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Most attorneys will allow the debtor to pay their fee over the life of the plan - including these in the monthly payments - so that you would not need to have the entire amount upfront.
If your income changes drastically during the 5-year plan period, you may be able to convert your case to a Chapter 7.
I think this is what you wanted to know. If not, please let me know.
OK, let me try again - knew I should have saved what I typed before I clicked "Reply"...
I am concerned about the word "may" in your second paragraph. I suppose one of my options is to hold off on Chapter 13 until the garnishment is done. In that case, I can't pay everyone else what they want to get for 18 months. So what could happen to me if:
1. I stop paying my ex-spouse? What effect would court action by her have on the
garnishment or my other creditors? (Or my retirement pay?)
2. I continue to short-pay my largest creditor?
3. I stop paying all of my unsecured creditors until they agree to better terms for the
next 18 months?
4. I take my retirement check and move it around to different bank accounts? Can
my creditors catch up with me and seize my accounts?
5. I quit my job and file Chapter 7 now?
I don't want to go to jail, obviously - or add additional financial penalties on top of everything else I owe. For $18 a month, I don't know how much information I can expect to get; anything else you add is appreciated...
Very helpful - thank you so much! Of course, more information raises more questions:
1. How do I find out what is the median income for California? Is retirement pay
counted toward such income?
2. If I file Chapter 7, I believe that the spousal support payments are unaffected. What
about the court-ordered attorney fee payments that are now being garnished?
Would they need to continue, or would they cease because there is nothing to
3. If I file Chapter 7, would I need to give up the car that I am making payments on?
4. If I file Chapter 13, would the attorney fees that I pay monthly be counted toward the
expenses that reduce what I can pay my creditors?
5. If I file either Chapter 7 or 13, and I later get married, can my creditors go after my
spouse for any debts that I didn't have to pay, or have yet to pay?
6. If I continue on as I am, would my unsecured creditors have to seek a garnishment
first, then seek to seize my bank accounts, as two separate actions? What notice
would I receive in each situation?
I again appreciate any information you are able to provide!!
Thank you for all the information you have provided! I have a much better understanding of my situation and options now. Guess I have one more question:
If I file either Chapter 7 or Chapter 13 at this stage of my life (58 years old), will there be any SUBSTANTIVE difference between the two in the negative impact on my credit and my ability (if ever) to rebuild it?
OK, makes sense - and of course I thought of one more thing after I sent my LAST last question:
I currently have two cars, one that is 10+ years old with about 250K miles on it. Could I give that car to my 20-year-old daughter (title passes to her as well as the insurance responsibility) before I file Chapter 7, or is that a legal no-no?
Sorry that I didn't get back to you yesterday - was at work and had to leave. The 10+ year old car has a market value of less than $500. It is paid off. My newer car was purchased in December for about $20K, and I financed all of it. I lease an apartment, and do not own any other real property.
I did have another question after doing some more thinking about Chapter 7 last night. I read on-line that my pension (in my case, from the State of California) is protected in a Chapter 7 filing, as are "public funds" deposited into a bank account. Would I be able to begin to save my pension checks in a separate account, not have my creditors be able to touch it, and be able to keep the amounts saved in a Chapter 7 filing?
I keep thinking of things to ask here - I truly appreciate your patience and detailed responses. The new car actually was purchased using $4,000 on a credit card, with the balance financed through a bank. Does this mean that the car has value that may be counted toward the $21,825?
Also, I would not be able to hold onto all of my pension funds each month; but given that they are largely being used to pay my unsecured creditors, I would imagine that I would stop paying all of them at some point and start hanging onto the available funds. I am concerned that if I stop paying my unsecured creditors (but continue to pay my car loan), begin to accumulate pension money in the bank (separate account) while I continue to have my wages garnished, then quit my job, then file Chapter 7, I might be viewed as abusing the system. Is this a valid concern?
Wow! Chapter 7 is looking like a more viable option all the time.
Would it make sense at this point to establish a new bank account and have my retirement check from CalPERS direct-deposited into it?
Would it help (or is it possible) for the account to have a special name like "XXXXX XXXXX CalPERS Retirement Distributions", and to deposit ONLY that monthly check into it - transferring money as needed to my existing checking account for monthly expenses?
I want to begin to establish a record that clearly identifies and segregates my pension funds so that any court can see that these funds are exempt from creditor actions, while allowing the balance to accumulate to a point where I can hang onto it in a Chapter 7 filing. What are your thoughts on this?
And thank you for accepting my answer(s) - and for the bonus!
I knew I hadn't thought of every question I could ask! Two more that I thought of:
1. Assuming that my median income falls below $4,001 per month because I quit my
job, allowing me to file for Chapter 7, am I limited to that amount of monthly income
in the future? What happens if I were to get another job after the decision - or even
work fewer hours in my current job so as to drop below $4,001 per month?
2. As part of the bankruptcy filing process, do all of my income tax filings have to be
current? Is it possible for me to have less than the maximum allowable amount of
property prior to filing, then exceed that amount after the Chapter 7 bankruptcy is
finalized because of income tax refunds?
These may sound like devious questions - probably because they are to some extent. But I hadn't thought about what could happen after the Chapter 7 process is completed. Thanks again for your responses!
OK, as I thought - thanks again! But after I sent that question, I started thinking about the impact that reducing my income from employment would have on my Social Security (assuming that there is such a thing when I turn 62). It seems as if I should continue working, let the creditors take turns garnishing my wages (but not touching my pension), and file Chapter 7 when I turn 62. If I do that, do you know whether my Social Security would be affected at all by the bankruptcy? Does it matter which I do first - apply for Social Security or file for bankruptcy? This is SO complicated...
Social Security is not affected in any way by filing a Bankruptcy.
That's good! Now, let me combine all of these complicated things...
I have been dating a woman for two years, and want to marry her, but don't want to expose her to any of my debts. I also don't want to mess up my Social Security by reducing my income just so I can file bankruptcy. It seems as if I have to do the following things in order:
1. Turn 62, which won't be for 3 1/2 more years..
2. Retire from my job and file for Social Security; I would get 75% of my maximum
3. File for bankruptcy to escape my remaining debts - Chapter 7.
4. Get married immediately after I file for bankruptcy, so my wife is not exposed to
I would have my creditors coming after me for 3 1/2 years; but unless they seize my bank accounts, they can't do more than take turns garnishing my wages. That does seem like a long time to dodge them, but if I try to settle with them, that would trigger tax consequences if they discharge any of my debt.
Does this sound like the proper order of actions, given my situation?
Your sequence of events does look good, and you do appear to have a firm understanding of what is involved with debt collection and Bankruptcy.
However, you do not have to use your debt as an excuse to not get married, as your pre-marital debt will always be "separate" debt, and your fiance can never become legally liable for it - whether or not you have already filed a Bankruptcy to have the debt discharged.
Hey, that is awesome news about the separation of pre-marital debts! Two more questions that I thought of, one regarding this issue:
1. Should we maintain some kind of detailed records as to what our assets and liabilities are prior to our marriage, and should we maintain separate bank accounts so as not to commingle funds that could be attached to pay off pre-marital debts that one or the other of us did not incur?
2. I presume that all the information that you have given me in answer to ALL of my questions is based upon current codifications of Federal and State of California law. Since I probably won't file bankruptcy for at least three more years, it is possible that those laws, and related debt collection laws, will change - and the changes may affect my plans. How do I find out what are the applicable laws regarding all of these issues?
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