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Children's benefits~not enough time for a 13?


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We are filing CH7, however have been worried lately that they may disallow some of our expenses(life insurance, a secured payment, etc) and it will put us over $100 disposable income. I may just be worrying for nothing, but it has brought up several questions. If it is suggested that we do a Ch13, my question would then be, my daughter's survivor benefits would be considered as disposable income from several cases I have read, but in our case, it is a little different because we are only receiving it until she graduates from high school, which is another 21 months. Not enough time to complete even a 3 yr CH13 plan. So, then what? We are in the negative right now as for our expenses unless our lawyer changes any, haven't heard from her yet about our paperwork we mailed to her. Any opinions????

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Your daughter's survivor benefits are NOT YOUR income, they are legally hers and it is also EXEMPT 100%, they cannot touch it. This should in no way have ANY impact on your disposable income.

As for the insurance policy, it is an allowed expense and secured debts are not disallowed either. What is the debt secured by ?

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Your daughter's survivor benefits are NOT YOUR income, they are legally hers and it is also EXEMPT 100%, they cannot touch it. This should in no way have ANY impact on your disposable income.

As for the insurance policy, it is an allowed expense and secured debts are not disallowed either. What is the debt secured by ?

ok, now I'm confused. Someone on another board told me that (and also sent me several court cases from South Dakota) even though her income is exempt, it can still be used to figure disposable income to make sure there is no substantial abuse.....and our lawyer also told us we have to show it as income but will tell the trustee it is used entirely for her benefit. I'm really confused now....???

The secured payment is on my wedding ring. Our lawyer said she was going to try to get it squashed(her words???). Not sure what she meant by that other than she was going to try to get it down to fair market value maybe? Also said it may cost us more for her to do that, I had to mail her a copy of the original papers I signed when I picked the ring up, was on a credit card, however there is a clause at the bottom of the receipt that I signed that states they have a security guaranty on the ring in the event of default.

They also told me on the other board that our Life Insurance premiums may not be allowed because some trustees don't consider life insurance as a necessity. Has had my stomach in knots thinking that they weren't going to allow it and then it would throw us into Chapter 13 because we would have too much disposable income without that expense($285.00 per month, all policies between 5&15 yrs old, both of us were smokers when they were taken out, dh still is). We have both whole life and term life policies that equal around $4-500,000. Our mortgage company didn't offer credit life, so we had to get it on our own, plus wanted to have enough so that if something happened to either one of us, the house, kids, bills, etc were taken care of.

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  • 2 weeks later...

That case does NOT say that your daughter's benefits will automatically be considered disposable income. That case does say, however, that he woman had used her kid's benefits to pay household expenses and the judge bascially said that an equivalent amount could also be used to fund a CH 13 plan. I see a couple of things; 1 - the SD woman was making 'extra' mortgage payments that came to an end, so the Trustee already saw extra money once those extra payments ended. That alone was enough for a Ch 13 plan. 2 - the SD woman typically used her kids money to pay household expenses and that was enough for the Trustee to see even more $$ to fund a Ch 13 plan.

There are no 'automatics' here, and SD exemptions are different from MO exemptions. Trustees and their actions do vary by district. Your lawyer should be able to tell you what the Trustees in your area pick on.

Your lawyer may be able to 'squash' the security interest for your ring by stating that the 'lien' the creditor has impairs your exemption for it.

What does your lawyer say about the life insurance expense ? It IS a fairly normal expense and since you do have a family, its hardly frivolous. If your employer(s) don't provide a life insurance policy, then taking out your own is your only recourse.

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Your lawyer may be able to 'squash' the security interest for your ring by stating that the 'lien' the creditor has impairs your exemption for it.

She talked to me about this Monday and I can't remember her terminology, but did say that we wouldn't be able to "squash" the security interest, something about the lien on the ring, I wish I could remember what it was she said, anyway, I had planned on continuing with the payments anyway, so not a big deal.

What does your lawyer say about the life insurance expense ? It IS a fairly normal expense and since you do have a family, its hardly frivolous. If your employer(s) don't provide a life insurance policy, then taking out your own is your only recourse.

She told me that she didn't see a problem with it, the whole life policies don't have any value, all but one has loans against it, and the one that doesn't is only about $300 cash value. The term policies she said she didn't think they would be a problem either, I have given her copies of all the policies, and she said we would indicate that I didn't have credit life included with my mortgage and something about credit life insurance not being exempt. My employer does offer life insurance, but it cost more, and for some reason when we signed up for it they turned us down, this has been about 4 years ago, so couldn't have been because of our credit, because at the time it was excellent. ???? I don't know, but she didn't sound too concerned. She said that our expenses looked ok and unless the trustee started hacking away at them we looked prime for a Chapter 7.

Thanks LIR for all your responses! and taking time out of your day to answer me!!!! :D

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"Squash" is a slightly more dignified term than "cram down" which is what it is usually to referred as. :wink:

This refers to negotiating with the creditor to get the loan reduced to the present fair market value of the ring. In this case, state exemptions are not a factor, only the FMV versus what's owed is taken into account.

I don't believe the creditor can be forced to finance you at the FMV (I know auto loan providers don't have to), but credit cards with a security interest usually go ahead and do it. But they can be forced to accept the FMV in a lump sum in a 722 redemption. So if they do refuse to finance it, and you can find the money to redeem the FMV from an exempt source, you can redeem it that way.

The extra cost can be incurred if your atty can't reach an agreement with the creditor on the FMV and they have to go in front of the judge to decide it.

Edited after reading your last post: I took a break while writing this and didn't check new stuff before I posted. Anyway, was the problem that you're not far enough upside down to make a "squash" worth the trouble? Or was there something different about the security interest agreement at this particular store? Which store did you purchase the ring at?

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Edited after reading your last post: I took a break while writing this and didn't check new stuff before I posted. Anyway, was the problem that you're not far enough upside down to make a "squash" worth the trouble? Or was there something different about the security interest agreement at this particular store? Which store did you purchase the ring at?

I wish I could remember what she said, she used a term, not preferential but seemed like it started with a p, something about the lien they have against the ring itself and not being able to cram down the value because the ring itself was worth more than we owe on it, although I don't know how she knows that, we haven't had it appraised. We purchased it from Kay Jewelers, we got way behind in payments, but they agreed to let us make three monthly payments and then go back to our normal payments. They are still showing us as late, but are accepting the payments they agreed to. Not sure how this will affect the reaffirmation though.

ok, remembered the word she used "perfected". Does that make sense?

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Perfected doesn't make sense to me. I thought perfected meant that the lien was officially filed and recorded at the courthouse, usually on an auto or home loan. :?:

Anyway, if the ring is worth more than what's owed, then that explains why she can't do a cram down, as you can only get the loan crammed down to the fair market value of the ring.

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Perfected doesn't make sense to me. I thought perfected meant that the lien was officially filed and recorded at the courthouse, usually on an auto or home loan. :?:

Anyway, if the ring is worth more than what's owed, then that explains why she can't do a cram down, as you can only get the loan crammed down to the fair market value of the ring.

that's what I thought too, was a little confusing to me, but most of this is. Not really a big deal because I included the ring payment in my expenses.

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