GOOD NEWS.....BAD NEWS!!!!

iVillage Member
Registered: 10-01-2008
GOOD NEWS.....BAD NEWS!!!!
11
Fri, 02-15-2013 - 12:50pm

Well, I'll start with the good news.  It's Friday, yeah.  Hubby & I had a nice quite wonder super and romantic V'Day.  Next Thursday will offically mark the beginning of our last year of Chapter 13 Bankruptcy payments. For all of the above I am truly grateful.

The bad news :( .  I'll explain for all of the followers who have not been around since I joined the board in October 2008. 

In 2005 I worked a full time job in a nearby city plus, my son & I ran a small trucking company.  The company broke even, but never really made a profit.  In October of 2005, my husband suddenly lost a high paying sales job.  No real real other than the company keep raising the bar for his commissions and he kept hitting the mark and they were about to have to pay him $100,000 a year.  His fixed salary was only $32,000.  They let him go with a serverance package.  Six months of salary plus health benefits with a clause he could not go to work in this same field for 2 yrs.  We panicked, caved, took the deal.  DH was ready for a break, discussed and decided he wanted to join our son in a care free atomsphere of trucking.  We added another truck, insurance the whole deal.  We keep going deeper and deeper in credit card debt trying to keep the company profitable.  Diesel prices rose to a sky high level and by the middle of 2007 I told DH & son that we needed to close the company.  DH found a job, $60K a year, but one month later rec'd court orders to leave the job or face judicial punishment.  He left.  Our son soon found a job with Pepsi (previous employer) so that left DH back to driving the remaining truck.  We sold off the other truck and a trailer.  We refinanced our house in early 2008 and paid off one credit card that was joint with son that had a large balance of fuel charges.  For two whole months DH had little to no income.  He did not qualify for unemployment because a CPA advised me to re-pay the salary as loan repayments instead of salary so he did not qualfy for unemployment.  He took a job with ADT as a small business saleman.  It paid no salary, straight commission.  He made less than I did in my office job, under $25,000.  So his income dropped by over $75,000.  No jobs were to be found. PERIOD.  

So in January 2009, we filed Chapter 13 Bankruptcy.  The payments were $325 a month.  We struggled to make the payments with his unknown check every week.  Some weeks were good, others were terrible. We were living on less than $50,000 a year (previously $125,000).  Finally a good friend offered him an manufactures rep for a company that he use to sell their product.  This friend took a chance on a very good salesman with no college degree.  He took this job in August 2009 and has thrived.  He got $60K salary, benefits and a company car.  The Bankruptcy trustee raised our payments to $518 a week....GULP....hard....but doable.  I only netted $450 a week, so this meant all of my check went to the court plus the rest from his check.  We have struggled at times, but somehow we've always managed to make it.  Last year he got a bonus of $2,750.  We ask the trustee if we could keep it for medical (my heart and back) bills, plus dental bills for him that the insurance did not cover.  They let us keep that bonus. 

Now the bad news.  This year he hit ALL sales qualifications and we be receiving a $10,000 bonus ...before taxes.  We have to surrender ALL of it to the court for the balance of approximately $26,000 that would have been left standing had we just continued our regular $518.00 a week payments.  If anyone remembers back a couple of months ago I expressed some regret that when we came out of Bankruptcy next February, 2014 that we would walk away oweing some credit cards companies this $26,000.00.  Now that will be cut by what the net amount of this bonus will be.  All of the sudden I'm not feeling so guilty.  And before anyone ask, I spoke to the attorney and he thought our chances of keeping any of this bonus would be slim since she awarded us last years bonus for bills.  It would require meeting with the attorney, going to court (missing work) and not being guaranteed any benefit.  I say screw it, we owe it, this is to be.  Hubby is mad, peeved to say the least.  Not at me, but the whole bankruptcy system.  The attorney really said we would have a very slim chance of getting anything.  

I say forget it.  Let it go.  What's your opinion or thoughts?

All I keep telling myself is one year...52 weeks....365 days.

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Community Leader
Registered: 08-25-2006
Fri, 02-15-2013 - 1:18pm

Ugh!

So, if I remember correctly, the $26,000 you are referring to was what would be written off by the CC companies (therefore your guilt), after you are done with your $518 a week payments in a year?  

Well, I have never quite understood why they make a pament plan, then take your bonuses, so part of me wants to side on your DH with this one.  Because if I understand correctly, these bonuses the court takes are not shortening the terms of your payment plan or lowering the total balance due.  Is that correct?  

I mean, I don't care how much you owe or how much you make, your entire paycheck, plus some, is going to the court.  I mean, holy cow!  I can't even immagine.  

IDK, will it cost you money to try?  Normally I would say "let it go." But the system you are discribing kind of irks me. 

Serenity
iVillage Member
Registered: 10-01-2008
Fri, 02-15-2013 - 1:47pm

The bonus will go towards a $26,000 balance that would have been written off by the unsecured debtors.  Our total debt was $150,000. the payment plan of $518 a week would put us paying back approx. $125,000.  So you can say the unsecured debtors are getting more of what they would have lost.  The  only good news we got about this is that if we should ever have to file (for health or another job crisis) since we will be  paying in over 70%, we cannot be denied filling BK again. ALSO....they CANNOT get next March (2014) bonus...it's ours to KEEP!

