Chapter 13? or 7? ..........

[CAB_44]

Hi all~
I am new to this website and this is my first post.
My husband and I are contemplating either Chapter 7 or 13. We go to the attorney to do a means test next week....
We have 90K .....yep....90K CC debt.
We have a mortgage, payments always current/never late
vehicles, payments current/ never late
and up until this month, we have been never late and current with ALL of our CC payments.
I am thinking it will be chap 13 that we file, but after reading some of the threads, I am wondering.......
I was under the impression (by the free consult with attorney) that we would get to keep our vehicles and home because they are current and never late...is this not the case?
Can the mortgage Co. and banks demand that we sell both the house and vehicles even though we are current and never late???
I have TONS of other questions as well.....but this is for the starter.....
thanks!

[NASCAR20FAN]

If you go for a Ch. 7 and you do have maens to do a Ch. 13, I would think that you would need to do the 13. Someone plase correct me if I'm wron, but I thought that the purpose of the pay stubs and tax records was to get a handle on your finances.

[FoolAndHisMoney]

Hi all~
I am new to this website and this is my first post.
My husband and I are contemplating either Chapter 7 or 13. We go to the attorney to do a means test next week....
We have 90K .....yep....90K CC debt.
We have a mortgage, payments always current/never late
vehicles, payments current/ never late
and up until this month, we have been never late and current with ALL of our CC payments.
I am thinking it will be chap 13 that we file, but after reading some of the threads, I am wondering.......
I was under the impression (by the free consult with attorney) that we would get to keep our vehicles and home because they are current and never late...is this not the case?
Can the mortgage Co. and banks demand that we sell both the house and vehicles even though we are current and never late???
I have TONS of other questions as well.....but this is for the starter.....
thanks!

First off if you are certain you are filing then stop paying your credit card bills and stop using them. The mortgage co and banks can't force you to sell anything and they do not want you to surrender this property or they would both lose their shirts trying to auction them off. To everyone's surprise you can keep a BMW and water front vacation house (if you had one) and still get a chapter 7 under new law as long as they are secured loans and not leases or rentals and they weren't purchased on the eve of filing.
The next step is you should get your assets appraised to see their values. The vehicles can be done at kbb.com and you can get an idea of your home at zillow.com, but the trustee usually wants a professional appraisal for your home.
This will determine your exemptions. If you have $110,000 in home equity and your state only allows $100,000 for a homestead exemption then you will have to either let the house go (in a chapter 7) and the trustee will sell it and give you the exempt amount or you can do a chapter 13 and pay your unsecured creditors at least 10k of your available disposable income over 5 years. The same applies to your autos. Any non exempt equity will go to the trustee.
As for the means test you can deduct the allowed national and local expenses, your secured car(up to 2 cars) and home loans, health insurance, life insurance, some charity, and any other reasonable expenses on the form. After the deductions this is your disposable income.

Figure out your disposable income and allowed exemptions here:

http://www.bankruptcyaction.com/bankruptcyexemptions.htm

http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm

Do plenty of research and go to your attorney prepared to avoid any problems.

[bkbiker]

Hi cab44,

Simplified

In chapter 13 you will general keep your home, cars, and everything else you own, no one can force you to sell your home or cars or anything else ever; Not the creditors nor the trustee can make you do this, you are in control always.

In return for the chapter 13 trustee making payments to your creditors and the bankruptcy court discharging all your unsecured debt at the end of your case, you are required to surrender all your disposal income for the length of your plan (usually 60 months) this is not always a easy task! Read some of the threads about planning your bankruptcy and making sure you list all all all all

[CAB_44]

Chapter13? or 7?

