36,000 in CC debt....ugh

[Lhamp3318]

Hi,
I have been reading posts on here for awhile. I appreciate all the information. I have been going back and forth for about 3 months on whether or not to file for Chapter 13. I spoke with a lawyer, and because my house has equity I have to file a 13. My questions are can you be denied a BK, on average how much is the repayment plan and do I just stop making payments and if so how long do I wait after that to file? I have been living off my CC since my divorce. I have not missed any payments yet, but it's getting very tight and in the next month most of my zero interest cards will be over, so my minimum payments are going to triple. I have tried to get an equity line along with other various consolidation loans but my debt to income is too high. I am so ashamed, I just don't see any way I will ever pay off 36,000 making minimum payments, and I need the money I am paying on the cc debt to survive as a newly single mom. Could anyone please give me some advice. I can't believe I put myself in his situation...it's all I think about from sun up until sun down. Thank you in advance 😊

[LadyInTheRed]

Please don't be ashamed. You find yourself in a position that many do all the time. Don't dwell on your mistakes. Instead, focus on moving forward.

The court can refuse to confirm your plan if it is not feasible. What is an average Chap 13 plan payment is meaningless in guessing what yours may be. It will be equal to your Disposable Monthly Income: income minus your necessary living expenses. For your plan to be feasible, you will need to show that your DMI is enough so that during your 3 to 5 year plan, the plan will pay unsecured creditors at least the value of your non-exempt equity. So, if you have 10,000 in non-exempt equity and propose a 5 year plan, your plan payment will need to be at least $200 or so (10,000 divided by 60 payments plus trustee fees). If attorney fees or any other amounts need to be paid in the plan, the minimum plan payment will increase accordingly. The payment will not be less than your DMI unless you pay 100% of your debt.

You do not have to put any time between the time you stop paying your credit cards and the time you file BK. Some attorneys will tell you to put 90 days between your last credit card use and your filing. That is the safest thing to do, but not required, especially if you haven't made in luxury purchases or received cash advances. If you can't pay your living expenses and make credit card payments, then stop making credit card payments. If you will definitely plan to file BK, stop making credit card payments, even if you can pay them and your expenses.

Before filing Chap 13, be certain that you can afford to keep your home in the long run.

[Lhamp3318]

Thank you for your reply. I have been using my credit cards...mainly to buy groceries, summer clothes for the kids, etc. No major purchases. What is considered a luxury purchase?

[LadyInTheRed]

Good question to which I don't know the answer for sure. But, if it is a necessary expense, it wouldn't be a luxury. What you describe does not sound like luxury expenses unless you are buying your kids designer clothing. The reason it is an issue is that if you charge over $650 to any one creditor for luxury goods or services within 90 days of filing, and the creditor petitions the court to have the debt ruled not dischargeable, that debt would be presumed to be non dischargeable. The creditor would not have to prove that you made the charges without an intent to pay them back.