Sometimes I feel it's unfair . . . BK 13 Vs BK 7

[Kuya]

Ok . . first let me say that I mean no offense to anyone at all. If ever it comes out that way, please forgive me. It is not intended.

Since I filed my Chap 13 BK in 2006, I have felt let down. I know of several other people that were able to file Chap 7, instead of 13. I have noticed some HUGE differences.

In Chap 13, I spent 5 years in hell, having payroll deductions taken to repay my debts. I lived on a super tight budget. Kept my old car because it is near impossible to get any type of loan during a bk 13. Instead, I had to wait it out for 5 years and THEN start to rebuild my credit. I am finding that it's not easy to jump out and get a fair loan rate either . .

On the other hand, the people that I know who were able to file chapter 7 . . . faired much differently:

They filed and had their case completed and discharged within a few months.
No 5 years of hell
They can begin rebuilding credit right away
They seem to get better rates on auto loans immediately after discharge, while I am facing 18 to 20%.
They don't have to pay a single penny back

Now, again . . don't get me wrong . .. . I am happy for those who were able to file chapter 7 and get their life back on track - it's just that I constantly feel punished for actually making arrangements to pay most of my debt back. You almost get treated better if you waked away from your debts and paid nothing.

My sisters friend, filed chap 7 TWICE in her life already. And each time, she has made out much better than I have with my chapter 13.

I filed my 13 in 2006

She filled her SECOND bk7 in 2010.

In 2010 she bought a brand new car at 9% interest.
Now, two weeks ago she traded it in for another car, at 8%.

As for me . .I make almost $70,000 year. I paid almost ALL of my debt back in my BK 13. I did my 5 years. I struggled through it for years and paid much of it back.

While she was able to build her credit back instantly, I had to wait the 5 years to even begin the process . . and now I am facing 18% and 21% rates on auto loans.

Does anyone else feel this same way?

And agin . not hating the chap 7 people lol . . just GOSH . . I feel cheated haha.

[despritfreya]

Perfectly understand your thought process. However you are venting to the wrong people. You need to vent to Congress. Congress is the one who changed a law that was working just fine (IMHO). You apparently were above median income and could not qualify under means testing. There was no such thing (means testing) before 10/17/05.

Now, even under the "old" law, you might not have "qualified" if you were unable to show, using Schedule I and J, that your income minus your expenses left you almost nothing at the end of the month. But, at least you would have been in a 36 month Chapter 13 and not stuck for a full 5 years.

Des.

[Kuya]

Des. . .

Agreed . . venting to the wrong crowd But really just sharing my thoughts/frustrations . . not really angry about it though. Just seems like Chapter 13 is punished harder, and yet we are the ones who actually pay back a large portion of our debts rather than walk away.

For me . . . maybe it's more frustrating because during the time that CAUSED my downward financial whirlwind . . . I was struggling to make ends meet at $8.00/hour. I struggled and fell deeper and deeper in debt . . . just so happened that I took a huge permanent promotion at the tail end of the spiral. I tried SOO hard to make amends with all my creditors and not file BK. But, CHASE . . became a big bully and demanded 100% payment immediately or they were filing to garnish my wages. I was forced into BK . . . two weeks after getting my big promotion

The good thing for me, is that I NEVER once saw a full check from my promotion. Because by the time I got my first check, it was already being garnished by the Trustee for chapter 13. So you don't miss what you don't have. But at the same time . . . I can't help but think how unfair it is when you compare chapter 7 vs 13. We are punished harder, for being able to pay some of it back.

Oh well . thanks for lending an ear haha.

[Flamingo]

You are jealous of your sister for filing Chapter 7 twice? And with what you are saying she is on the road to do it again in 8 years...some people become serial filers because they can get away with it and some use it as a budgeting tool if they can get away with it. Maybe she will learn to get her life in order. Yes some get quick, easy credit and the majority do not. Do not think that everyone comes out of a Chapter 7 right into a bed of roses...one has a bankruptcy on their record for 10 years from the date of discharge and only 7 for those filing Chapter 13. Also, and this is information given to me by my attorney, a mortgage broker and bankers/finance people I personally know, creditors do view more approvingly of those who successfully complete their Chapter 13s and are prudent with what they do with any bills during their plan years. We were not yet discharged from our Chapter 13 but obtained refinancing 4 years into our plan at the going average rate of 6.5% in 4/06 (good credit rate at that time) and the following month I received the going good credit offer on a new GMAC vehicle of 0% financing. We did not receive our discharge until 8/06 (we bought out early in April 2006, filed 4/02). So a lot is situational for both sides (filing either Chapter 7 or Chapter 13).