thanks for the info BKB and FAHM...
I know that we will have to do the means test, and yes, I know about reporting ALL of my expenses....
We go this next week to talk w/ the attorney. We have been already to the free consult. She has given us a packet to get all things in order when we go see her next week.
The CC companies have already started to hound us, but going to see her next week and paying her the up front fee of 300.00 gives us the right to refer the CC companies to their (attorney) office to stop them from calling us. It's interesting that we have never been late on anything, and it's only been a few weeks that I haven't paid 2 of the CC and they are hounding us 4times a day with phone calls...my anwering machine is getting a workout.....they won't leave messages though, that's also interesting...it's just that I didn't expect them to hound us to soon, it's the first time i've not payed the bill.....
The first attorney that I went to see said that we probably would only be expected to pay about 30% of the total 90K ...but the second attorney said that it depended on what was left over after expenses....we decided to go with her, she seemed to be more knowledgable. It is very scary at this point, i've never not paid these bills. I have stopped paying them so that I could get some things together.
Thanks for the info again, I do appreciate it!

[keepmine]

$90K and making minimum payments means, you'll spend decades trying to dig out from under this mess without filing bk.
You've a life to lead, a retirement to fund and a family to support. You can't do this paying $2300/month forever.
For sure, explore the Chapter 7 first-if there is anyway possible, file the 7 and destroy your unsecured creditors with the stroke of a pen. Neater and cleaner than a 60 month payment plan.

[Allen Greenspan]

RE. Chapter 13 or 7?

Under the new BK laws, the option of filing Ch. 7 has been taken away from many folks that make a middle class wage, leaving them only with the Ch 13 option. Being in BK for 5 years is a long time and this decison ought be taken very seriously, and after much planning, and as a last resort.

One test I see used by consumers is this: is your house-hold income more than the average for your County? and Do you have equity in your home, or 401k to pay off the 90K?

If you have the equity and you make more than the average income for your area, the painful but most realistic option to get on with life is to take $$$ from the equity of the home to manage the debt, or I hate to say this but it is true, sell the home to pay the debts.

The changes in the BK laws are still not totally understood, even by judges and laywers, so my suggestion is general, depending on the type of debt you have, credit cards? medical bills? what is it?

Because you say you have never missed a mortgage payment leads me to suggest to you various options of using your home's equity to manage the debt if you make more than average income, if you make less than average household income, file the CH 7----this is not legal advise, it is a suggestive starting point to know you have covered all options.

A.G.

[CAB_44]

I guess I am worried that my auto insurance and everything like that will go sky high......anyone know anything on this?
We have done the refi thing 2 yrs ago...actually the house is still worth about the same....100K ....we are current on everything except one month CC payments at this point, only 2 have come due that I haven't paid on, there are 4 more yet to come due.....never been late on home or cars (2).... have done the interest rate thing all cards are 7% and lower.....it's just that they want higher minimums because the interest is so low....3.99% 4.99% that sort of thing....can't sell anything, already have cut as low as can go, there's basically nothing left to do as far as cutting back~we've done it all...I have been looking for more ways to cut for many years, can't do anymore.......

[SinkingFast]

Not to be rude or anything, but we can help you better if you tell some things.

What State?

How much total gross income/mo?

How much are the house payments? Loan to value on the house?

Car payments? How much/mo? How long have you had the auto loans and term of the loans when you bought the cars?

If we know more, we can help you better.

[CAB_44]

yes of course SF~ I don't think you are being rude at all
Total income 73K after taxes
mortgage 883.00 monthly includes taxes and ins. value is approx 115K bal:110K
cars 772.00 monthly (2 vehicles) 05 and and 06 Nissan's
paid on 05/ 14 months
paid on 06/ 5 months
husband must have a dependable vehicle
he drives 60 miles daily.
I realize we probably should sell both of these and get used cars~
it looks really bad on here when I post that.....
I expect to get a bashing for that one........

[SinkingFast]

Don't go selling anything if you think you're gonna file BK. That could look like fraud if you don't have an exceptional reason. Like having to pay the IRS.

We sold a truck back last spring to pay Uncle Sam $8100 taxes for '05. Our attny said it wasn't ideal, but not much the Trustee could do about it. Paid a Secured and a Priority Creditor with the money. Not like we gave the proceeds to CC's or took a lavish vacation with the money.

