cannot afford my chapter 13 anymore...thinking of walking away from it.

[kst7488]

im not sure what to do. i cannot afford my 200 dollar a month payments for my chapter 13 anylonger. i filed before the recession and now that its hit the rust belt pretty hard i really cant afford that payment a month anymore.

can anyone tell me what happens when you walk away or whats the best way to go about it and what to expect?

im 2 years into my 13 with 3 more to go. i just cant do it anymore. (

i have a bank account that i keep no balance on just to pay the bills i deposit cash when needed. i dont really have any other paper trails. i have a car worth about 7 grand....way above the amount for my state to keep if i file a 7 that is paid off.

what do i do ??????

[isabella]

Has your income changed? Have your expenses? Additional medical expenses, job change or loss? Have you talked to your attorney to see about modifying your plan or possibly converting to a Chap 7? Depending on your circumstances you might be able to work something out. I would hate to throw away the 2 years to be right back where you started, if you have your case dismissed you will be back to owing exactly what you did before the bankruptcy.

[despritfreya]

The first question is, "what were you trying to accomplish by filing a Chapter 13?" Were you trying to save a home, auto, pay taxes, keep non-exempt property or simply did not qualify for a 7 due to your income? Please elaborate. We really need this info before we can venture a guess as to what your next step can be. Maybe a moratorium if the drop in income is temporary; maybe a conversion to 7; maybe a voluntary dismissal. There are many choices and just throwing in the towell may not need to be one of them.

[kst7488]

my attorny retired after my case i dont even have one anymore. yes my income is less.

i dont own a home i rent. i have no savings or retirenment money. i filed a 13 to keep my car its the only property i own. and yes 5G of the 10 G is taxes.

what happens to all the money i paid into my 13 if i walk away????

[despritfreya]

Ok, so did you initially qualify for a 7 when you filed the 13? Were you below median income or have negative disposable income?

Converting to a 7 would wipe out all debt but the taxes (and student loans if you had any). Unforuntaley you would most likely lose the auto unless you could work some sort of reaff out with the lender. Converting to a 7 would also allow you to add any debt you have run up since the filing of the 13 such as credit cards, pay day loans, medical bills, etc. Once discharged in the 7 you could sit down with the tax agencies to see if you can work out payments or even if you can be deemed a hardship. Interest will run on the tax claims.

Oh I forgot your last question. Assuming you had a confirmed plan the $$ paid went first to the Trustee to cover his % then to you attny then to the auto. My guess however is that no much has been paid beyong the Trustee and the attny if payments were $200/month.

[kst7488]

yes i qualified but i filed a 13 to keep my car. but again, the car is paid off....

i dont know how im supposed to live without one....

the only thing i can think of doing is walking away from the 13, waiting for a while "selling" the car to a relative and then after 90 days filing a 7. so i can keep my car.

would that even work?

[despritfreya]

"the car is paid off...."

Then this is an issue in a 7 if it is worth more than the allowed exemption. However, if the Trustee liquidates the auto, after he pays you for the exemption and then himself, the $$ would go to pay the priority taxes therefore you would get some benefit. Mind you that it is unlikely that all of the taxes would be paid.

[kst7488]

it is worth more then the exeption.

[despritfreya]

How much more valued TODAY 2 years later?

[kst7488]

the ohio exemption i believe is about 3500 dollars, its worth well over that. 5000 at the lowest.

its a 2003 mazda p5 in fair condition.

i just looked all this up, so it should be correct.

[despritfreya]

So you have a 3K problem. I am going to give you a rundown on how my firm handles this type of an issue - and here is where having an attny helps.

First, you must understand that the job of the 7 Trustee is to maximize the recovery for creditors. The UST (his boss) sometimes is a stickler for this and does not allow the Trustee to "cut a deal" with the debtor. However, Trustees are sometimes very sympatric and, depending on how much they wish to push the envelope with their boss, will allow a debtor to purchase the asset by paying the non exempt value over a very short period of time (say 3 to 6 months). I, as counsel, know what a particular Trustee will do and, once the case is filed, can try to negotiate for my client. The problem is that no one can guarantee that once you convert, your Trustee will allow you to purchase the vehicle. He may feel compelled to sell the vehicle to the highest bidder. That could be you or it could be John Doe. When my negotiating does not work my client shows up at the auction. More times than not my client is the successful bidder.

If you convert this is the risk you will take as it relates to the vehicle. Your other choice is to dismiss the 13 but doing that means your creditors can come after you.

[kst7488]

thank you for being so helpful, can i ask if i dismiss my 13, can i then sell my car to a relative and then months later file a 7?

[despritfreya]

You can sell your auto but it must be a bonafide sale, not a sham. Selling to a relative raises a red flag and I would not advise it. If you do sell to a relative it must be for fair value. I would then use the $$ to pay the taxes.

[kst7488]

good to know.

[kst7488]

just to update i called my trustees office today and they said i can be up to 3 months late on payments before they take any action so i may be okay big sigh of relief here. i had no idea about that until i called.