[Kuya]

Flamingo,

One: Seems to be a pattern. I notice that most of your posts are dismal . . it's almost as if you enjoy being "Debbie Downer".

Second . . I am not jealous of someone else's misfortune, nor their ability to file chapter 7 twice. Nowhere in my posting did I even suggest such a thing. Please don't twist my words. It's almost as if you work for the media ... they are great at putting their own spin on things. I am simply saying that it feels as if WE, who file chapter 13 and actually pay a good portion of the monies owed, back to the creditors - are actually punished harder and longer for doing so. I did not even say that to be true, just how it felt.

Third . . Yes, she filed twice in her life. First time was due to medical bills that had gone up over $100,000 when her insurance cancelled her. Her first time filing was not the least bit related to careless over spending. Second time she filed was also indirectly related to medical. As she is diagnosed manic depressive, and had no choice but to take a leave of work. Now, I don't pretend to understand that . . . or relate to it, but I try not to judge.

Before you make a quick judgment as to :

"You are jealous of your sister for filing Chapter 7 twice? And with what you are saying she is on the road to do it again in 8 years...some people become serial filers because they can get away with it and some use it as a budgeting tool if they can get away with it. Maybe she will learn to get her life in order"

You should first know what you are speaking of.

Flamingo, I am not out to start trouble with you . . . but I really felt you were way off on this one. And this is not the first time I have gotten a "dismal" feeling from one of your response postings.

The only message I was trying to convey here . . is that gosh, I feel like I am being punished harder in my BK13, then some who have filed a BK7, and were able to walk away without paying any of the owed money back. I am NOT judging anyone on the reasons why or why not they filed, or why or why not they were able to file a chapter 7 once or a million times. I am not jealous of anyone who has had the miserable unfortunate experience of filing any Bankruptcy at all.

It just feels that when I do the math . . . it is not in my favor.

Chapter 7 gets to begin rebuilding almost immediately.
Chapter 13 has to live in the hell fires for 5 years first . . and THEN begin to rebuild.
Yes, chapter 7 stays on file for 10 years, and chap 13 only 7 years . . but when you weigh in the 5 year wait period . . it's no advantage at all. Most chapter 7's are much further ahead in that 5 years . while the chapter 13 comes out in 5 years at rock bottom.

In speaking with banks and credit unions . . they really don't weight them any different . .chap 13 vs 7. You get no brownie points for actually paying most of it back.

And . . on a positive note . . . the fact that you were able to refinance at a good rate during your 13, and even get 0% financing on a new car is really fantastic. Obviously not the norm . . . but that is very cool that you were able to pull that off.

[Flamingo]

Reread your post....you are the one who is down, not me...I call things as I see it and the way you describe your feelings about how other people get things and you don't bothers you...The way you describe what your sister's friend did obvoiusly bothers you that it could not happen to you - hence, jealousy. Sorry you can't see that but that is what your post is all about. As to the multiple Chapter 7 filier, think about it...if someone files a Chapter 7 twice and immediately goes out and gets all sorts of credit again, that person is back on the same path they took. The rest of my reply is filled with factual information you may not want to hear.

What you are feeling is normal as to having to go through a Chapter 13 compared to someone who gets off the hook immediately with a Chapter 7. However, not everyone out of a Chapter 7 fairs well as a Chapter 7 does not solve cash flow issues or gives one a job if unemployed. All situations are different. When you are discharged and look back at the situation, you will look at it differently than now and will be glad you learned what you did through filing a Chapter 13 that someone going through a Chapter 7 would not learn...hopefully you will carry the budgeting and financial skills you have learned during your plan with you for the rest of your life. Chapter 13 is the best budgeting teacher ever.

[Kuya]

I respectfully disagree. I will just leave it at that.

[JKPDX]

Hi Kuya,

When I went in to file, I wanted to do a 13 because I felt obligated to pay the money back, even if just partially. My attorney told me to do a 7, as it was "cut and dry," and cheaper. I still felt weird about it, but then she said, "oh you are self employed, so you can't file a 13." So I guess I benefitted from not having a W2 job. I'm thankful my attorney guided me that way, since she would make more money on a 13 versus a 7.

You still might get a good rate on a car loan (if you are needing a car). I was discharged in April and just purchased a 2011 Toyota at zero percent financing. They go off your credit score, if you are above 650, you are pretty good to go. You may have to put a bit more down, and jump through some hoops, but it is possible.

