Question about going from Ch13 to Ch7

[east9200]

Please don’t judge me, but first off to start I have a horrible gambling problem and have had so for much of my life, have bi polar condition . I know I need to get help and i hope to do so…. Question is this, I live in Texas and am in the middle of a ch13 payment plan for 36 months including repayment in the plan to include the IRS. Why would these companies even allow my to borrow money with an open ch13? If I was just denied from the begging I wouldn’t be posting on here tonight. I know I spent the money but I was honest when filling out the applications and have been making the minimum payments. Would credit card companies even try and come after me for smaller amounts? $2,500 on a few cards, $5600 loan.

Being honest during this bk I applied for loans and credit cards and didn’t lie on the applications, I was approved for a $5000 loan and various credit cards. Well I made bad decisions and am back in debt now. I can qualify for a ch7 due to my income, could I just stop paying my ch13 and file for a ch7 to also include past IRS debt? I occurred around $15,000 of new credit card debt during my ch13, I need advice. I do not own a home, no major assets other than a car I make payments on. I just really messed up here. Should I finish the ch13 then file a ch7 or just stop paying on it? Asking her first as I’m so embarrassed to call my own attorney.

Thank you for your replies.

[justbroke]

Welcome to BKForum.

Yes, gambling addiction is tough. You have to self-exclude and resists. I know that not everyone can do that. I've spend a lot of money in casinos and I know the draw personally.

The question you're going to be asked, if you allow the Chapter 13 to be dismissed and then file a Chapter 7, is what happened to gain another $15K in debt while in a Chapter 13. The Chapter 7 Trustee is likely to raise the issue of whether the Chapter 7 is in "good faith" or not. That's a difficult question to answer.

The real bottom line is this: if you don't get your gambling addiction under control, no bankruptcy will ever financially save you. This is why many bankruptcy trustees, once they know you have a gambling problem, want to know it's out of your system, you're self-excluded, and you've taken concrete steps (counseling) to deal with the issue. You can't hope to do so; you must do it and you must do it now. Call the gambling addiction hotline and self exclude yourself right now.

With that contrition you can call your attorney and explain what happened. It is going to be a tough call with the attorney, but you have to do it. Just so that you know, you won't be able to get a Chapter 7 discharge within 6 years of filing your Chapter 13. Finishing the Chapter 13 isn't going to fix anything.

Just call your attorney. They may have a solution but it will start with absolutely self-excluding from casinos.

[despritfreya]

If you are in a 36 month Chapter 13, at the time you filed you were at or below median income. You chose Chapter 13 over Chapter 7 because Chapter 13 gave you a "forced repayment plan on the government". The Chapter 13 Plan provided for the taxes without any additional interest. It may have also been paying for your car.

If you can no longer afford the Chapter 13 and/or have incurred additional debt, converting to a Chapter 7 may be in the cards. The post petition creditors can be added and, unless someone files a Complaint to determine if the debt is dischargeable, each post petition (pre conversion) creditor will be subject to the Chapter 7 Discharge.

The draw-backs to converting are the car and the IRS.

If you owe $$ on the car you will have to work with the lender to bring that current so you can keep the car. If no $$ is owed on the car, you have to determine if the value of the car is fully exempt. If it is, no problem. If it is not, you will need to deal with a Chapter 7 Trustee wanting it (depending on the amount over the exemption - this might not be a problem).

If you obtain a Chapter 7 Discharge, you will still have to deal with the taxes. You can reach out to the IRS (after discharge) to workout an installment agreement.

You should discuss the specifics of your situation with a local bk attorney. Based upon the information you have provided, I think conversion may be in the cards.

Des.

[Carmella]

Definitely talk to your attorney and see what the options are at this point. Did your BK allow you to take out credit? We had a very low limit, $500, we could borrow while in our Chapter 13.

Please make sure to stay active with your mental health professionals for both bipolar and gambling addiction. I know it can be much easier to say than to do. But your mental health should come first if you can force yourself to go to appointments, make extra appointments if needed or if you have a close friend/family maybe direct them to tell you if they see any behaviors indicating you may have an episode or mania or depression. Be upfront and have them tell you directly and do your best to believe them and try not to lash out at them if you don't see the symptoms. Let them know you will try your best to listen to them and apologize upfront in case you are rude to them. Take care of yourself!

[east9200]

Thanks for the replies, am going to contact my attorney soon regarding this. My car was outside the bk13 plan and has been paid on time, no late payments on the vehicle. The ch 13 payments are up to date.

I can convert to a ch 7 quick due to the fact that no actual discharge has been yet been completed on my ch 13 case correct?

Also if I convert to a ch 7 will the IRS debt, which is $2,000, be wiped out or would I have to pay that? I could also just stop making payments on the credit cards and loan I have. I have a $5200 loan, and credit card debt in the range of $3,500. These cards and loan was approved even though I’m in a open bk case, I know it’s my fault for accepting these funds but these banks should have also better checked my credit before loaning me this money. It’s a mess trust me but I take things one day at a time and am going to be getting treatment for my gambling issues. Thanks

[despritfreya]

If you are in the middle of your Chapter 13, you do not have a discharge - conversion is possible. However, I assumed you filed the 13 due to the IRS. You state that the IRS debt was $2,000.00. That is not enough to justify a Chapter 13. Why did you file a Chapter 13 in the first place?

Des.

[east9200]

Ch 13 was filed as I had a ch 7 filing in 2018 and was advised that I cannot file another ch 7 again for 8 years. Once the 8 yr period is up I’d be eligible at that time. So that’s where I’m at unfortunately.

[despritfreya]

That's a very important detail. Conversion may not be possible. It depends upon how your district interprets the bankruptcy code. In most districts you had to be eligible for a Chapter 7 as of the day the Chapter 13 was filed because the filing date does not change. You need to talk to your attorney. Let us know the outcome.

Des.