Dismiss Chapt 13 or Convert to Chapt 7?

[kcfaninin]

Sorry for all the questions!! Since we struggling to make our plan payments, would it be best to dismiss our Chapt 13, wait 6 months and file for Chapt 7 or try to convert our 13 to a 7? (We would have to obatin a new lawyer for that, our current one won't help us) What is the process for converting to a 7? Don't we have to show a decrease in income for 6 months in order to qualify for a Chapt 7? What happens with the creditors during the 6 months of waiting? What do you tell them? Can they take you to court during that 6month waiting period?

[HHM]

What were you trying to accomplish with the chapter 13. Was there any reason you couldn't file chapter 7 originally. What has "changed" such that you cannot make your payment.

A chapter 13 is a lifestyle change. It's one thing if something changed and you can't make your payments, it's quite another if you lack the committment to make it work (yes, I am being blunt).

[AngelinaCatHub]

Check out all the "stickies" on the C7 forum. Very helpful as well as the Chapter 7 book mentioned. About 17 bucks download pdf from Nolo.com. I would attempt the conversion. The sex month wait is if you kill your 13 and yes there is no automatic stay between and even then you 'may' only have a 30 day stay due to the previous bk. I'd have to research this more for you, but the 7 book has those answers. I can't do this right now, but I'll get back. 'Hub

[AngelinaCatHub]

What were you trying to accomplish with the chapter 13. Was there any reason you couldn't file chapter 7 originally. What has "changed" such that you cannot make your payment.

A chapter 13 is a lifestyle change. It's one thing if something changed and you can't make your payments, it's quite another if you lack the committment to make it work (yes, I am being blunt).

HHM there is no other way. Call it being honest. I'd rather get the straight scoop than the beat around the bush. 'Hub

[HHM]

The big picture is what would happen if you dismissed your 13, what are you going to do. If nothing has changed and you didn't qualify for a 7 when you originally filed, I don't think you are going to qualify for a 7 now. If you dismiss, the creditors add back all the interest, fees, etc, and you are back to square one, actually, more like square negative one because you are usually worse off than when you filed the chapter 13.

[kcfaninin]

Thanks for responding. We didn't qualify for a Chapter 7 initially because we filed for a Chapter 7 in October 2001. (daughter had 3 heart surgeries and we lived off credit cards and loans) When we filed in October 2007, we had to go with a Chapter 13 because it was too soon to file for a Chapt 7 and we made too much money to qualify because of the 4 jobs we work. (filed again due to husbands gambling problem, he is currently in therapy) I believe we would qualify ifor a Chapter 7 if we drop our part time jobs. I am just concerned what to do and the best way to do it. If we drop our part itme jobs, we can't afford to make the plan payments. But, we have to drop our income for 6 months in order to qualify for a Chapter 7. Our lawyer is no help with answering our questions. She appears to have an "attitude" with people who file. I don't want to dismiss the plan if we don't qualify for a Chapt 7? Would an attorney be able to tell us if we definately qualify? A different attorney!! We want to fire ours!!

[kornellred]

I would like to know why kcfaninin says that their attorney "won't help us". That attorney must be aware of mitigating factors that would make conversion to Chapter 7 unlikely.

Chapter 7 is always the ideal filing - being in a Chapter 13 is never a preference or a choice. It's something a debtor is "forced" (so to speak) into. It's a numbers game, pure and simple. How to arrive at the numbers is what attorneys are all about.

[HHM]

I would like to know why kcfaninin says that their attorney "won't help us". That attorney must be aware of mitigating factors that would make conversion to Chapter 7 unlikely.

Chapter 7 is always the ideal filing - being in a Chapter 13 is never a preference or a choice. It's something a debtor is "forced" (so to speak) into. It's a numbers game, pure and simple. How to arrive at the numbers is what attorneys are all about.

I need to disagree with the 2nd part of that statement. There are certain things you can accomplish in a chapter 13 that you CAN'T accomplish in a 7 (getting rid of 2nd mortgages, paying priority tax debt, getting mortgage current), I'd say easily 50% of chapter 13's are filed as the "preferable" option.

