VA Disability No Longer Income; Convert to Ch 7?

[vet2019]

[mel22nv]

I'm about to look into converting my Chapter 13 to 7. I am the Veteran my only taxable income is my retirement; I'll update with a post once I move forward. I just need to make sure my mortgage arrears is paid first! Fingers crossed this will get me out of 13 into 7

[justbroke]

The President signed the HAVEN Act a few months ago and it prevents VA Disability from being counted as income or an asset in bankruptcy. The current monthly income form has been updated with this new information too.

If you were forced into CH13 due to high income because of your disability, maybe you can convert to Ch7 now? Or at least maybe get your payments reduced as the calculation should be redone without counting that as income, which I would think could drop your repayment time to 3 years instead of 5 depending on your circumstances. Might be worth looking into...

You will likely not be able to convert. Many districts would require that you meet the requirements for a Chapter 7 discharge -- including "disposable income" limitations -- as of the day that you filed the original case. This will likely require you to voluntarily dismiss and then refile as a Chapter 7.

I don't have experience with converting as I did the means test before and was able to do Ch7 last year but we did file my wife on Ch7 after learning about this new law. Just wanted to share the info on the new law since it might help someone...

We have been talking about this already on the forum.

[mel22nv]

Yes thats right I will have to dismiss and refile as chapter 7 not convert. Not sure if I'll do it; right now just contemplating I think I just want it to be over (my chapter 13) weighing my options but not rushing into anything!

[justbroke]

I know exactly how you feel. In 2010, I converted my 2008 bankruptcy from Chapter 13 to a Chapter 7. I was done. But, I could do this conversion, easily, because I was a non-consumer (mostly investment real estate debt) and really qualified for a Chapter 7 when I filed my Chapter 13. So my conversion went very smoothly (eerily smoothly in fact).

I like your idea to take a look at this and then decide if its the best path forward. I don't even remember if I had a choice or not, with the conversion, but it was a good thing.

[mel22nv]

Any idea if I dismiss my Chapter 13 if my mortgage company will work with me or will the arrears just be due ASAP? Should I try to modify? Its a VA Home Loan mortgage co is Mr Cooper; never tried to modify have no clue how it works I think mortgage arrears is about $7K owed. Should I try to modify before dismissing? What's my chances?

My idea situation would be to modify my mortgage get it out of my Chap 13 get rid of car(2013 Luxury SUV) get reasonable vehicle and payment with IRS then file Chapter 7 but not sureI wish I had the $7k outright but I don't any advice on how to proceed? Or do I just keep plugging away on current plan? Looking for any words or wisdom or insight? Thanks, desperately want a change in 2020!

[justbroke]

There's no way to tell how a mortgage company will respond, but being many months in arrears (or as little as 2 months in arrears), does not help. The only solution would be a lump sum to come current, or to negotiate a modification. Strategically you may try to modify before dismissing, so at least you know. There's no way anyone could predict the changes. There is a lot of math involved and most banks look at each borrower individually. A lot has to do with income, expenses, and affordability.

If I were in your position, I might try the modification while you are still in plan and protected. At least you'll know if you "need" the Chapter 13 to protect yourself from foreclosure. If they agree to modification, then you do that, wait for it to kick in, and then consider dismissing the Chapter 13. Realize that it won't be able to just get rid of the SUV since you won't have bankruptcy protection or a way to "surrender" it without penalty. A repossession would certainly make obtaining a new vehicle loan problematic (likely impossible).

Breathe, relax, and run the numbers. The first thing is the modification. That's the kicker.

[mel22nv]

Thanks justbroke my atty suggested we try to modify the chap 13 plan to pay more to mortgage arrears less to IRS hoping that the arrears will pay off within a few months then try to modify my mortgage stating it maybe easier? They were checking with trustee office to explain that I am not tax exempt (VA p&t) so my property tax went way down in hopes that it will also explain why; just hoping this works if not will try to modify mortgage; will post updates once I know if we can modify plan; no extra to payment just shifting more to mortgage arrears to get paid

[justbroke]

Thanks justbroke my atty suggested we try to modify the chap 13 plan to pay more to mortgage arrears less to IRS hoping that the arrears will pay off within a few months then try to modify my mortgage stating it maybe easier?

That's up to the Trustee. If your attorney can convince the Trustee to do that, it's perfect. In my Chapter 13, my Trustee paid ALL the secured debt first, so my cars were paid off in less than 20 months! They then started paying the IRS. It was perfect because it gave me some breathing room that at least I knew that all my secured debt was paid off and not in arrears. Again, that's a Trustee question. Some Trustees automatically pay the arrears first and then go to priority tax debt, then unsecured debt.

They were checking with trustee office to explain that I am not tax exempt (VA p&t) so my property tax went way down in hopes that it will also explain why; just hoping this works if not will try to modify mortgage; will post updates once I know if we can modify plan; no extra to payment just shifting more to mortgage arrears to get paid

Well, at least you are thinking about some strategies and the loan modification can be your fallback.

[mel22nv]

Thanks justbroke trying to come up with strategies that's for sure. I'll update the post, wish the new law (Haven Act) was around when I filed, happy for all my veteran friends who was able to get a chap 7 but for me this really do suck. Funds are so tight hard to live and for all I gave up by serving and with my health issues it really just sucks!

[justbroke]

My stepson is now serving and I know firsthand what you all have sacrificed for country. I thank you for keeping our dream alive. I do think it should be easier for those that served, and that's what the Haven Act attempted to accomplish. They -- the powers that be -- tried to pass this Haven Act several years ago, but it didn't make it out of committee. I'm glad that it finally made it to the president's desk for signature.

I really do hope that things work out, that you're able to dismiss, and that you're able to refile a Chapter 7 using the provisions of the Haven Act. I'll be keeping an eye out for ya!

[mel22nv]

Thank you justbroke and thank your step son for his service as well. My hope is for the same that I can dismiss and refile a Chapter 7 using the Haven Act provisions. I'll update once I have some news.