Thanks for the opportunity to join and read your interactions with each other. I have researched the forum heavily and I am now posting with my remaining questions. I apologize if they have been discussed as I may have phrased my search the wrong way.
My wife, 2 kids and I live in Illinois and own our home with a mortgage on it. She leases her car and I am almost at the end of the lease of my vehicle. I am looking into Chapter 13 as I am unable to keep up anymore. Many mistakes in my 20’s is causing life to be overwhelming and day to day finances to be a massive burden. I know this is wrong and horrible of me to do, but I am out of options in my opinion.
I know this site does not take the place of a lawyer and I am not looking for it to. I want to reach out to peers and experts in this arena to get some background. When I go into my first consult I want to have an understanding of what’s going on, not be blank in an unknown world.
We will have to do Chapter 13 as we want to keep the house and cars and our income is too high, roughly $220,000 a year before any deductions. I reached out to my work EAP for lawyer recommendations, I am nervous on that part as I dont want to get scammed.
Student Loan $746
Student Loan $110
Student Loan $1,728
Student Loan $872
Student Loan $1,105
Student Loan $1,331
Student Loan $3,731
Student Loan $1,856
American Express $7,000/$6,800
Best Buy $1,509/$1,500
Capital One $1,952/$2,150
Capital One $746/$750
Lending Club $22,527/$31,600
One Main Financial $9,000/$9,500
First off, don't feel bad for getting to this point. Life happens and at least you are dealing with this now! You have a bunch going on here and I would ask your attorney for official responses to all of this as it can differ by Trustee and by state. My own personal opinion to each of your questions:
1) I would not secure a car right before filing. I would file, then talk to the trustee and attorney about needing a new car as you should not take on new debt before filing
2) Most attorneys will tell you not continue to pay on debt if you are filing as filing will suspend all collections. Work through the CH13 process
3) My opinion is to have her file as well with you. You have numerous debt together that would be best for you to go through this together
4) This is false. You should not be in a worse position after completing CH13
5) I would bring her into this with you. Just my opinion
6) No one can go after you if you file CH13, but if you do burn Chase in CH13 they will not remain your best ally for sure. Chase can be tough as nails for people post completion. Not sure on their specific rules for a bank account if you burn them on a CC
7) When you do the financial worksheets they will take into account all incoming and outgoing bills and needs. However, having a "cushion" for things that pop up is usually case by case. The trustee will want to use most income for paying back creditors and for your "needs". If things pop up, you can always ask permission of the court/trustee for exceptions.
9) All spending should be part of your expenses/needs
FYI - I burned Chase in a 13 with 3 cards, they didn't say boo to me, matter of fact they failed to file a claim too, I was cautious and opened a new checking account but post filing (6 months or so) when I noticed Chase didn't touch my checking I switched back to using them as my primary bank
no guarantees but I suspect they won't touch your deposit accounts (I was actually quite worried because I have a rollover IRA with JP Morgan and was afraid they'd tell me to pound sand but again they haven't, not sure if it matters but I am CPC with them as well, coming up on my 2 anniversary of filling, 3 more years go to!)
We met with the lawyer today and it went well. It was very imformative and he seemed well versed in the Chapter 13. Due to our income he said we will need to do the 13 which is what we expected from the information I gathered here. He recommended we take care of a couple small things that we have such as our tolls that we are behind in due to an issue with the IPASS reader and HOA fees, he stated the HOA can make our life a living hell.
We have to gather 6 months of checking statements and he suggested moving to a new bank as Chase will be apart of the the Chapter 13 as I have 2 credit cards with them.
We discussed the vehicle situation and he said that we would like us to replace both of our cars, my lease being up in April of 2020 and hers being up in Decemebr of 2021. My lease is upside down and I got some prices on a Honda Accord which was almost $800 a month. He said that most likely wont work and suggested we explore other options. This part I am kind of overwhelmed with, we need reliable vehicles for work. I am going to check into Carmax and see about a used vehicle and he said to shoot for 60+ months on the payments. He hinted towards $350-$500 a month.
He said to work on the worksheets for our budget but to be generalized with things, I was expecting to be very accurate with the numbers so I thought that was interesting. I want to make sure I do the budget the right way as that will be my guide for the next 60 months. Ive been brainstorming what we spend montly and yearly.
He said to worry about staying current on the utilities, mortgage, HOA, car/home insurance and not the credit cards/loans.
My wife is pretty upset but shes just overwhelmed. I have a list of 25 things to work on....time to get to work!
Can someone please comment on a budget related question? I met with my lawyer and he gave me the worksheets to complete. I noticed that the worksheet asks for monthly overtime pay which is very consistent for us, years of history on the consistency actually. Safe to add that into the budget and plan for it?
When you look at a budget its ok to put things into it that you may not have in the past? I havent really bought clothes for myself not on credit in years because my wife and kids come first and maybe it would be nice to plan for that. Home repairs, can I add a little to that each month to plan for the occasional unexpected mess?
How much do you leave on the table for the trustee in a chapter 13 as there is much flexibility in budgeting and planning for unexpected. I paid a little under $4,000 a month in credit card/loans but I can easily justify most of that into a line item budget as we were behind in payments left and right and putting basic neccesities on credit since we were overextended. Thoughts on this?
Is there a percentage they look for on your income? A percentage of total debt owed?
Congrats on taking your first steps to getting your financial life back. I too filed Ch13 just over 5 years ago and let me tell you, the beginning is overwhelming, but it does get better. Just coming out of mine and it's been by far the best thing I've done in many years. I firmly believe that those who successfully complete 13 are FAR more likely to success financially than 7, if that gives you any comfort at all. (Nothing against 7, I would have if I could have!)
OK - to the best advice I can provide you and I hope it helps you. If your attorney is like mine, he's there to help you, but he does things by the book. So, in my opinion, the most important thing you can do is push to get your payments accepted at the lowest monthly amount possible. This is NOT a situation where you just fill out the worksheets and take whatever the numbers come out to be. If your scheduled payments are too high its going to make that 5 years seem impossible. Work the numbers and make a realistic budget. Things pop up and happen in life that you have to pay for and if you are on an absolutely thin budget and have no padding whatsoever, that will make it very difficult.
If the numbers come out to a payment that you think you'd struggle making along with your other living expenses, push back, be honest. I had to do that and we moved the budget around a bit and found common ground. Don't get me wrong, its going to cost you, thats the point. But make it realistic. Contrary to what others will tell you, not EVERY EXTRA PENNY must go to debtors. Most if it, yes, but not ALL of it. Thats important in my mind.
Sounds like you are doing good and taking charge where your wife is probably just afraid. I was in the same boat. Just keep a level head and know there is light at the end. That 5 years feels like 20, but you'll get there and be better off financially for it!