what if chapter 7 doesn't go in your favor?

[Help!]

Why I don't want do file Ch. 13

I do appreciate all the input. While there are some credit counseling horror stories (mostly debt settlement and not DMPs), there are several reasons why I feel this is better for us.

- Husband's income is likely to dramatically increase over the next year due to major promotion. Any communication about Ch. 13 to HR in this small company could destroy his reputation and chances of getting this promotion.

- We did a DMP for several years before taking out a HELOC to pay CCs off. The HELOC was the worst decision we ever made, but in that DMP we were really making progress and didn't have any problems with the DMP.

- Not worried about liens, etc. We were never late on a payment until we filed Ch. 7 and if we can't keep up we have a new car we own outright we could liquidate. The trustee would do this anyway if we filed 13.

- Because of the income increases, we would likely end up paying everything we owe to our creditors in a 13. Why not do this ourselves, without having a trustee having power over us? This part bothers me the most. I don't like the power trustees are given over people's lives.

Those are my opinions anyway. We may be filing 13 later anyway if the mortgage company comes after us, but at least at that point I will really feel ready to go the 13 route.

[Dirk Squarejaw]

- Any communication about Ch. 13 to HR in this small company could destroy his reputation and chances of getting this promotion.

Who's to say they won't find out about your chapter 7 that you already filed and are trying to walk away from? Its public information and in some areas its printed in the news paper, etc.

[Cali]

- In DMP creditors don't have to agree to participate.
- Employers can't keep you from getting a promotion if you file BK, that is against the law.
- If the C7 is on your records, the employer can see that already.

[Help!]

I see your point. However, employer was never granted permission to check credit. As I see it, you're right, there is a chance the employer will find out about us filing 7. Unless they skim the newspapers ever weekend, I'd give that a 5% chance. If we file 13, the payments will be taken out of his paycheck and there will be a 100% chance they find out.

Cali, you're right... they can't discriminate against you legally, but they could "overlook" him for a promotion and attribute it to something else. It would be tough (and expensive) to prove discrimination.

Good point about the DMP and the creditors ability to decline a proposal. I've done the math and if half of the creditors accept one we can afford the payment.

Thanks for the replies and for keeping me thinking...

[Cali]

Help,

As long as you know it will work, go for it. Good luck and I hope your hubby gets his promotion.

[JRScott]

I do appreciate all the input. While there are some credit counseling horror stories (mostly debt settlement and not DMPs), there are several reasons why I feel this is better for us.

- Husband's income is likely to dramatically increase over the next year due to major promotion. Any communication about Ch. 13 to HR in this small company could destroy his reputation and chances of getting this promotion.

- We did a DMP for several years before taking out a HELOC to pay CCs off. The HELOC was the worst decision we ever made, but in that DMP we were really making progress and didn't have any problems with the DMP.

- Not worried about liens, etc. We were never late on a payment until we filed Ch. 7 and if we can't keep up we have a new car we own outright we could liquidate. The trustee would do this anyway if we filed 13.

- Because of the income increases, we would likely end up paying everything we owe to our creditors in a 13. Why not do this ourselves, without having a trustee having power over us? This part bothers me the most. I don't like the power trustees are given over people's lives.

Those are my opinions anyway. We may be filing 13 later anyway if the mortgage company comes after us, but at least at that point I will really feel ready to go the 13 route.

Help, you seem to be banking on your husband making more money. That's a common mistake many of us make, hoping to make more in the future, and it generally leads to disaster.

You've already paid the money for the chapter 7. Let it run the course and see what happens. Go ahead and get the info the US Trustee has asked for. Them asking does not mean you will not be discharged, if your unsure pull up your bank records and do the best you can. Most Americans keep very poor records.

I would sit down and pray long and hard before banking on an increase in income considering the state of the economy. I wish you luck in whatever you decide.

[Help!]

Hi JRScott, thanks for the reply. My post didn't include some details that my other posts have. We just do not meet the means test, not without padding numbers. The only reason we appeared to meet the means test in the first place was that our rent is $600 above the standard, our charitable contributions are 10%, our private school tuition costs are $400 over the standard, etc. There is zero chance these would be considered "reasonable" expenses, even though our attorney told us they would be fine. Ch. 7 was a real stretch to begin with, and any one of these expenses being decreased would cause us to fail the means test.

