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Home > Ask The Get Out of Debt Experts > I Was Told Not to File Bankruptcy Due to Severance I Might Receive. – Diane

I Was Told Not to File Bankruptcy Due to Severance I Might Receive. – Diane

“Dear Lewis,

In May 2009, I was laid off. I had an appointment with a bankrupcty lawyer the day after I was escorted out (I had fairly high security clearance). She told me to hold off on the bankruptcy due to whatever severance I might receive.

I held off and held off…and had a really rotten relationship in the meantime. I regained employment at about $20K less than my other job and in the meantime spent my IRA — which resulted in my owing the IRS $12,777.

I wanted to put my IRA towards my outstanding bills, but my lawyer advised against it. Where did it end up going? See above bad relationship comment.

So now I can’t file bankruptcy; the lawyer informed me that due to the IRA disbursement, I’d be on a 100% repayment plan — equating to about $1800 a month, PLUS my $800/month mortgage…which would leave me with about $200/month to live on. (I’ve already paid the lawyer $3000 to retain her.)

I have two credit card companies who have tried to put liens against a part-time job I had in lieu of a “real” job which fell through when I quit the part-time job; a lien against my house, and most of my creditors have passed to collection agencies. I have a few other judgements against me which I haven’t heard more from yet.

Most of my debt is unsecured (credit card), I have quite a bit in payday loans also. I had two cars repossessed but of course they weren’t worth what I owed on them.

My main question is, I guess, what can I do? Can a debt counseling/management company help me?

I’ll be honest, what prompted my asking was the question posted by the gentleman who is so depressed he’s considered suicide.

Believe me, if it weren’t for helping out my elderly father, that would be a viable option for me anymore.

Thanks for your time!

Diane”

Dear Diane,

If you could answer two questions, then I can get back to you with some guidance. When did you take the IRA withdrawal and for how much?

Please post your answers in the comments section below.

My name is Lewis Roberts and I’m an attorney licensed in Florida and Georgia. My practice focus is consumer bankruptcy, real estate issues/closings, and mortgages. I also have Florida real estate broker and mortgage broker licenses. I am a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA), National Association of Consumer Attorneys (NACA), and a graduate of Max Gardner’s Bankruptcy Boot Camp. I enjoy helping people with decisions that impact their financial well-being.

Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.

If you have a bankruptcy question you’d like to ask just use the online form.

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About Lewis Roberts

Lewis Roberts
Florida Consumer Protection Attorney
  • Diane

    She suggested actually to wait until November or December; she’d emailed me asking what I was planning on doing just last month. I related that unless she knew the facts would change I couldn’t do the bankruptcy and still be able to live; she responded “ok” — that was it.

    I don’t want to bring the relationship into view, I don’t want anyone to contact this person in anyway.  Had I been able to press charges or anything (in my own heart/consciousness/whatever you want to call it) I would’ve; that’s my own fault.

  • Lewis Roberts

    If you took the last of the distributions in January 2011, then you should be able to wait just a few more months and all of this income will drop off the means tests, and then you should be able to pass.

    The larger problem is explaining to a chapter 7 trustee where all this money went.  This would involving opening wounds regarding the bad relationship and explaining in detail how the money was spent.

    If you are confident in your ability to show where everything went, then you should be able to file chapter 7.

    Did your attorney suggest waiting 6 months from the last distribution to file chapter 7, or was there another concern regarding assets?

  • Lewis Roberts

    If you took the last of the distributions in January 2011, then you should be able to wait just a few more months and all of this income will drop off the means tests, and then you should be able to pass.

    The larger problem is explaining to a chapter 7 trustee where all this money went.  This would involving opening wounds regarding the bad relationship and explaining in detail how the money was spent.

    If you are confident in your ability to show where everything went, then you should be able to file chapter 7.

    Did your attorney suggest waiting 6 months from the last distribution to file chapter 7, or was there another concern regarding assets?

    • Diane

      She suggested actually to wait until November or December; she’d emailed me asking what I was planning on doing just last month. I related that unless she knew the facts would change I couldn’t do the bankruptcy and still be able to live; she responded “ok” — that was it.

      I don’t want to bring the relationship into view, I don’t want anyone to contact this person in anyway.  Had I been able to press charges or anything (in my own heart/consciousness/whatever you want to call it) I would’ve; that’s my own fault.

  • Diane

    All throughout last year, about $120K; the last bit around Nov/Dec/Jan….

  • Diane

    All throughout last year, about $120K; the last bit around Nov/Dec/Jan….

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