Considering Converting from Ch13 to Ch7?

[Leahnc25]

Im in NC...
We are 21 months into a Ch13. (Filed 3/16/18) It's been very difficult and been scraping by every single paycheck to get by.

We have had so many ups and downs in this first year and a half. My husband was let go from his job 6 months into our ch13 and while we considered modifying the ch13, he was back to work shortly after making about 10k less per year. We reported all the income changes to our atty and expressed our struggles with limited income, but still did not modify. We make timely payments (never missed / never late) We are also now about $6-$7k in medical debt now too due to a Major surgery one year to the date of filling. Can't add that to our bk since they happened post filing. So much for a clean slate post ch13.

I know bankruptcy isnt supposed to be easy but we can hardly put food on the table or gas in the car for a fam of 4. Sometimes we have 20-30 bucks for 2 weeks and our gas expenses to work exceed that. We've cut all expenses way back, dont go out to eat, etc...I can't cut expenses anymore

We decided to initially file 13 because we were 4 months behind on our mtg payment (job loss) and just trying to save our home and have a roof over our heads. Having already modified our mortgage loan about 5 years ago, we sought out alternatives & found the Ch13 as a possible solution to keep us in our house. We have two cars (one paid off, one financed owing 15k) Due to late mortgage payments and the past mtg modification, our MTG balance is exactly what we borrowed 16 years ago. Our principal balance hasnt moved much in many years.

I am just tired of the struggle and want to see the light... 3.5 more years in Ch 13 seems like a lifetime.

Am I guaranteed to lose my home and car in NC if I convert to Ch 7? I know only my atty can say for certain, but just curious what this might look like? Can I get an apartment with a ch13 or 7 if I have steady income?

I'm worried and just not sure what to do?

[justbroke]

Welcome to BKForum

I know bankruptcy isnt supposed to be easy but we can hardly put food on the table or gas in the car for a fam of 4. Sometimes we have 20-30 bucks for 2 weeks and our gas expenses to work exceed that. We've cut all expenses way back, dont go out to eat, etc...I can't cut expenses anymore

That's tough and I understand what you're going through. It's why I always suggest modifying the plan, but that's not always as easy as it sounds. Usually it's because we are trying to protect property, so there is no wiggle room in the plan to deal with loss of income.

Am I guaranteed to lose my home and car in NC if I convert to Ch 7? I know only my atty can say for certain, but just curious what this might look like? Can I get an apartment with a ch13 or 7 if I have steady income?

I have to give you a qualified answer, with caveats, because it really does depend on your specific case.

As for the car, if you didn't cramdown the car payments, then you would just keep making them. You may be able to actually "Redeem" the car by using a loan to pay only what the value of the car at the time of the redemption hearing. This could save you $$$ and put you into a new loan. The downside of redemption loans is that the interest rate (APR) is typically in the upper teens. But, you could save thousands on the value of the car. I saved $11K by redeeming my vehicle (owed over $21K and redeemed for just over $10K).

As for the house, this will depend on whether you could get another modification to deal with the arrears. in Chapter 13, the arrears are spread over 5 years. Since you are only about 2 years into the Chapter 13, you haven't put a large dent into the arrears (about 40%). You'll have to specifically come up with a plan to deal with this. Even if you convert to Chapter 7, I would not reaffirm the mortgage, but you do need to get the arrears issue fixed.

When you convert to a Chapter 7, you get to include any new debt incurred since the filing of the Chapter 13 into the Chapter 7, as if those debts existed on the day that you filed the Chapter 13. This is a powerful tool. Under what they call section 348(d) of the code, the debtor includes all those new debts upon conversion. This would definitely help with the medical debt.

I actually converted from a Chapter 13 to a Chapter 7. I qualified for the Chapter 7 at the time I filed, but chose Chapter 13 because I was trying to protect property. After 2 years, I decided that it wasn't worth it to save the property and converted to Chapter 7. It went really well.

(Updated to add that whether or not you can convert by notice, may depend upon whether you initially qualified to receive a Chapter 7 discharge at the time you originally filed your Chapter 13. This varies by District as some require a new Means Test and others rely on the original Means Test to determine eligibility.)

[Leahnc25]

Thank you so much for replying. I tried to respond a few days ago, but the bkforum website was giving me issues?

This ch13 is causing a lot of stress! Its really nice to talk to others that understand. My attorney is not all that helpful and all questions get fielded through their paralegals. They aren't always helpful unfortunately.

We did not cramdown the car payments when we filed. I read about redeeming the loan but requires a lump sum to pay off the loan? I'm not sure where I would get a lump sum? I need to research this further.

I wonder if the mortgage company would work with us on the arrears?

Ch 7 would deal with those new medical debts that have accumulated so that is something to consider.

Lots to think about - Thank you!!

[justbroke]

We did not cramdown the car payments when we filed. I read about redeeming the loan but requires a lump sum to pay off the loan? I'm not sure where I would get a lump sum? I need to research this further.

There's at least 1 company that does these types of loans. I used 722 Redemption which is a division of US Bank. I applied day one of my Chapter 7 and then filed the appropriate motions to redeem after I was approved.

I wonder if the mortgage company would work with us on the arrears?

That's the question. It too difficult and not worthwhile speculating. You'll only know if you ask.

Ch 7 would deal with those new medical debts that have accumulated so that is something to consider.

Lots to think about - Thank you!!

My pleasure.