[cleanslate01]

I hear ya. We were way over the line for Chapter 7 and we looking at a Chapter 13. Then I found out I was expecting baby number 2 (baby #1 was only 3 months old) and we took a hard look at re-evaluating our lifestyle. Having to put 2 infants in daycare full time, paying every available penny to a trustee for 5 years, the stress it was all taking on our marriage, etc. I quit my job, which represented 60% of our income, and became a stay-at-home mom to take care of our babies. My husband declined any overtime work for 6 months to push us below that line so we could file for Chapter 7. It SUCKED for those 6 months but was better for us in the long run. I know not everyone has this option but I was grateful for a lawyer that told us to make these changes and wait a year to file. It made a world of difference. Chapter 13 just sounded life hell! :-(

[Kuya]

JKPDX and cleanslate01 - you guys show two great examples of taking a chapter 7 appropriately. Thank you for sharing your situations. I know and understand that we all are faced with different circumstances and different qualifying situations. For me, I did not qualify for a 7, because literally - a few weeks before I filed, I was promoted from a 18k/year job to a 60k/year job. I got lucky - and even though my luck meant that I would have to be in this wretched hole for 5 years, I still felt lucky lol. The good news is that I NEVER saw a full paycheck. My Trustee had begun garnishing my check before my first "promotional" check ever hit. Therefore, I did not feel the "hit" like most people. Going from 18k a year to a "garnished" 60k year paycheck is still a raise lol. A raise and now all my bills were being paid. The garnish certainly prevented me from living up to my pay - but I am kinda glad it happened that way - I never had time to feel what it was like to get a full paycheck, so I didn't miss it.

Overall - I just want to say once again (to anyone who reads this and post and gets misdirected) - I don't disagree with chapter 7's and I don't feel one is better than the other. I believe that we all have to do what is best in our own situations. I was just feeling that chapter 13 really sucks hahaha - because we can't even begin to build our life back for 5 years - and yet, we are paying back a lot of our debts. All the while, a chapter 7 can begin to build back their life/credit situation almost immediately.

They both have pros and cons. Anyway - mine is seconds away from being over. My Trustee has completed the audit, and closed the case. She has issued a refund check to me for the overpayment (still waiting to get it in the mail). Now it's just a waiting game. Apparently I have to wait until ALL checks to creditors have cleared the bank before the Trustee can file the final report to the judge - and it can officially discharge forever. This, can be any day . . . or up to 90 days. I am now just bidding time . . . waiting for that Pacer Notification that my papers have been signed.

[Jacey]

I totally understand what you're saying. Life isn't fair, and the laws aren't any better. There are people out there who will read about my Chapter 7 and say it's not fair that I'm
"walking away" from my debt while they still have to pay theirs, and I understand that, too. I would have said the same thing until I found myself in this position of making half of my previous salary. I'm so happy that you're almost done, and now you can really enjoy that paycheck!

[moneyblues]

I hear ya on that one. I have to file and after reading about both I would never file a 13. I would make my circumstances fit a 7 if I had to. I was really scared to file, you know just fearful of the unknown but the more I read the more I get okay. Now,I can't wait to file just to have the relief. I will tell the attorney, if I use one- been reading in the pro se forum, that I will only file a 7. I don't need a court appointed Daddy to tell me how to spend my money. I'm just saying.

[enginegirl]

I hear ya on the filing chap 7 and walking away scott free ... how I wish I was able to do a 7.... HOWEVER.. what I have read over and over and over is how many of these chap 7s are on their 2nd and 3rd Bankruptcy... because god forbid that they learn lessons in BUDGETING! and that is what my 13 has done for me... I now am able to live within my means and pay my 13... it is not in any way easy... but I took the time to look at why and how I got into the debt (I lost over 2/3rds of my salary) I had and was able to change my way of thinking... I have been able to learn about my needs vs my wants and how to save for my wants which is difficult in the instant gratification society that we live in....

[momindebt]

I hear ya as well Kuya. It is a tough pill to swallow when I see friends getting "out" of debt 6 months after filing, and here we will struggling-really struggling-to make it through out chapter 13 plan successfully despite a strong plan and budget. I understand that in many cases Chapter 7's have to give up property, but we did that as well (voluntary return of vehicle). No offense against anyone but with what we are paying back, and at what percentage, and with 2 very dated vehicles, it just feels awful to bel iving under this scrutiny for 5 years. I feel absolutely like we are being punished for making an honest attempt to pay back the majority of our debt at times in comparison to some people in Chapter 7's. : (

[biotechsolution]

I'd check your credit report. You should be getting offers way better than 18-20%. Creditors might not be reporting correctly.