File Bankruptcy or not, advise me plz

[Catdog2000]

What is the name of your state?SC

I am a Military retiree, receive military retirement and VA disability.

Wife had cancer reoccurrence. Quit great job to take care of her.

Can’t pay approximately $30 In unsecured cc debt now.

Two choices: 1. File chapter 13

2. Stop paying credit cards and let chips fall where they may.

House has no equity. One vehicle, will be paid off in Feb 2019.

Our adult son with autism and lupus lives with us. We take care of him and support him.

We saw an attorney and he said we could file, or not. He said we “should” be able to protect the Military retirement and disability.

I don’t really have anyone to get advice from. If you have any please chime in. Thanks.

 

[quincy]

Here is a link to your other thread, Catdog2000, for the benefit of those who will advise you on bankruptcy: https://forum.freeadvice.com/threads/can-a-judgment-creditor-levy-military-retirement.647553

I assume in your post you mean $30,000 in debt and not $30.

You should be able to protect your military retirement and disability.

 

[Catdog2000]

Ok thanks. I am in a bad place right now and would appreciate any advice. I am taking care of my wife and son and have some family support but financially I am on my own.

 

[quincy]

Ok thanks. I am in a bad place right now and would appreciate any advice. I am taking care of my wife and son and have some family support but financially I am on my own.

There is a bankruptcy attorney who posts to this forum. You might keep checking your thread to see if there are responses from "despritfreya."

Good luck.

 

[Catdog2000]

Thank you. I have always worked and paid my bills and taken care of my family. I only have these 2 choices right now. I tried to get a job with less hours so I could help my wife more and it didn’t work out. She has an major surgery coming up in June.

 

[despritfreya]

First and foremost, your health and the health/well-being of your wife and son are paramount.

Second, you mentioned a Chapter 13. Why? Sounds like, if anything, you would be filing a 7. My assessment would change if you either had too much pension income combined with the disability income to qualify or had some non exempt asset you need to protect or were trying to save a home or car or maybe pay back taxes.

Third, your military pension and VA benefits (thank you for your service) are protected from creditors.

I suspect your are "judgment proof" meaning, if a creditor sued you and got a judgment the creditor would be unable to collect. Is that why the attny indicated you could take the "do nothing" approach? If my assumption is correct I see no reason to file bk. Instead, concentrate on your family.

Des.

 

[Catdog2000]

Des- yes, the pension and retirement makes it so I have to file 13. We don’t have anything but one vehicle and some furniture and our personal items. No boat, RV, etc. Right now we are just trying to live day to day. I retired less than 2 years ago from the Military after 25 years and we had just started our new lives when my wife got sick. I had a great job but it’s not possible to work the hours I was working anymore. I sincerely thank you for your advice and appreciate that you took the time to help us out. People don’t know how fast their lives can change. Thank you again.

 

[despritfreya]

@Catdog2000

Just a FYI - please make sure your military retirement and VA disability are deposited into a designated bank account. DO NOT commingle those funds with any other source of money including wages should you return to work. The funds that are traceable to your Federal benefits are protected. If you commingle you will lose the ability to trace which monies are protected and which are not. This is no different from protecting Social Security if and when that comes into play. Never commingle.

Des.

 

[Catdog2000]

Thank you Des. I will make sure. I appreciate the help and advice.

 

[Catdog2000]

I have a couple more question, and again, I am deeply grateful for advice. Can I have both checks deposited into the same bank account, or must they be in separate bank accounts? And this question is more complicated. If I do not pay my cc debt, the credit card companies will issue me a 1099 and I will have to pay taxes on it. I understand a CPA or tax preparer may help me file some exemptions, if I qualify. I am scared that I’ll get hit with a tax bill at some point I cannot pay due to the 1099s. Perhaps bankruptcy would be better?

Honestly I am terrified of having judgements against me and possibly having to go to court to reverse a levy. I consulted 2 lawyers in real life and one said my money was protected, and one said creditors could take it.

This is truly an eye-opening time in my life. I have gained so much sympathy for people who get in financial and legal troubles. It’s easy to live and work if things go ok, but when things go wrong, you and your family are screwed.

Thanks again for any advice or perspectives. I appreciate it.

 

[PayrollHRGuy]

Bankruptcy is not going to discharge a tax debt.

 

[LdiJ]

Bankruptcy is not going to discharge a tax debt.

That is only a partially accurate statement. It will not discharge a tax debt that is three or less years old. However, older tax debt can often be discharged in bankruptcy.

 

[PayrollHRGuy]

That is only a partially accurate statement. It will not discharge a tax debt that is three or less years old. However, older tax debt can often be discharged in bankruptcy.

The OP did not mention any previous tax debt. From my understanding he is concerned about taxes that may be due at the next filing.

I understand and agree with your point though.

 

[HRZ]

I'd not worry about 1099s for possible discharge of debt in your current priorities ...if you are "insolvent " at the time something is discharged, that is an exception to counting it is income . ....

IN the short run my lay suggestion is to pay the bills that must be paid and or are not dischargeable like taxes ....and the rest...as you can..

 

[despritfreya]

“I consulted 2 lawyers in real life and one said my money was protected, and one said creditors could take it.”

I can't imagine any attny asserting that funds traceable to VA disability is subject to garnishment therefore I can only assume that the attny who said the money was not protected was referring to your military pension.

Below is a quote from: https://www.dfas.mil/garnishment/civgarnishment/enforce.html

“Military retired pay is exempt from garnishment for anything other than child support, spousal support, or a property division. . . It is exempt from garnishment for the collection of commercial debts.”

Here is a good general info link:

https://www.consumer.ftc.gov/articles/0114-garnishing-federal-benefits

But here is the law that covers benefits (including both VA disability and, I believe, pension benefits) administered by the Secretary of Veteran’s Affairs:

38 USC § 101- Definitions

(1)The terms “Secretary” and “Department” mean the Secretary of Veterans Affairs and the Department of Veterans Affairs, respectively.

(13) The term “compensation” means a monthly payment made by the Secretary to a veteran because of service-connected disability. . .

(15)The term “pension” means a monthly or other periodic payment made by the Secretary to a veteran because of service, age, or non-service-connected disability, or to a surviving spouse or child of a veteran because of the non-service-connected death of the veteran

38 U.S. Code § 5301 - Nonassignability and exempt status of benefits

1) Payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. . .

_____________

Please go back to that attny and have him/her research the above refereced US Code section.

Des.