Bankruptcy

[JaneS1123445]

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Math_Rocks wrote:

Thank you for all the input! I  neglected to say that DH refs soccer games on the side and accepts as many overtime shifts as he can get. I have been working a second job tutoring for over a year and a half and I am burned out. I definitely don't feel like I can commit to doing it for another 3-5 years. The constant work, having a DH who has to commute an hour each way, having a daughter with special needs. We are just spent from making it this past two years. That's why I feel like if we do end up filing, I will still feel really proud at all that we did pay down.

My primary job is as a university professor and it's more than a full-time job. I have a heavy teaching load and due to the economy, my meager salary will not be seeing any big increases any time soon. And recently, I cut down from tutoring 6 days a week to 3 days a week. I just had to. DH is hoping that a supervisor position will open up at his work soon but even if it does, we can't guarantee that he will get it. That's why we have decided to wait out this month and see if there are any significant changes. In the meantime, I think we will try to meet with a BK attorney over Spring Break and just discuss our situation. 

We also have some valuables to try to sell and catch up the mortgage so there is still a lot we can try to do before resorting to this last option. However, I am beginning to feel a huge sense of relief just knowing that there is a plan B.

Sorry that my thoughts are so scattered. Please keep the comments/advice coming!

Here are some specific questions:

Is it possible to do a Ch. 13 without any extra income for credit card repayment? (That is just paying auto loans, mortgage, student loans.)

DH commutes to a city an hour away. We HAVE to have both of our cars. Is that going to be a problem since they both have loans on them? One of them is down to 16 payments.

Can they make me continue to work a second job and/or teach in the summers for extra income?

What are "acceptable" expenses for things like cell phones, internet and cable?

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When you file for a chapter 13, all assets will be included by law.  Your unsecured creditors will only end up recieving a small portion of what you owe them, unless the Trustee decides you must pay 100 percent back, which is determined by disposable monthly income after alll your debt and income is accounted for. All creditors must file what's called a "proof of claim", which is basically them proving you owe them money. Your attorney will then object or conform to those claims. Bankruptcy plans are anywhere from a 3yr to 5yr period, at max. Your vehicles can be placed into the bankruptcy plan and possibly at a lower interest rate than you are paying now. You can also have them treated "outside the plan", which you'd have to pay on your own, seperate from your monthly repayment amount. It should not be an issue. They cannot make you work for extra income, but one of you has to be employed in a ch 13 since there is a repayment plan. As far as acceptable expenses, it depends on household size and income. There is actually and IRS guideline that must be adhered to. I would find an attorney that gives you a free consultation. In fact, see a few and don't settle until you find one who's extremely knowledgeable

[Math_Rocks]

Thank you so much for the information!

I just made our appt with a BK attorney. We live in a small town so we are going to a city about 45 minutes away to meet with him. He was recommended by good friends. But I made the appt for when DH is off work and I am on Spring Break so we have to wait almost two weeks. I have so many questions; this is going to drive me nuts.

Do you have recommendations for what all we should ask about and how to tell if it is a good "fit"?

We spend $45/mo for internet, $65/mo for Dish and $150/mo for cellular. We are a family of four. Do these expenses seem reasonable? (Obviously this is just an opinion question.)

[JaneS1123445]

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Math_Rocks wrote:

Thank you so much for the information!

I just made our appt with a BK attorney. We live in a small town so we are going to a city about 45 minutes away to meet with him. He was recommended by good friends. But I made the appt for when DH is off work and I am on Spring Break so we have to wait almost two weeks. I have so many questions; this is going to drive me nuts.

Do you have recommendations for what all we should ask about and how to tell if it is a good "fit"?

We spend $45/mo for internet, $65/mo for Dish and $150/mo for cellular. We are a family of four. Do these expenses seem reasonable? (Obviously this is just an opinion question.)

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Yes they are pretty normal, but it will vary with the Local rules where you live. Your atty will be able to inform you of whether or not they are acceptable in your district and if the Trustee may have any issues with such expenses. You seem to have pretty good questions to ask him/her already. Based on that, I'm sure you'll be able to determine whether or not the attorney is a good fit on how well he/she answers your questions. If they give you vague answers, move on my friend.

[beamMEup]

And make sure you feel comfortable with the attorney.

That's easier to determine if you're meeting with more than one.  But if you're meeting with one, just make sure you communicate well with each other.  BK is stressful - you'll want to make sure the attorney is a comfortable fit.

I would also recommend doing some research online and/or the library on CH 13's.  The more knowledgeable you are going in, the more you'll learn.  Make sure to bring a one page overview of your finances.  That'll help tremendously.

