Bankruptcy woes, income busted, life sucks

[harbenger]

Can anyone offer advice on this situation. Last year my wife and I were having financial issues and took out loans from places around our area and online. We got to the point financially that we just stopped paying them, of course we got served papers and had to speak with a lawyer. We went through the whole bankruptcy procedures and all, we agreed on the amount and started the payment process which is $800 a month for 2 years, then down to $300 a month for 3 more years.

We got to a point where we could no longer afford the $800 because my wife got fired for missing a couple days because she had a major panic attack and was under doctor care, job didnt care. We spoke with they lawyer and they were able to reduce the amount to the $300 for a couple months until she finds a new job. Now the reduction is coming off next month and she still doesn't have a job. I have contacted the lawyer but I am not getting a response (holiday probably).

When that goes back up we are pretty much boned, she is trying to find a job, but having no luck at all. I am physically not able to work a 2nd job due to being partially handicap. I have looked into freelance stuff, but I can find nothing in my realm (IT) that I can do. We only have the one car that is tied into our C13 payments, we have already sold off everything of value that we had.

[justbroke]

When that goes back up we are pretty much boned, she is trying to find a job, but having no luck at all. I am physically not able to work a 2nd job due to being partially handicap. I have looked into freelance stuff, but I can find nothing in my realm (IT) that I can do. We only have the one car that is tied into our C13 payments, we have already sold off everything of value that we had.

Your attorney did what we call an abatement or a forbearance of your plan payments by temporarily reducing your payment. This reduction (or elimination of payment) is typically temporary before the attorney takes a more permanent action known as a Modification of Chapter 13 Plan.

If your spouse doesn't find a job after the 2-3 months, your attorney will likely file a modification and seek to permanently lower your payments. However, there seems to be some money in your plan that is taking care of some obligation that you "must" pay in the Chapter 13 (such as post-filing arrears on a mortgage?... totally guessing). You have a "step-down" plan meaning your payments were already decreasing after 2 years from $800/month to $300/month which led me to think there is something you "must" pay.

Your attorney will work it out so your plan is still feasible and that you can lower the payment.

[harbenger]

We have never owned a home or had a mortgage. I guess that would be the car, as that was included in our case, the lawyer said that the care would be paid off after the first 2 years of the BKR period and the payments would be reduced to the lower amount.

[justbroke]

Then the thing that you "must pay" is the car and you are paying off in the first 2 years. You could spread out the remaining payments over the rest of the plan years. I can't guess at how much that would be or what your payment would be if you proceeded to modify your confirmed plan.

[leonel9]

Without knowing the OP's finances, would it make sense for them to inquire if they qualify under Chapter 7 with the current reduction of income?

[justbroke]

Without knowing the OP's finances, would it make sense for them to inquire if they qualify under Chapter 7 with the current reduction of income?

It depends on whether they actually qualify for a Chapter 7 given the income. I converted to a Chapter 7 but I was already qualified for a Chapter 7 when I filed in 2008. I chose Chapter 13 to save property but later decided it wasn't worth saving.

Typically, during this payment abatement period, the Trustee and attorney are seeing if the circumstances change. If the circumstances are drastic, you could receive a hardship discharge under Chapter 13 (highly unlikely) or be permitted to convert to a Chapter 7. My concern is the vehicle and whether it could be exposed during conversion (because it was in arrears when the case started).

It's not outside the possibilities of what may be done.

[harbenger]

Thanks for the responses, I am going to talk with my lawyer about converting to chapter 7 on monday. The only thing we absolutely must keep the car, it is our only transportation. I checked on the requirements for chapter 7 and our combined income falls under the median for my state (louisiana). I am mainly worried about the car.

[hamburgervol]

You can get another car. Pay cash for one if you can.

In some cases it may be better to let your car go. I bought a vehicle after I filed and before my Ch7 discharged. I parked the car that was to be repossessed at the dealer that I purchased my newer car at. The interest rate was pretty high at the time. I later refinanced it and eventually paid it off. I'm still driving that car today.

There are lenders and dealerships that specialize in BK lending.

[harbenger]

We dont have extra cash to put down or purchase on another car, I cannot lose the car.

[justbroke]

Some lenders, when you convert to Chapter 7, will accept an reaffirmation of the loan and re-amortize the loan. They may even reduce the interest rate. This happened to me. My Chapter 13 caused arrears with my auto loan upon conversion to Chapter 7. This happened because the Chapter 13 "re-amortized" the loan to 5 years, when I only had 2 years left. Since I was paying less over the 2 years I was in the Chapter 13, I was in "technical" arrears when I converted.

On one vehicle, I reaffirmed the vehicle and had to negotiate a little on the rate and term. My second vehicle I redeemed in the Chapter 7. Actually, you may be able to redeem that vehicle in the Chapter 7 and pay only what it is worth (assuming you can get a 722 Redemption loan).

There are a few ways to work this issue. A good attorney can help guide you, but I think the suggestions here should mirror those of your attorney.

[VeeDubNut]

I have looked into freelance stuff, but I can find nothing in my realm (IT) that I can do.

Off topic (sort of)
But define your role in 'IT'.

If you can do simple helpdesk related stuff, there is no reason you cant devise a plan to possibly work from home.
IT is a HUGE realm - and you dont always have to work in an office.

Best of luck to you.