interest rate of your crammed down loan under the plan.

[lgeiger99]

I guess you didn't google it then. There are plenty of entries about the Till rate, which is the prime rate plus 1-3%, which should be the amount of the new interest rate of your crammed down loan under the plan.

Hi,

Thanks for your reply. I've been rereading the entire pro se section since 5 a.m. this morning - I saw your posts a lot and am impressed with your handling of various subjects.

Actually, I did google till rate ch 13 and got very few responses. I just went back and googled Till Rate by itself and got information. Your remarks are very helpful, so thanks.

I'm really short of money, unemployed and I've barely been able to support myself or daughter. We have been underwater for six months, so I'm kind of embarrased to admit, I didn't even have $20 for the nolo book. I just decided on CH 13 within the last couple of weeks and I'm doing it in the middle of moving so I'm stressed. Not excuses, just an explanation to you that even if my questions seem stupid, I'm trying very hard to absorb a lot of information probably just like everyone else.

So, what I think you are saying is that I find out the prime rate as of today, add one to three percent addt'l interest to it and include that in the amt. of the payment on my plan. Is that right? Thanks a lot for your help. I really appreciate it.

[tigergem]

Right, for your cram down you have to figure out what the valuation amount is you are going to petition for. Then figure the Till rate. At the time I did mine, the prime rate was .25 % so I asked for my Till rate to be 3.25% on the valuation amount. I guess I could have asked for less, but didn't want to push my luck.

I can't remember specifically if the Best Case program calculated the amount for the Plan for me, but I don't think it did. I think I used the auto loan calculator on Bankrate.com to figure it out. It gives you the ability to figure out what the amortization will be over the life of your plan.

That is at http://www.bankrate.com/calculators/...alculator.aspx

[justbroke]

I'm jumping in late, but tiger seems to be doing well. I will say this... you have issues already that are making me cringe sitting here. If you actually have tax liens (where they have levied property), you aren't going to discharge that debt.

In order to determine that those federal and State taxes are dischargeable, you'd need to file a Complaint to Determine Dischargeability and file it against the United States of America and your local State. I How do you know the liens don't attach to property? How do you know if they don't enjoy statutory super-priority? When did you file your late 2004 tax returns in 2008? Was it before June 1, 2008?

You are neck deep in what I would call a complex case, and these are cases that I always recommend an attorney. There are too many traps and I'm afraid you may have already stepped into a couple of them.

[lgeiger99]

Right, for your cram down you have to figure out what the valuation amount is you are going to petition for. Then figure the Till rate. At the time I did mine, the prime rate was .25 % so I asked for my Till rate to be 3.25% on the valuation amount. I guess I could have asked for less, but didn't want to push my luck.

I can't remember specifically if the Best Case program calculated the amount for the Plan for me, but I don't think it did. I think I used the auto loan calculator on Bankrate.com to figure it out. It gives you the ability to figure out what the amortization will be over the life of your plan.

That is at http://www.bankrate.com/calculators/...alculator.aspx

Thanks Tigergem!

I broke down and bought the Nolo book after your first post. It changed my plan by 7.61/mo. The prime rate today is 3.25 so I added 1%. I found the bankrate.com refererence in the Nolo book and figured out my slight additional payment. I'm not sure it was worthy of spending most of my day reading the book, but I got frustrated right after my first post to you and decided to figure it out myself.

I have spent weeks figuring out my cram down amount and have documented it by:

1. Two estimates
2. A dimished value claim that I paid for two independent appraisals for.
3. Dealership quotes for two items that don't need to be done yet; but will in the near future.

Basically, I am cramming down a 16k loan to 4k. For naysayers that tell me it can't be done, I will do it or know the reason why.

Information on bankruptcy is hard come by. I've taken 3 court video courses, seen an independent lawyer, researched endlessly on the net. Yesterday, I even took all my docs to another lawyer for review to see that I filled them out properly. SHE missed the Till Rate. It just stuck in my mind because of something I had read in all my meandering, that's why I jumped on it.

Next steps will be the lien stripping on the tax debt and the cramming down.
In AZ, the procedure is to wait till the creditors both object. Then file a motion respectively for all three issues (IRS, State of California and my car lender). Or I believe I can call an adversary hearing. I've been advised to take no action unless they object to my plan, which I believe they will.

So, next step is to become an expert on lien stripping and cram downs.
I plan on visiting the law library at ASU and have been advised what to ask for by a lawyer. I have some time on this, so back to my move which is on Monday. After that, I can pick up more info on those two items so I am ready when/if the next step comes.

Thanks for your help. I appreciate it. As my daughter says, you wouldn't go into a hospital and order yourself an MRI - good analogy for filing Chapter 13 pro se. Nonetheless, I am learning and appreciate any and all advice when I ask. Pro se would not be my first choice, however after talking to and reading about some folks experience with lawyers, perhaps it is for the best.

