Filing for Chapter 13 in Texas need advice regarding stopping foreclosure

[txeagleair]

I am a little confused on Chapter 13 vs Chapter 7 filing. I am behind about four months on my mortgage but have been given a chance to get a foreberance if I can come up with $2,100 in the next 7 days. Since I am not able to borrow from any family member or friends, I am planning to filing Chapter 13 to stop the foreclosure on November 1. My only current payments are my mortgage and car payment. I have over $60,000 in credit card debt but all of that has gone to collection agencies about 3 years ago. Am I going to be required to pay some of that credit card debit? Or is Chapter 7 a better option. I have one year left on my car payment which will free up $400 by next September. Should I keep this out of the bankruptcy? I plan to talk to a lawyer next week but would appreciate any suggestions. Thanks

[StaciMM]

First, have you looked into where you stand regarding your state's median income, and how your budget fares with allowed expenses? If not, you can post your state, family size, etc. and we can help with info on those topics.

If you do not want to keep your house (and you meet ch. 7 qualifications based on income & expenses) then you can file ch 7 & be done with it. It will take a minimum of 3 months time in the BK process (likely longer as the courts are a bit backed up right now) and that will temporarily pause the foreclosure, allowing you time to save $$ to get ready to move somewhere else. A ch. 7 would get rid of all your debt, if you have no assets over the state exemptions. (Note-if you can get caught up & want to keep your house, ch. 7 could work with that also.)

If you want to keep the house and there is no way you can get caught up, then ch. 13 allows your past due amounts to go into a repayment plan. There would be some paid back to unsecured creditors as well. Basically, your disposable income would go into the plan for 5 years & that would go to your creditors.

[txeagleair]

Further info regarding my situation

I have a family of three in Texas and my income of about $53,000 would fall above the median. Right now my expenses exceed my income by about $200 and is balanced by my wife's income which is around $500 a month. It fluctuates, but she is considering going to a full time job. Utility bills have been high this past summer which has been a drain on us but will go down through the winter. Also I have paid about $9500 on a car loan of $14,500 and the car is worth about $9,500. Is there a possibly of renegoitating the car loan. The current payment of $400 a month makes a huge difference in having extra income. 11 months from now I may not have filed for bankruptcy but I need to get my life back in order and not worry about living so tight on money each month. Thanks

[Lightning]

It's my understanding that if you earn above the median income for your state and have no acceptable reasons for normal expenses to be higher than allowable, you're going to have to cut something out of your budget. You're only allowed to spend a certain amount on housing, food, and transportation.

[StaciMM]

Post info about your expenses, if you'd like more feedback. (Do not count credit card payments, by the way.) Your wife's income would be considered, even if she isn't filing.

Regarding your vehicle-it sounds like you are not upside down it it, but I don't think having equity is really an issue for a 13. You're not likely to get something changed regarding the payment.

From what you posted, it sounds like you would have about $300/mo to pay into a 13. (On your own, you're short $200 but your wife makes $500/mo.) Over the course of 60 months, this would repay the past due mortgage amount (would need to make post filing payments on time) and pay a little to your unsecured creditors. (The trustee would keep a %, and part might include your attorney fees.)

[txeagleair]

If I understand correctly according to the new guidelines I may fall into the Chapter 7 BK vs Chapter 11 BK. But if I want to keep the house, I need to do a Chapter 11. So either I would have to cut expenses from my budget or find extra income to maintain a Chapter 13 BK. Would I be prevented from doing a Chapter 13? My goal is to keep the house and get the car payed off asap. Would it be better to put the car loan into the Chapter 13 plan and thus spread the remaing payments over a five year plan thus giving me more monthly income to pay towards the Chapter 13BK? The total between the back payments on the mortgage and the remaining payments on the car is $16,000 which simply spread over a 5 year plan is $266 a month as compared to my monthly car payment of $400 a month. Does this make any sense? Thanks for all your info.

[StaciMM]

I see where you're coming from TX, but I'm not sure that you can choose to put your car's remaining balance into a plan. Generally, past due amounts go in but you would need to keep payments (after filing) current on your own.

[txeagleair]

Thanks for your advice. Just FYI for people who may be reading this, I checked into the credit counseling requirement and found out that CCCS is very to hard to schedule an appointment with if your are planning to file on short notice. Found a different company,Credit Counseling Centers of America, with a website www.bkfile.com that can do online counseling. They charge $30. Finally is there really any way I can be prevented from filing Chapter 13? I am willing to cutback any way possible to make payments or get a second job if necessary? Thanks

[StaciMM]

From my understanding, the only obstacle to filing ch. 13 is if you had no income to pay into a plan-so you can't be unemployed & file.