Yes, it would cost $400 to the attorney, plus over time off work, twice.  Hubby travels a ton and a court date is almost impossible for him to keep.  He's gone 1/2 of each month.

iVillage Member
Registered: 04-08-2008
Fri, 02-15-2013 - 3:54pm

This seems ridiculous to me - you are paying almost all of you debt and being punished with more. I mean, you had a repayment plan and agreement and this seems like changing the rules. If you were short for something, would they give you your money BACK? No...so why does it work this way? How many ppl have massive credit card debt and then just have the bulk of it written off? Yet, if you try to pay it back, you are punished. This is ridiculous.

I have the same problem with personal taxes. I used to work 3 jobs to save up a downpayment in my 20s. I was HAMMERED with taxes. If I need 3 jobs to make $40K/yr then I should not be taxed like someone making $40K/yr at ONE job bc I am incurring more costs like transportation than the other person. And I am trying to be responsible...yet our system is set up to reward irresponsibility. It is so fustrating.

Your DH earned that money by excelling in his work, it upsets me that he can't keep it :(

Ugh,

Dee

Community Leader
Registered: 08-25-2006
Fri, 02-15-2013 - 5:28pm
Boy, $400 seems like a lot to spend on a slim chance. And two court dates. Really???? I suppose this is the cost of our actions. As much as I am with your DH on this one, if you know for a FACT they can't take next years bonus, I would probably say "let it go" and then go throw up.
Serenity
iVillage Member
Registered: 04-10-2003
Mon, 02-18-2013 - 8:36am
I guess if you are risking losing money, and your lawyer has advised you the chances are slim, then it doesn't make sense. If your lawyer thought you had a good chance (based on medical expenses or needing a new roof or something) than maybe I would go for it. Either way Norma, you are so dang close!! I'm so inspired by you and your always positive attitude!

Bex -

iVillage Member
Registered: 12-31-2010
Mon, 02-18-2013 - 2:23pm
You guys have done so well and are within spitting distance of this thing going away - that is the VERY good news. You have also taught all of us here a tremendous amount regarding BK. Well you do know that if they write off the full $26,000 it would probably be TAXABLE to you as income, so with only $16,000 now, it will be less of a tax burden if you are in the 25% TAX bracket. ($6,500 at $26k, vs. $4,000 at $16k) so you kind of saved $2500 of it that way. (I am always trying to find the bright side.) I still might consider fighting it and showing how all your bills have increased, your medical is more and even comparing heat from this year to last, let alone gas. I don' t know that you need a lawyer to fight it, you were there the last time, anything you think you can do on your own here? OR you might ask DH's company if they can stretch out his bonus instead of lump sum, or increase his expense amount for a while?? Nothing asked, nothing gained. _Marie
#Marie
iVillage Member
Registered: 12-31-2010
Mon, 02-18-2013 - 2:26pm
Dee- Just wondering why you would be taxed more on 3 jobs? Taxes are computed annually from all earned income. If they are taking too much out at each job, just change the W2 and add some dependents so you get more take home - that is not illegal unless you pay too little for the year. Unless I am missing something here???
#Marie
iVillage Member
Registered: 04-08-2008
Mon, 02-18-2013 - 2:34pm

Hmm...you did miss something. I wrote taxed the SAME for earning $40k/yr in 3 jobs as someone earning $40k/yr at 1 job. At the time (tho this has since changed) transportation costs and other expenses were not allowed as tax deductions...so I was expending more money in transportation and other costs to work those 3 jobs (not including the opportunity cost of my time) and yet paying the same tax. That is inequitable IMHO.

Dee

Community Leader
Registered: 07-26-1999
Tue, 02-19-2013 - 11:13am

Norma, I replied to your thread on the other board, but this post answered most of my questions, so you can ignore it if you'd like.

Stormydancer, when you file BK, yes you are making arrangements to repay your debt through payment plan, but it is not a contract you sign and you are "locked in" per se.  It can be adjusted to accommodate an increase or loss of income on the part of the person(s) paying in.  If you are working a low income job and file for BK and then end up with a much higher paying job part way through it, you still have the obligation to use that increased income to pay those debts that are in the BK and owed to those original creditors that are "out" the money that wasn't originally going to be paid, but that they lent you in the first place.  Yes, Norma and her DH could have skipped town and just let the credit card companies, or whoever else they owed, doctors, etc. charge it off, but they decided on BK and the terms of it and that's part of it.  Each person makes their own decisions on how to address their debts. 

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iVillage Member
Registered: 11-14-2008
Tue, 02-19-2013 - 12:26pm

Norma although this situation sucks your 2nd answer, answered my question. What about next year? I know its hard to swallow but I would let it go. Next year its all yours and that is what you have to concentrate on. Pretend there was no bonus this year and move forward with your count down. Then you can put this all behind you.

Karen

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