why is atty pushing 13 rather than 7 ?

[overstressed]

Wondering if anyone knows why our attorney is insistent on us filing 13 rather than 7?

We pass the means test to file for 7, but our attorney wants us to strip the
2nd which is$34,000.

I'm just nervous about having to get into a repayment plan for the next 3 years because we have only one car that has 153,000 miles on it. Tried to get financed by the auto dealership that they recommended that works with bk and they were not able to finance us because my husbands reduced income, my self employment and our high cc debt. they questioned why were were in a 13 rather than 7. Said they could finance us easier if we were in a 7 and let some time pass to reestablish credit.

Our first mortgage is $277,000 and it was appraised at $275,000. We stopped paying our 1st and 2nd just this month as recommended by the atty, so we could strip the 2nd, but I'm afraid that now we stopped the 1st we will not be able to qualify for 7. If we make this mortgage payment the balance of the 1st will be even with the appraisal.

I thnink I would much rather stick with the second and be able to save for a car and not worry about having everything approved by a trustee- am I missing something?

Is it harder to qualify for a 7 ? Is it scrutinized more? I just want to understand and the attorney is just saying"trust us" without explaining.

I emailed the attorney thursday night and I have not had a response - I just feel time is of the essence and worry I will make 1 wrong payment/no payment to really screw up our case. Any insight would be greatly appreciated. thanks

[helpmeout]

Are you planning on keeping the house? Did you tell your attorney that?

[overstressed]

yes

[HHM]

That is your answer. The only way to guarantee removal of the 2nd mortgage is chapter 13. You are overestimating how much the trustee really oversees your chapter 13. The trustee almost never denies a request for car purchase, etc.

[overstressed]

yes, I understand I can only strip with a 13, but am I misunderstanding that if my dmi is $800, the trustee will get all $800 for the payback?
How do I save any extra to pay for a car without financing ?

My 2nd is only $460/month , yes I do have 6 more years on it, but I'd have alittle more each month and have a new start right away rather than have to answer to the trustee for the next 3 years. Besides, it doesn't matter if the trustee will allow us to purchase a car, - we can't get financed for it.

It makes me awfully nervous going into the payment plan for 3 years without a reliable car.

[blessed]

We don't have a 2nd, Thank God we didn't have enough equity to get one last year. But I've seen plenty of other people file Ch 7 and stop paying the 2nd so they can settle later. Is that an option? (You would need to keep current with your 1st though)

[helpmeout]

yes, I understand I can only strip with a 13, but am I misunderstanding that if my dmi is $800, the trustee will get all $800 for the payback?
How do I save any extra to pay for a car without financing ?

My 2nd is only $460/month , yes I do have 6 more years on it, but I'd have alittle more each month and have a new start right away rather than have to answer to the trustee for the next 3 years. Besides, it doesn't matter if the trustee will allow us to purchase a car, - we can't get financed for it.

It makes me awfully nervous going into the payment plan for 3 years without a reliable car.

If you have a positive $800 DMI, you may just be pushed into a Chapter 13 anyway.

[flyinbroke]

yes, I understand I can only strip with a 13, but am I misunderstanding that if my dmi is $800, the trustee will get all $800 for the payback?
How do I save any extra to pay for a car without financing ?

It makes me awfully nervous going into the payment plan for 3 years without a reliable car.

If your DMI is 800, yes, the trustee gets all 800. You are not going to have extra money which means you scrimp on the areas in your budget to save for the car. 13s kind of suck in that regard. You won't get a fresh start till you are done.

With 800 extra, you are likely going to have a 5 year plan. I had around this in DMI and I got stuck with a 5 year plan if I proceed.

[HHM]

If your DMI is 800, yes, the trustee gets all 800. You are not going to have extra money which means you scrimp on the areas in your budget to save for the car. 13s kind of suck in that regard. You won't get a fresh start till you are done.

With 800 extra, you are likely going to have a 5 year plan. I had around this in DMI and I got stuck with a 5 year plan if I proceed.

Correct, a good BK attorney will help you "pad" your budget in certain areas and yes, you will need to make "minor" lifestyle adjustments. I am not talking about beans and rice for 3 meals a day, but it is time to start thinking about how you spend your money and tracking it very well.

If something does happen in a BK, you can always request a forbearance in payments. Many people fail to understand just how flexible chapter 13's are. You can ALWAYS make changes and adjustments as things happen, it is simply that you have an extra step involved in the process; you will need approval of the trustee for "major" changes that affect the plan.

Think of it this way, you weren't saving money anyway because of your debt, so what have your really lost? Debt was your obstacle to saving money in any meaningful way in the first place, so you use chapter 13 to be OUT OF DEBT in 5 years or less, which is something you apparently could not have done on your own.

[momofthree]

My 2nd is only $460/month , yes I do have 6 more years on it, but I'd have alittle more each month and have a new start right away rather than have to answer to the trustee for the next 3 years.

In your first post you said your 2nd is $34k. How will that be paid off in 6 years with a payment of $460/mo? Are you at 0% interest?

[overstressed]

OK, thank you all for helping me navigate this. Our attorney hasn't really helped us filll in the blanks - I think they do so many of these that they overlook explaining some of the basics to people new to this.

When I did the means calculator I did not use the standard, I used actual because I thought we had to document all our expenses, but from reading alll the posts I am gathering that I can include health insurance premiums which we do not have right now(and has contributed to our need for BK).

I also did not include anything for clothing or entertainment as we have not been spending anything in those areas for quite some while. So, I'm guessing if I add these things we will be closer to $100-$300 dmi.

Thank you to all !

[flyinbroke]

Know that entertainment and recreation will NOT be that much...maybe 100 per person tops. At least this is what my attorney said...but other areas should have had greater expenses so it will even out.

As HHM said, a good attorney will help you with regard to a livable budget because many 13s fail and it is in no one's interest to have this happen.

[pcn]

Just for conversations sake, we were in a similar situation with one member of our husband/wife atty team telling us go 13 and strip the 2nd, and the other saying go ch7 and settle afterward. We eventually, after much debate, opted to go ch7 and will try to settle soon. The speed of the 7 as well as the looming 5 year debtor's prison of the 13 were the 2 main considerations for us. I will post how out settlement efforts go as they occur if you want to watch for it, and of you have time to wait.

[SMinGA]

One quick note - the amount of DMI does not determine whether you end up in a 36 vs 60 month payback. 2 things determine that.

First of all, if you are above the median income you MUST do a 60 month.

If you are below the median you can do a 36 month if your plan payment is enough to cover any required payoffs in 3 years. Such as if you have mortgage arrears (no other prior debts) of $12,000 and dmi is only enough for $300/mo - you'll need 60 months since 300 x 36 (less trustee fee) is not enough to pay off the $12,000.