[Math_Rocks]

Feeling really down today. We looked at our finances last night and we aren't going to have money for food the second half of the month plus we can't pay our utilities. We really shouldn't have made the DMP payment this month but we can't change it now. I just feel like we are making bad decision after bad decision and I feel like a total failure when it comes to money. I've worked a second job and we've cut just about everything that we can think of for two years now. I'm worn out and demoralized.

In addition to all that, we have 10 more days until we see the BK attorney and I have so many questions that are driving me crazy. Does anyone know about contributing to retirement (for a match) while you are in Ch. 13? Contributing to retirement is one of the few things that we have done right. I can't touch mine but DH can take a loan on one retirement account and could cash out the other (with penalties of course). Should we consider doing that to try to settle our debts before considering BK?

I appreciate all the helpful comments and encouragement.

[FrugalRican]

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Math_Rocks wrote:

Thank you so much for the information!

We spend $45/mo for internet, $65/mo for Dish and $150/mo for cellular. We are a family of four. Do these expenses seem reasonable? (Obviously this is just an opinion question.)

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If you feel like you are in a position in which you won't be able to eat, I'd say it's time to cut out the Dish.

And the cell phone plan is going to have to go.

I know there are children involved, but that $65 could go a long way when it comes to food.

What's the $150/mo include on the cellphone, two cellphones? Three?

Have you looked into using prepaid cells? And maybe combine that with a service like Skype?

[beamMEup]

We were not allowed to contribute to IRA (and we had a match) during our CH 13.

We were sad, but it makes sense. 

Have you found any helpful info about CH 13 at the bookstore, or library, or online?  Gathering info will help you feel empowered and keep the frustration level down.  It'll also help you ask the best questions when you talk to the attorney.

As for the food, we ate a lot of rice and beans, potatoes, kept an extremely low food budget before and during our BK (yes - all the way through!)  Do you have a local food bank that could help you out this month?  That's what they're there for!

Keep us posted - lots of us have been there and we're rooting for you!

ETA:  and definitely give up the Dish!

We were told we had to give up daughter's cell phone when the trustee went over the plan.  She was 16 and working, driving at nights and we felt she needed a basic phone for safety.  We had given her a cheap phone and a cheap plan ($10 month) for her birthday.  Trustee said we couldn't afford it and she should pay for it herself.  It was taken out of the plan budget.  We did keep paying it - it came out of our grocery budget. If you're already in contract, cancellation fees can be pretty steep.   Interesting to us - the plan allotted for a clothes budget.  Something we didn't have (or it was very minimal); so that was more generous than what we had been doing.

[FrugalRican]

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beamMEup wrote:

As for the food, we ate a lot of rice and beans, potatoes, kept an extremely low food budget before and during our BK (yes - all the way through!)  Do you have a local food bank that could help you out this month?  That's what they're there for!

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OP, rice and beans is a cultural thing for me, so I have quite a nice few bean recipes as well

[Math_Rocks]

Thanks for the advice and the encouragement.

I'm starting to feel like BK may not be an option for us and then what are our options? DH's employer is owned by a bank and we have a CC with them. If we include it in BK, he loses his job. And we were so late starting retirement, where will we be if we stop contributing for five years and come out of BK almost 50? Also, DH gets an annual bonus that necessitates him contributing so we would be out that money as well. And I have a loan on my retirement account that I took out about 18 months ago. How does that get handled in BK?

We still have a long time on our cell contract and a few more months on Dish. The cell bill is for 3 people. DS turns 18 in May and we expect him to pay for his car insurance and his part of phone bill starting then. We will definitely consider canceling Dish when the contract is up but we aren't going to pay the cancellation fees to do it now. We may be able to reduce the plan though. We'll look into it. 

We've been married over two decades and have had our fair share of beans & rice months. I will say it's much harder when you have kids. My dad has given us some things to sell and we are looking into it. It may be enough to fill in our food budget and catch up the mortgage and utilities. Just not sure. 

[beamMEup]

Looks like you've got some good options.  Dish can go in a few months (we cancelled ours and lived - easier than we thought), you can do the rice and beans thingy with kids (we have tons of kids and it taught them how to cook on a budget - great skill for college and beyond) and you can look at local food bank help.  All those things add up.

I think you'll feel better when you have solid info - either from your attorney and/or your own research.

I do see the BK issue as a very real job threat to DH if he works at a bank, and especially if you have a card there.  You might consider closing the card before filing.  However, banks sometimes have a notice on job apps that if you've filed for BK you're not eligible for a job.  Don't know how they'd handle that if you're already employed but it seems a real risk.

Someone will likely throw something at the computer screen, but I'd consider a loan on the retirement account.  Sometimes you gotta do what you gotta do, regroup and march forward.  I would pay the fees if I had the cash available to keep my family in a home and fed.  But that's just me and others will have varying opinions.

Keep us posted and know we're hoping all's well.  And get food for the kids.  Food banks are not anything to avoid when you have children that need to be fed.