Should I dismiss my Chapter 13?

[karatekid]

Hi. I filed chapter 13 on Jan 18. It turns out that I have quite a bit of non-exempt equity in my house. I'm on disability and not really able to put more than $400/mo into the plan which is the proposed amount.

I have $100,000 of unsecured debt and I wont be able to pay all that off within the plan timeline. I don't want to lose my house. I'm concerned the chp 13 will be converted to a 7 and then the house will be sold to pay the difference I can't pay within the plan. I'm thinking about voluntarily dismissing and then paying my creditors via Consumer Credit Counseling Services or some other non-profit debt management program. Does anyone have input on this?

[SMinGA]

The CCCS type companies won't be able to get a payment of $400 on $100k in debt. From my experience in looking into that option, the payment is closer to 1.5-2% of the debt balance.

What state are you in? How much non-exempt equity do you have? I believe if that much goes to unsecured creditors, then the 13 could still work for you. Such as if you have $20k in nonexempt assets, at least $20k needs to go to your unsecured.

If you filed for 36 months, perhaps you could extend it to 60 so that unsecured get more? May not be ideal to stay in 13 for longer - but it could be better than unsecured coming after the equity in your home eventually.

[forgotten]

How much non-exempt equity are you talking about? Was your plan filed for 36 or 60 months?

[karatekid]

I live in California. Actually, I bought my home before the big real estate bubble and have about 140k in equity but can't get a equity line of credit to pay off unsecured creditors (seems like banks aren't giving them out now??)

[karatekid]

my plan is 36 months.

[forgotten]

You mentioned you are on disability. If you are physically or mentally disabled you have a $125k homestead exemption, that only leaves about $15k in equity. Your $400/mo for 3 years just about covers it, you may need to extend the plan a few months but it should be workable.

[karatekid]

I see. That makes sense. I am physically disabled (serious arthritis) . So hypothetically if I had $240k in equity and use the exemption for $125k there would be $115k in non-exempt equity and in that case they could take my house? I'm beginning to understand this more....

[SMinGA]

I checked a couple of sites that say $150k exempt in CA if disabled or over the age of 65. So if your equity is $140k, it should be exempt. Assuming you are legally disabled of course.

Whether or not the trustee goes after the house, I think, depends on how much non-exempt equity you have & the potential cost in forcing a sale. Even if they get a sale price for the full value then there are closing costs and such. If you're looking at $100k + in equity, it would certainly pay off for the trustee even after those expenses.

I am confused at one thing - did you file with an attorney? If so, have you discussed your home value & exemptions?

[forgotten]

I checked a couple of sites that say $150k exempt in CA if disabled or over the age of 65. So if your equity is $140k, it should be exempt. Assuming you are legally disabled of course.

I just clicked the first hit on google, so my numbers may have been old. So yes, it its $150k now then there shouldn't be anything to worry about at all.