modify payments or convert to a chapter 7

[abouttofile]

hi, I'm trying to decide between converting to a chapter 7 or applying to have my payments modified. Here's my situation:

I filed just over a year ago I am currently on a 30% payback, my car and student loans are included in the payment, I pay approximately $625 per month.

A few months ago I took a job that reduced my income by 40%. I cannot make the payments anymore. I contacted my lawyer when I took the job (their office is swamped, it took about 5 months for them to file my inital case)

So I'm wondering about my options. Here's my concerns. What will happen to my car? When I bought the car it was for $22 000. I made payments totalling $12000 my trustee has sent payments totalling $5200 (statement says $5000 more owed). Will they take it if I convert to a 7 or give me a payoff amount?

My concern is that I know if a file chapter 7 my student loans will be due. I would not be able to afford to make a car payment and a student loan payment. I currently owe $625 on BK13. A car payment and st loan would come close to that. I'm guessing outside of theplan my st loan would be close to $400 per month.

What I guess I'm hoping for is for a modification where I pay no more than $300 a month to basically stall until car is paid off and my income goes up a bit where I could afford the student loan payment.

I have no idea if this makes sense.

[SMinGA]

If you convert, you would probably need to catch the car loan up pretty quickly if the payments the trustee has made are less than what your original contract called for.

For the student loans, after discharge they would probably start billing. Look into "Income Based Repayment" to see if you're eligible and if that would lower your payment. If you are eligible - it won't pay them off, but could be useful until you can increase your income. Ultimately, after 24-25 years (I know, long time) they forgive any balance if you stay on IBR.

At present, it sounds like you should have some room to modify your payment downward unless there is a reason you need to pay 30% to unsecured. Such as to keep non-exempt assets. If that is not applicable, then it may be possible to decrease your plan payment down so that next to nothing goes to unsecured.

[abouttofile]

Thanks for the response. I've been doing a little research on the income based payments and it looks like I would qualify for a lower payment(if I qualify). Also the job I started is with the gov't so it seems like I would qualify to have my balance forgiven after 10 years. So now I am leaning towards a chapter 7. My boyfriend will probably loan me up to $5000 to pay off the car and with the lower than expected st loan pymt it might be easier to just get this all cleared up.

[SMinGA]

The actual car loan balance is probably higher than what your plan has for it. It may get less interest in the plan, while any late fees and higher interest can be added back once you convert.

Just an FYI.

[justbroke]

For what it's worth, my vehicle lender never tacked on extra interest or anything when I converted to Chapter 7. They only kept the balance as is. I thought that was nice of them.