Filling Chap 13

[LadyInTheRed]

Based on the information provided, nobody here can tell what the payment will be or what percentage of unsecured claims will be paid. Just because toojerm makes less than your friend and was in a 100% plan does not mean your friend will be in a 100% plan. There are too many factors. Each case is different.

Even if your friend does end up in a 100% plan, it's not the end of the world. With a good attorney, a Chap 13 puts the debtor in the driver's seat instead of at the mercy of the creditors.

While some have successfully filed Chap 13 without an attorney, it is a time-consuming task that is not to be taken lightly. I probably could have managed to do it myself. I know how to do legal research and navigate the court system. I am fluent in legalese. But, the $5400 in attorney fees for a Chap 13 with a lien strip is worth the piece of mind that it was being done correctly by somebody familiar with the local trustee and customs. There are just to many ways to make a mistake. My attorney submitted a plan that was confirmed as filed with no negotiation required.

[toojerm]

If it's a duplex, then is there income on the other unit? Honestly, sell the house if it's not upside down pay off as much as he can. I honestly believe that the five years in a high payment plan has taken at least as many years off my life expectancy.

[spidge]

If it's a duplex, then is there income on the other unit? Honestly, sell the house if it's not upside down pay off as much as he can. I honestly believe that the five years in a high payment plan has taken at least as many years off my life expectancy.

I agree on both fronts. Ch13 can wear you out.

If the house sells for even close to the actual value quoted earlier he could pay off much of the debt with the proceeds. He could avoid BK altogether, but will still have to work on paying off the remaining debt. He has options if he will let the house go.

[LadyInTheRed]

Ok here is a better idea, he makes 6,000 a month 4,782 in monthly obligations pertaining to the house with the equity loan included. Then the minimum payments on all the cards is 1,782 and he still comes up 500 short and is using his 401k to keep them paid. Wouldn't this get him a 7? or a really really low payment on a 13? I mean he's done for there is no disposable income as the amounts don't include food or any living expenses.

The payments on unsecured are not taken into account when determining eligibility for a 7 or a Chap 13 plan payment. He should try the means test calculator at http://www.legalconsumer.com/bankruptcy/means-test/ Note that for purposes of Chap 7, the payments on the 401K loan are not included. But, they would be included in calculating DMI for the Chap 13 payment.

[LadyInTheRed]

What is owed is 429,000 and the house is worth 520,000 per the last appraisal. .

Honestly, sell the house if it's not upside down pay off as much as he can.

Is there actually equity? OP said:

mortgage is 3,862.86 a month plus an equity payment of 377.82

Is $492K the balance of the first mortgage (in response tom my question) or does it include the 2nd? How old is that appraisal?

[iamwhoiam]

Right, Even if he let's the house go he has to go and rent and still include everything right now he has to take a very expensive med 1900 a month that we have skated by the cost of thanks to a few things i have worked out but the money he has been given for the meds has run out. he will have to start paying for them so eh lawyer it is this week. I just feel bad for him.

[iamwhoiam]

Plus the amount owed on the house i did not include the equity which is 80,000 and in 2 years is due in a balloon payment i mean hell i just keep finding out more.

[keepsmiling]

Your friend really needs to sit down and write out all of his expenses in preparation for a sitdown with a couple three attorneys.
He's going to probably get a slightly or vastly different picture from each btw.
As pointed out above, every case in a 13 is different. How much money you make is only a small part of the picture and in no way determines the percent payback.
Your friend has extraordinary medical expenses and will be grilled on them. Hopefully he has receipts for backup. I wonder... has he tried working with the drug company? Often there is some kind of assistance available. Good thing he makes decent money.
Also important to remember are all those tax deductions lost when renting. Might not be a good time to do so, unless trustee objects to high mortgage payment... which happens occasionally.
Does he not own a car because it's inconvenient in the city? Buying one pre filing is often a good strategy. Be sure to discuss.

ETA: Please tell him... NO MORE 401 WITHDRAWALS!!! WORST. DECISION. EVER.

[moe]

I am confused why this guy has to sell his house. Is it just that his house payments are so high?

I need to declare Ch. 13 and I don't want to sell my house.

Rent will be the same as my mortgage payment in my case. I wasn't sure why you were telling him to sell unless it is because his house payments were really high.

But I thought your house payments go into your means test.

You don't HAVE to sell your house to declare Ch. 13, I thought!!!

[keepsmiling]

Everyone's circumstances are different and it's almost pointless to try to compare your 13 to someone else's situation. It's kinda like that "high 13 payment" thread.... everything is so relative to individual circumstances; one person's "high" payment may be bupkis next to another's; or it may be a low number but a high percentage of income. Silly really, IMHO. No offense to the OP of that particular thread if you are reading

Anyhoo... one DOESN'T have to sell one's home in a 13, of course! It was just a suggestion from a member who is having a difficult time with his/her plan. Considering that balloon payment that is coming due, though... unless the HELOC could be stripped, could be selling isn't a bad idea. That could equal a very large payment I'd think. Anyone know how that part would work? Other than being able to stretch it to five years instead? I am very curious about that.

[momofthree]

"as soon as his tax return runs out"

Sounds like he is also having too many taxes taken out of his paycheck. That will need to be adjusted before filing. Just to use random numbers, someone who received a $6000 refund each year actually has an extra $500/mo in income.