Thanks again!

[tigergem]

I'm jumping in late, but tiger seems to be doing well. I will say this... you have issues already that are making me cringe sitting here. If you actually have tax liens (where they have levied property), you aren't going to discharge that debt.

In order to determine that those federal and State taxes are dischargeable, you'd need to file a Complaint to Determine Dischargeability and file it against the United States of America and your local State. I How do you know the liens don't attach to property? How do you know if they don't enjoy statutory super-priority? When did you file your late 2004 tax returns in 2008? Was it before June 1, 2008?

You are neck deep in what I would call a complex case, and these are cases that I always recommend an attorney. There are too many traps and I'm afraid you may have already stepped into a couple of them.

Hey jb I think he says they don't attach to any property because he says he doesn't own any property.

[lgeiger99]

I'm jumping in late, but tiger seems to be doing well. I will say this... you have issues already that are making me cringe sitting here. If you actually have tax liens (where they have levied property), you aren't going to discharge that debt.

In order to determine that those federal and State taxes are dischargeable, you'd need to file a Complaint to Determine Dischargeability and file it against the United States of America and your local State. I How do you know the liens don't attach to property? How do you know if they don't enjoy statutory super-priority? When did you file your late 2004 tax returns in 2008? Was it before June 1, 2008?

You are neck deep in what I would call a complex case, and these are cases that I always recommend an attorney. There are too many traps and I'm afraid you may have already stepped into a couple of them.

The liens don't attach to property, because I have no property. I lost my home in 2004, just broke. I actually won't file against my local state, which is now AZ. I owe the State of California taxes from 2004. On a 10,500 tax debt, I have paid more than 12,500.00. I still owe 4400.00.

To the IRS, the original debt was also from 2004, I have paid 26k, and still owe 44k in penalties and late charges. The original IRS tax debt was 37k.

Neither tax meets the dischargeability rules. The taxes are old - 2004, tax was assessed by both IRS and State of CA in 2005, but I didn't file the returns until 8-08. Yes, I realize I am close to meeting the rules for a Chapter 7 discharge in both. However, it's June and I am being evicted and my car is being repossessed. For my own reasons, even though I realize complete discharge meets all the criteria except for the two year rule - and that I would meet in August 2010. I will not change my mind about Chapter 13.

What 13 can do for me is strip both liens upon completion of my plan. The bankruptcy court has authority over the IRS and can remove all penalties and late charges from both the CA tax and the IRS. I would have overpaid the CA tax at that point (I don't expect nor count on money back, even though I have overpaid by a couple of thousand- I haven't researched what will happen with my overpayment). I would owe the IRS approximately 11,500 if I can get late payments and penalties removed. Remember, I said I have already paid $26k back. I will then amend my plan to accomodate the 11,500

I categorized the tax debt as non-priority unsecured debt deliberately and upon the advice of lawyers. Now, I wait for the IRS and State of CA to object. When they do, is the appropriate time I've been advised to file motions. I also expect anticipate my car lender to object. I wait for that too.

The lien issue can and will be resolved. Since the liens do not attach to any property, once the debt is paid, Chapter 13 will remove them at the end of my plan. There is also a question unresolved in my mind, that since the lien attaches to no property at the date of my filing, then it is basically reduced to the value of my assets (zero). It can't hurt me going forward in regards to acquisition of future property at the very least because it attaches what it attaches to at date of filing, not property I acquire after.

I appreciate your concern. Yes, I am dealing with some complexities. I'll figure it out - now that the initial filing is complete, I can turn all my attention to the cramming down of the vehicle, IRS liens and what amounts I can get discharged, if any. That's where I'm headed.

All advice is greatly appreciated by me.

Thanks!

[lgeiger99]

Hey jb I think he says they don't attach to any property because he says he doesn't own any property.

Exactly. And he is a she.

[lgeiger99]

Ooops, I forgot to mention. I also have a scheduled an appt. with a bankruptcy lawyer to see if my understanding of my tax concerns are on track. I may even retain him/her, I'm not sure. It depends on what I information I can pump him/her for for free and how far I get with the law library on my tax issues.

I'm on the right track, so far so good. I just got through the tedious part of the initial paperwork, now I can turn my attention to the matters I'm most concerned with. I've gotten as far with answers from the net in regards to Federal Rules of Bankruptcy procedure, US bankrupty code and local rules,
now I have to hone my research on taxes and bankruptcy.

I believe my initial plan is good. I am sure the trustee will tweak as is his want. Now, I get the focus on the tough stuff. Any and all helpful advice will be greatly appreciated by me.