More 13 to 7 questions....

[Skipper]

Hi all,

I am six months into a 36 month Chapter 13. To date my plan has not been confirmed, and is a zero payback to the unsecured creditors. I have payments going to a bank (automobile), federal and state taxes (from 2009). The balance of the auto is about $3500.00 and the tax balance is about $2900.00. My home mortgage is current.

My question(s) are these; in a conversion to a Chapter 7 from a Chapter 13, what happens to the auto? I would like to re-affirm and keep it, so would I be the one to contact the bank to make the deal? In addition, how does the IRS normally respond to a case like this? Would I contact them and set up a payment plan outside of the Chapter 7?

The reason for thinking about the conversion, is that I just recently received a letter from my lender offering to forgive the principle and interest/fee's due on my 2nd. Not a big deal, as there was no contest to strip upon the successful discharge of my 13. There is however, a possibility that I could receive a nice raise later this year at work, that could add another $1000.00/month in payments, should I not convert prior to a raise (right now I pay just under $400.00/month).

In closing, I would like to accept the forgiveness offer on my second, re-affirm the car, and figure out a payment plan for the taxes. All before I receive a possible raise that would put me in a position of not qualifying for a Chapter 7 conversion (I currently still qualify).

Thanks in advance for all of your thoughts!

Skipper

[justbroke]

I'm not sure if the "forgiveness" (or lien strip) would stick should you convert. That shouldn't be your motivating factor. You should look at your home as to whether it is a financially sound business decision to keep it. I would still not reaffirm the home at all, and if it's financially the right thing to do, continue to pay (pay and stay).

As for the car, you will need to be current. Depending on your local rules in Arizona (Des?), you may need to reaffirm the car to keep it. What is the car actually worth? When did you buy or refinance it? All these are factors in determining whether reaffirmation is a good thing -- or a ride-through is more appropriate (based on availability in Arizona).

Why did you go into a Chapter 13 to start with? What were you trying to accomplish? With a $0 payback to unsecured creditors, and only a car, I don't see why you went into a Chapter 13 to start with.