Chapter 13 conversion or hardship discharge or stick it out?

[espo1357]

Currently, I am about 18 months into the chaper 13, and all is good.

However, my job is not stable.

So, would I be better off converting to a chapter 7 (no assets) or ask for a hardship discharge (if I lose the job) or just stick with the chapter 13 payments because I have only 42 months to go?

My thinking is that if I stay in the 13, using unemployment insurance, that I will have less problems with my credit down the line, and the BK will come off my credit earlier, rather than convert to the 7.

Also, wouldn't that be considered a hardship discharge IF I lost my job?

Thanks!

[shark66]

Why would you be interested in a "hardship" discharge? That's not going to make your credit file look any better...

In my book, once you decide to clean out the house and jump into waters of BK, the future credit should be the least of your worries...

If you feel that you could do a 7 and get a fresh start, it's well worth it IMO. Stop paying into your Ch. 13, get it discharged, file a 7 and call it a day...

My $0.02 only...

Good luck.

[espo1357]

Why would you be interested in a "hardship" discharge? That's not going to make your credit file look any better...

In my book, once you decide to clean out the house and jump into waters of BK, the future credit should be the least of your worries...

If you feel that you could do a 7 and get a fresh start, it's well worth it IMO. Stop paying into your Ch. 13, get it discharged, file a 7 and call it a day...

My $0.02 only...

Good luck.

I hear ya shark, but I can't do it until I lose the job, right?

In other words, I am better off staying in the 13 until I qualify for the 7, right?

Thanks for your quick feedback by the way. I appreicate it that someone is responding!

[shark66]

In other words, I am better off staying in the 13 until I qualify for the 7, right?

That's not what I meant...

You need to do your math...personally, I see no point paying into a Ch. 13 that I would eventually abandon...but that's me.

You know your creditors better than anyone...THAT is what should guide your hand in deciding whether to keep on paying into 13, or withdraw altogether and duck under the table until you're ready for 7...

No one else can make that call for you.

My $0.02 only...

Good luck.

[catleg]

Unless you need the chapter 13 super discharge for some reason e.g. taxes, a ch7 is always preferable (IMHO).
If you seriously anticipate the ability to qualify for a ch7 in the forseeable future, it makes sense to consider stop paying for the ch13.
Many of your OC's will have sold off their debts to JDB's who will have to realize you've dropped out of BK and then locate you.
So depending on whether there's judgments against you, if they can find you, etc, etc, it all factors in.
P.S. cheaper to convert than re-file, but consider your monthly payment vs the ch 7 fees (new attorney and filing).

[espo1357]

Unless you need the chapter 13 super discharge for some reason e.g. taxes, a ch7 is always preferable (IMHO).
If you seriously anticipate the ability to qualify for a ch7 in the forseeable future, it makes sense to consider stop paying for the ch13.
Many of your OC's will have sold off their debts to JDB's who will have to realize you've dropped out of BK and then locate you.
So depending on whether there's judgments against you, if they can find you, etc, etc, it all factors in.
P.S. cheaper to convert than re-file, but consider your monthly payment vs the ch 7 fees (new attorney and filing).

I am just so lazy about it all. But, I think you are all correct. My attorney has stated that it takes 3 to 6 months before they dismiss...

so, it is going to be a year before they "find" me again. By that time, I could qualify for the 7.

Its hard to predict the future, isn't it?

[newbie2]

Hardship discharges are difficult to get. If you really want out of the 13 then quit paying, let it dismiss, and re-file a 7 later to take care of the home loan discharge. Good luck to you.

[espo1357]

Hardship discharges are difficult to get. If you really want out of the 13 then quit paying, let it dismiss, and re-file a 7 later to take care of the home loan discharge. Good luck to you.

Yes, if I didn't have to dump the cc debt (incurred after I bought the home, had no prior to that), then I think you would be 100 percent correct. The cc debt will keep me in the 13, as long as I am above the median.

thanks for your response!

[corrin69]

Hardship discharges are difficult to get. If you really want out of the 13 then quit paying, let it dismiss, and re-file a 7 later to take care of the home loan discharge. Good luck to you.

Newbie, are you saying he cannot convert because he is already in an approved Chapter 13 plan?

Espo, I recently converted and it was a simple process. My Chapter 13 plan had not yet been confirmed. It required another 341 meeting and took a little less than 3 months. I used a lawyer. She charged me $3500 to do my Chapter 13 and nothing to file the application to convert. She did tell me that she ordinarily charges $1500 for the conversion. My advice: If you lose your job, file for the conversion. You see me question to Newbie above. I am not sure if you need to let your plan fail first since you are in the middle of it. That sounds somewhat familiar to me. Either way, conversion gets rid of your debt and save you 42 payments. Sorry to hear about your job by the way.

[espo1357]

Newbie, are you saying he cannot convert because he is already in an approved Chapter 13 plan?

Espo, I recently converted and it was a simple process. My Chapter 13 plan had not yet been confirmed. It required another 341 meeting and took a little less than 3 months. I used a lawyer. She charged me $3500 to do my Chapter 13 and nothing to file the application to convert. She did tell me that she ordinarily charges $1500 for the conversion. My advice: If you lose your job, file for the conversion. You see me question to Newbie above. I am not sure if you need to let your plan fail first since you are in the middle of it. That sounds somewhat familiar to me. Either way, conversion gets rid of your debt and save you 42 payments. Sorry to hear about your job by the way.

thanks for your feedback.
Ya, I think the best move is to just stay in the 13 until I lose the job. My plan is confirmed.

About 50 percent of my payment goes to the secured student loan, so my plan isn't too bad. however, to get into a 7 would be better, because the other 50 percent that goes to the unsecured, would not be wasted.

Another option would be to stay in the 13 because it gets off my credit earlier.

What do you think? Is it worth saving about 10k over 3 plus years, or is it better to get go through the 13 no matter what?

My guess is the 7 is better.

Its too bad my lawyer didn't have the integrity to put me in a 7 when I qualifed. As soon as I filed for the 13, I got my home loan modified, and then I no longer qualifed for the 13 because my mortgage payment on the first got lowered so much, and the 2nd no longer required to be paid as an unsecured, and it will be stripped if I finish the 13.

However, I no longer want the home!

Hindsight is 20/20, and then we all die anyway, right?

[newbie2]

Newbie, are you saying he cannot convert because he is already in an approved Chapter 13 plan?

Espo, I recently converted and it was a simple process. My Chapter 13 plan had not yet been confirmed. It required another 341 meeting and took a little less than 3 months. I used a lawyer. She charged me $3500 to do my Chapter 13 and nothing to file the application to convert. She did tell me that she ordinarily charges $1500 for the conversion. My advice: If you lose your job, file for the conversion. You see me question to Newbie above. I am not sure if you need to let your plan fail first since you are in the middle of it. That sounds somewhat familiar to me. Either way, conversion gets rid of your debt and save you 42 payments. Sorry to hear about your job by the way.

I didn't say anything about not being able to convert. I said a hardship discharge is difficult to obtain. 2 different animals. Espo didn't want to convert his plan, he stated he wanted to wait to file a Chapter 7 to let income drop off..