Need to know what State you live in and how many in your family. That will help us with Exemptions, Median Income, Schedules allowables, and such.

[FoolAndHisMoney]

yes of course SF~ I don't think you are being rude at all
Total income 73K after taxes
mortgage 883.00 monthly includes taxes and ins. value is approx 115K bal:110K
cars 772.00 monthly (2 vehicles) 05 and and 06 Nissan's
paid on 05/ 14 months
paid on 06/ 5 months
husband must have a dependable vehicle
he drives 60 miles daily.
I realize we probably should sell both of these and get used cars~
it looks really bad on here when I post that.....
I expect to get a bashing for that one........

No bashing from me. Keep both your cars so you can deduct the full allowed car ownership expenses and operating costs for the means test. If you sell them before filing you will lose this important deduction. Whichever is higher, the national standard or the actual loan payment, your allowed to take the higher of the deductions. You don't want to be in a chapter 13 if that's the way you go with 2 old cars.
What's your states exemption on the house. Looks like you have 5k in home equity which most states allow at least that much.

[bkbiker]

Hi cab44,

Good advice here from Sf and FAHM,

If you do go the way of chapter 13, which looks like a very good possibility, you will need those cars! For 5 years so keep them, they should help to lower your disposable income on the means test.

It is not a crime to be in debt in this country, and it is your right under the United States Constitution to ask for protection from your creditors via the bankruptcy codes.

Most of us here have felt nervous, ashamed, sad, and anxious and many other emotions at the prospect of filing bankruptcy, it did get easier once I just accepted that this was my only way out of debt.

Good luck,
bkbiker

[CAB_44]

thanks to the both of you~
Yes, the first time I went to see an attorney, he advised us NOT to sell. I actually HAD a "for sale" sign on the most expensinve vehicle, and he told me that was not the smartest thing to do, at that moment I thought that was kind of ironic, but he explained it to me, and it made sense. Although, we struggle with that vehicle because a month AFTER we bought it (last year) was when gas went up, and has pretty much stayed up...I guess my "pay back" for buying that vehicle is that I can't drive it much and it sits in the driveway....we have a 14 yr old Honda that my husband drives instead, he says he still loves it though....
One thing that I did do was put my daughters car in her name (title transfer) it is paid for and she needs a car, she will be going to cosmetology school (her tuition is paid by her grandmother) and it will be 60 mile round trip. I didn't want it taken from her.
We don't owe the IRS,well... I am supposed to pay quarterly, but my husband doesn't claim any dependants until the end of the year when we file, so his covers me, but we do end up owing about 1K every year. I never get anything back.
I realize I won't be able to purchase any vehicles if we go through with this..
My husband and I talked again last night about it, and we are both getting cold feet as far as filing....I really think it is the only way out, but he is still not sure. On MSN message boards, I have posted a few and talked with a few and some have really started to bash me (of course) but one guy seems to be helpful, although he is trying to convince me I can get out of this without 13/7 .....I just don't see how~ We have hardly any equity, even if I sell the cars, I'll still have to purchase one....no two.....it's just not possible~
I truly appreciate your input on this, yes I DO feel ashamed, and I guess I should, it's not how I was brought up.......
Again, thanks~

[SinkingFast]

Most everyone here feels the same CAB. Basically, we're good folk who had something happen or made a few wrong decisions. That's all. Hindsight is 20/20, but we can't go back and change anything.

We're broke because we did try to pay our bills. No savings. No retirement. Sold things. No nothing left.

Don't beat yourself up over this. You've done the best you knew how and this is where you've landed.

Does it make you less of a person??!! NO!! Other people have other issues. Some you know about. Others you probably don't know about.

We know a couple that look very normal on the surface, but he cheats on her. Has for years. With many different women.

Another couple got divorced because the guy suddenly realized he was gay.

So your finances are a mess. There's other things that your neighbors are hiding, I'm sure. Nobody is perfect.