The problem with giong from 13 to 7, it's not about simply qualifying, something needs to have changed from the time you originally filed the chapter 13. I think you can pull this off by quite your part time jobs. (but you really need to run numbers first, if you quite your part-time jobs, can you actually live on the income from your full-time jobs). Unfortunately, you need your attorney's help with this.

[kcfaninin]

The only advise our attorney gives us is to cut back on our monthly expenses, which we are at the bare minimum now, and to "tough it out" for the next 3 1/2 years. If you read my previous post, I stated we did not qualify for a Chapter 7 because we filed Chapter 7 in Oct 2001. The time frame was less then the 8 years required between filing. Plus, we make too much money. We both picked up part time jobs in order to avoid filing the second time. Since they look at your previous 6 months of income when you file, we made too much money, therefore we had to file for a Chapter 13 regardless of the 8 year waiting period. Our attorney states the only way we could file for a Chapter 7 in October 2009, is to get divorced then our income and dependents would qualify for both of us to file a Chapt 7 seperately. She never once suggested that we quit our part time jobs in order to decrease our income or give us any advise on converting or qualify for a Chapter 7 in the fall. I was hoping someone could offer advise on the info I am sharing. If we quit our part time jobs we will qualify for a Chapter 7 in the fall. What steps need to be taken to prepare for filing a Chapter 7 while we are currently in a Chapter 13???

[DeadManCrawling]

I do not know about the details of conversion, but I DID want to say:

There is NO law requiring you to work part time jobs in addition to fulltime.

There is nothing immoral or unethical about dropping the jobs, if it makes sense for YOUR life.

Plenty of people on this forum have quit part time jobs to reorder their finances for one purpose or another and no one here should be casting stones in your direction, as though we imagine ourselves a lofty enough postion to declare judgement.

Silly, just plain silly.

By all means quit jobs, surrender assets, listen closely to attorney, but do whatever it take to put your life and sanity in order.

It is not worth sacrificing your marriage or your home life to work at the grind 24/7 to satisfy a piece of paper that ultimately means nothing to anyone except the bottom lines of some of the most heinous institutions in history.

Best wishes,
DMC

[HHM]

Then what exactly is eating at your budget. If I had to guess, you are probably in too much house or too much car and were unwilling to sacrifice, because normal living expenses with average housing and car expense should not be causeing this much of a struggle such that you need part time jobs to make ends meet. Let me know if I am off base, but without more info, I might have to agree with your attorney.

However, you CAN quite your part time jobs and convert your 13 to a 7. I wouldn't recommend dismissing and then refilling as a 7, there are some issues to that. I am getting the sense we don't have the full picture.

[kcfaninin]

DeadManCrawling-Thank you for your support!!

As far as the "full picture" I'm not sure I can explain it any better. We can easily afford our home, 2 cars, living expenses, etc., if we can dismiss the rest of the unsecured debt. We picked up 2 extra part-ime jobs in order to stay afloat for about 2 years. We continue to work our full and part-time jobs in addition to paying back 80% of our unsecured debt through the repayment plan. In addition to that, we have to pay $3000 in attorney fees and $6000 to the trustee over 5 years. We are not any better off. We have always been current on our mortgage and cars, just couldn't keep up with the medical bills and credit cards. The ONLY reason we had to file a Chapter 13 is because it was too soon to file another Chapter 7. (We filed a Chapt 7 in Oct 2001) At the time, in Oct 2007, we would have had to wait 1 1/2 years before we could file a Chapt 7 again. We couldn't go 18 months with creditors calling, so we decided to file a Chapt 13 in Oct 2007.

Once again, if we could get rid of our unsecured debt, we can easily afford our normal living expenses. The only reason we are working 140 hours/wk between the 2 of us is to pay back our unsecured debt. We didn't qualify for a Chapter 7 because it had only been 6 1/2 years from our last filing. That is why we filed a Chapt 13.

Question, if we shouldn't dismiss the 13 and file for a 7, how do we go about converting a 13 to a 7 while making plan paymnets? The only way for us to qualify for a 7 is to get rid of our extra jobs, but we can't make the plan payments without the extra income. If we can't make the plan payments they dismiss our case. So, the only way I see it is to quit our part-time jobs, wait the 6 months and then file for a 7. I would rather convert, but what other options are there?

