Ready to file! How hard is it to live in Chp 13

[bkause]

I met with my attorney last night and she broke it down and made me realize that a Chapter 13 is not as scary as I thought it would be.

I don't know how tough it will be to live under a strict budget for 5 years without any credit cards, but that is how I got into trouble in the first place.

We have $40,000 in credit cards and $77,250 in an unsecured HELOC which we plan on stripping. I think our plan payment will be between $200 - $500 depending on my DMI.

I have a couple questions for you experts;

How hard is it to live with your Chapter 13 budget by year 3 or 4?

If you are Self Employed and write off your income every year but have money in the bank does the trustee take the money?

How hard is it to get approved to buy a new car or move into a larger home if your family increases in size?

[optimistic1]

My advice to you is before you file, go out and get brand new cars, nothing too expensive, but brand new and with a warranty.

[HHM]

If you do your budget right, living in a chapter 13 should not be a problem.

As for being self employed, it really depends on the pickyness of the trustee. Many trustees will require quarterly reporting for those self employed. In chapter 13, "tax" expenses (write offs) don't count for "real" expenses.

Realistically, very hard to get a bigger home (assuming it would cost more). After all, if you increase your expenses, you need to justify to the court that your creditors in your chapter 13 should get less money. Cars are easier so long as the payment is similar to your existing payment or is within guidelines.

[Maximo]

We have been on a 100% payback plan for almost 1 year and we are basically barely scraping by. We typically run out of cash within a week after payday (I get paid every other week) and there is NOTHING we can do. Be sure you want to do this because if I had a choice, I would have gone another route, knowing it would be this bad.

[lrprn]

Chapter 13 is all about the plan. Writing a good one that is liveable for 3-5 years is much more an art than a science. Since your lawyer will be putting together your plan, that means getting the best lawyer you can find. Inteview, interview, and interview again. Talk with at least 3-4 experienced Ch 13 bk lawyers. Keep notes. Find out who is most familiar with what your Ch 13 trustee and state allow for expenses and exemptions. Ask how your plan will be created. Find out where the trouble spots are in your finances and how each lawyer will deal with them. Then pick the best one and make the plunge.

The best Ch 13 lawyer isn't necessarily the cheapest or the most expensive. It's the lawyer that understands the bk law best, is aware of case law and how those judicial decisions impact you, and is willing to go to bat for you with the trustee and judge on any "edge" issues you may have in your case.

Get referrals from your state bar. Find out who is certified (although this is no guarantee). Ask friends and family who filed (if you know any). If the trustees in your local court also take on private cases, that can be a great way to find a good lawyer (although again, it's no guarantee).

People that survive Ch 13 typically have (1) a good lawyer, (2) a liveable plan, and (3) can create a realistic budget and consistently stick to it to create an emergency fund to help get through the tough times that will always happen over five years.

Most folks that struggle in Ch 13 suffer from one or more of the following: (1) they have an unexpected event happen (job loss, divorce, serious illness) after filing that impacts their ability to pay their payments on time, (2) they did not have a realistic Ch 13 plan to start with but signed it anyway and are now stuck with it, (3) they filed Ch 13 trying to keep assets that they would have been better off surrendering, and/or (4) rarely, their Ch 13 trustee or local court bk judge is more rigid in their opinions about what is allowed and what isn't during Ch 13 than the majority of Ch 13 trustees and bk judges across the country.

Do your homework. First and most important, find and retain a really good Ch 13 lawyer. Second, be clear and be realistic about what filing Ch 13 can achieve for you before pulling the trigger. The rest flows from there.

[Flamingo]

IHow hard is it to live with your Chapter 13 budget by year 3 or 4?

If you are Self Employed and write off your income every year but have money in the bank does the trustee take the money?

How hard is it to get approved to buy a new car or move into a larger home if your family increases in size?

The hardest thing for anyone starting a Chapter 13 is adjusting to a whole new lifestyle of "not having" and "giving up." Some folks were so dependent on credit and living the high life that the reality of having to live on cash only and no credit cards hits like a ton of bricks. Your life will change so expect it and adjust. Budget and budget some more; save every extra penny you can because the unexpected does and will occur (i.e., appliances die, water heater goes, need 4 new car tires, etc., etc.). By year 3/4 of your Plan you will be an expert at budgeting and will probably get to the point of wondering why you had all that credit to begin with. Many people post on here by that time they never want to see a credit card again.

If you are self-employed, get a good business lawyer; as lrprn stated, a good lawyer and plan will work for and with you, not against you. But you yourself also have to compromise and meet certain terms (i.e., adjusting your lifestyle). We had one of the top BK attorneys in our state and I don't think we could have done it without the excellent representation/advice we had.

Forget about a new car or moving into a larger home during an active Chapter 13. You will not get approved for any credit/mortgage during an active 13 and cannot obtain any credit without Trustee permission during your Plan except as advised otherwise. Work during that time to improve your credit by not being late with anything, including Plan payments, and also for a few years after your discharge. If you lie low, listen to your attorney and stay under the radar, budget like crazy and follow all the instructions given to you, there is a pot of gold at the end of the rainbow. It may now come immediately, but credit at good rates and mortgages will be available to you.

[BNKRPTinNC]

Totally agree with flamingo & lrprn particularly the advice of finding the right atty. We had hired, filed and had our 341 all before I knew about this forum. Fortunately, our atty knew what she was doing and had set up a plan that has been, surprisingly, easy to live with. One thing that put us ahead of the curve was we were able to keep our tax refunds and that established an emergency fund which, subsequently, we have built on. We did struggle for nearly two years attempting to stay "afloat" prior to filing but now the pressure is off and life is good again. A good atty, a workable plan, account for all your spending and you will find that it can be done. For us the light at the end of the tunnel is the fact that, except for the house, we will be completely debt free. Good luck.