BK sucks, but you can get through it. Filing should give you debt relief, so that you can rebuild your finances. Though it may be difficult to rebuild your credit until after the BK gets discharged, you should be able to save up and rebuild your financial life right away after filing.
@Anonymous wrote:
Question 1:
After losing a 30,000 a year client near the end of last year, my income this year will be much smaller. I have the potential to add to my income by selling on eBay. I am pretty good at it. Can I keep that income as it comes in monthly? I averaged 5600 in the last six months of 2019 and have been told I have to stay with 70,000-71,000 with my plan based upon a monthly payment of 475 for 60 months You have to report all estimated income to the trustee, and it gets factored into your plan. You get to keep anything that is not required to go toward monthly payments. You also need to let the trustee know when your income changes significantly (e.g. gets much lower) and you might not be able to keep up with payments. The monthly payment of $475 seems high for a BK13 with 70k earnings that is not as consistent as a salary since you are self employed. Look at your schedule J carefully. Is your attorney being realistic about your income and expenses?
Question 2:
Can I open a savings account or use my existing account for an emergency fund and foundation? Is any amount of extra money I bring in and place into a savings account put me in violation of the agreement. Or do I just come out of it with no savings but the debt paid off? You can open a savings account, and you can keep the savings that you have as long as they don't exceed the exemption for your state. Anything left after the monthly payment you keep, and if you can cut down on your expenses, you can save. But you should be realistic about your expenses you report on the schedule J in the first place - report too little and you get stuck with payments you can't make. Report too much, and you're lying to the trustee about your ability to pay back the debt included in your plan.
In short am I allowed to save money while in Chapter 13? Do you come out of Chapter 13 without debts but still broke? I have 400 in savings now. I live in Illinois. I am panicked, can't eat or sleep and my mind is not absorbing the facts.
If you are realistic upfront when you file BK, and you have a good attorney, you'll be fine. If you manage your finances carefully during the BK, you should come out ahead by the time it's done. My BK13 was a 5-year plan, and by the end of it, my net worth was positive and I had put a good amount of money into 403(b)s and Roth IRAs, as well as built up savings to pay down student loans. The main thing I have to work on now after getting discharged, is rebuilding my credit. Also, it depends on where you live in Illinois, but if cost of living is reasonable, you should be able to save. I filed in a state with reasonable cost of living, but moved to an urban area in California during the BK, but after factoring costs of living, my payments did not change.
A few more questions. I have auto insurance with USAA but do not bank there. My payment is direct pay from my checking account. Will they raise my rate? Or worse cancel my insurance?
If you are sticking with the same insurance company and plan, they should not change your rate. If you apply for new insurance and they check your credit rating, you might not get as good rates because your credit score will drop after BK is filed. I think it's against the law for an insurance company to cancel your policy if you file BK and have not missed any payments/do not owe money to them.
I am self employed. I have life insurance I pay myself. Will that be cancelled and will I be able to renew a policy if needed?
Same as above. No it won't get canceled.
Does the trustee watch everything you do for five years?
No, they care that you are making your payments and fulfilling the terms of your plan. Don't do anything against the terms of the plan (apply for credit without asking, withhold your tax refunds, etc) and you'll be fine.
Do do credit counselors tell you you have to stop internet, I have to have it for work. Are you set to a mandated budget? I have dogs I have to keep healthy, vet visits, etc.
Report your internet, pet care, etc. as part of your expenses in the schedule J. If you need something for work, it's a business expense that you have to spend on. Make your budget realistic and accurate. There's no required number, but the numbers have to add up.
Will I have any life of my own and privacy?
Generally, you are the only one who will know you filed BK, unless you go around telling everyone about it. BK is public record but people have to go looking to find it.
I had a good lawyer but all these questions are now coming up in my mind. It sounds bad but I had to start an anxiety med because I can’t eat or sleep. I do not have a kind family, really can’t tell my friends.
I'm sorry to hear this. You should write down your questions and make sure you meet with your attorney again, or talk with another attorney, to make sure your questions get answered. Family and friends may not understand what you are going through if they've never had to think about BK. Many of us have been through it before, and it can lead to financial freedom and better money habits if we learn to avoid the things that got us into the hole in the first place.
Good luck. It's a long road but you can do it!