My biggest question is, what is the best thing to do while we wait until we can file a Chapter 7 in the fall? I know we have to quit our part time jobs, it is physically and emotionally taking a toll on us. When do we quit, what about the plan payments? What will the trustee say if we quit our part time jobs? Will we get in trouble? Please advise, we have really been stressed out over all this!!!

[HHM]

Sorry, I still don't buy it, if you can "easily" afford your living expenses, then a chapter 13 should not be a problem. When you file chapter 13 you are essentially saying to the court, I can't pay my creditors on their terms, but I can pay them "this". But I will give you the benefit of the doubt that the attorney probably made your budget a little too tight; but at the same time, hindsight, you should have quite your part time jobs and filed a $50 per month chapter 13 or something token like that.

In any event, what you do is you miss a payment (after quiting your part time jobs), your attorney files a Motion for Payment forebearence for a few months, after about 3 months, then the attorney files a motion to convert. I am not saying that you can't let the 13 dismiss and file a chapter 7, it's just not the best idea. No offense, you are a serial BK filer, you filed chapter 7 less than 8 years ago, got into more debt, and had to file again, so having 3 BK's is pushing it (chapter 7, failed chapter 13, then Chapter 7).

[kcfaninin]

HHM,
There is nothing to "BUY" or not "BUY". I'm just stating my situation. If you would read my post clearly, I am stating we PHYSICALLY and EMOTIONALLY cannot continue to work like we are working. We are current on our plan payments. It is very tight, but we manage. We are only managing because we work "4" jobs betweeen the two of us. We are working 4 jobs because that is what we had to do to get by for the last 2-2 1/2 years. Once again, if we didn't have to pay the UNSECURED debt, we could quit our part time jobs and be fine with paying our living expenses on our full time jobs alone. We would continue with the Chapter 13 plan payments if we didn't have to work four jobs, function on 5 hours of sleep a day and leave our girls home alone at night. It is seriously taking a toll on our health, family and marriage.

I didn't come to these boards to be criticized, I came from advise. Please don't judge anyone until you walk in their shoes!!

Our first Chapter 7 was due to me being off work and on bedrest for 4 months with a high risk pregnancy and our daughter have 3 heart surgeries within 2 years. We lived off credit cards and small loans to get by.

The Chapter 13 was due to my husbands gambling addiction. He thought he could try and "win" money so I could quit my job stay home with our girls. It got to be an obsession with him and quickly got out of control. He is now seeking treatment, but it's a little too late. So, unless you've been through an addiction, please don't judge us on that either.

We don't view ourselves as "SERIAL FILERS". We are good people who had bad things happen or made bad decisions.

So, I'll give YOU the benefit of the doubt and assume you are perfect and haven't made any mistakes in your life. Anyway, I appreciate your advise on the steps to take.

May I ask one more question without being insulted? Is it wise to switch to a different attorney? My husband dislikes our current one and she has not been very helpful or available to us? Would like a 2nd opinion also because current attorney is recommending for us to divorce in order to file Chapter 7. How does that process work, hiring a new attorney in the middle of a Chapter 13?

Thank you.....

[HHM]

Well, it really doesn't matter how you view yourselves, it is how the court will view the situation.

Was there a liquidation value issue with your chapter 13. I guess I don't understand why you had to work 2 jobs each to be in a chapter 13. I understand that you couldn't file chapter 7 because of the time limit, but at the same time, you can actually file chapter 13's with ZERO payment, or very small amount, so what I don't get is why you started the chapter 13 with 4 jobs in the first place.

As for criticism, grow up. This forum is not just about YOU. It is for the benefit of all members and visitors. One of the attractions of this forum is that people call it how they see it. I empathize with your situation, but I do not sympathize. Were you poorly represented by counsel, maybe, but you guys ultimately got yourself into this situation, it wasn't anyone elses fault, and it wasn't your husband's "brain chemistry". Thus, I am not going to sit by and allow you to pollute the forum with self pity. I ask the questions I do to understand the situation.

The good news is, you have options. But I believe you are facing an uphill battle.