I agree with you about the state of the economy, too. There is a 90% chance we'll be filing 13 very quickly, but I think we should stall as long as possible. I think that in the next few months if fuel and grocery costs continue to go up there will be a tidal wave of bankruptcy filings. Maybe the government will do something to help. I'm not holding my breath, and believe me, I am getting my ducks in a row in case we need to file 13.

Good luck to you also!

[justplaintired]

Hi JRScott, thanks for the reply. My post didn't include some details that my other posts have. We just do not meet the means test, not without padding numbers. The only reason we appeared to meet the means test in the first place was that our rent is $600 above the standard, our charitable contributions are 10%, our private school tuition costs are $400 over the standard, etc. There is zero chance these would be considered "reasonable" expenses, even though our attorney told us they would be fine. Ch. 7 was a real stretch to begin with, and any one of these expenses being decreased would cause us to fail the means test.

I agree with you about the state of the economy, too. There is a 90% chance we'll be filing 13 very quickly, but I think we should stall as long as possible. I think that in the next few months if fuel and grocery costs continue to go up there will be a tidal wave of bankruptcy filings. Maybe the government will do something to help. I'm not holding my breath, and believe me, I am getting my ducks in a row in case we need to file 13.

Good luck to you also!

Yes I agree with this economy it could be a record breaking year for BK. People are already strapped and it's going to get worse if you watch the news. That's why we are getting ready to file, I don't want to be in our current situation when the other shoe drops. We are getting ourselves prepared and filing now is the only way to do that. We knew we just couldn't go on like we were.

[JRScott]

10% Charitable giving is generally an acceptable expense in most districts. Depending on rent/housing cost in your area that might be typical for housing. Private School though as you seem aware can be seen as a luxury .

Chapter 13 isn't the end of the world, if I'm not mistaken lrprn is in one.

[lrprn]

Chapter 13 isn't the end of the world, if I'm not mistaken lrprn is in one.

Yes, you're right, JR - my husband and I are in Ch 13. Filed June 2006 (coming up on two years soon!). Our combined income was well over the median, so Ch 7 wasn't ever going to happen for us.

The way I figure it, in three more years we'll be done. No more unsecured debt and we will have paid down a good amount of our secured debt. We'll emerge with our cars fully paid for as well. Our phone isn't ringing hundreds of times a day. Every single one of our creditors had to participate in our Ch 13 plan whether they wanted to or not. Our alternatives? Frankly, there weren't any. Even cutting our expenses to the absolute minimum (eating cases of Ramen noodles, no new clothes for over a year....the works), we simply could not keep up with our monthly payments to everyone we owed and make any headway.

We tried credit counseling with very reputable CCCS for seven months before we filed. What a complete waste of time. Half of our creditors would not join the plan, and several of those who did participate increased our interest rates to 30% within weeks of agreeing to our CCCS repayment plan. We were paying in $800/month and after seven months, we were a tiny $900 ahead. Total waste of time and money, and we ended up filing anyway. Now we pay $1100/month and 90% of it goes to paying down our debt. After the dust settled, our non-secured creditors are getting 30% - that erases 70% of our debt - pretty cool deal!

Filing Ch 13 was by far the best decision we ever made. We are happy, we have hope...it's a whole new world again. Is it as quick and relatively painless as Ch 7? No. But it sure beats the heck out of being trapped in never-ending debt until we die that we could never pay off no matter what we did.

[Cali]

I totally agree.

BK's are way up here and they will continue to go up.

I am turning in paperwork next week and hopefully all goes well.

Yes I agree with this economy it could be a record breaking year for BK. People are already strapped and it's going to get worse if you watch the news. That's why we are getting ready to file, I don't want to be in our current situation when the other shoe drops. We are getting ourselves prepared and filing now is the only way to do that. We knew we just couldn't go on like we were.

[javaman]

There's another potential problem with DMPs. If I'm not mistaken, creditors are required to send 1099s for the amounts of the "forgiven" portions of the debts. If that is true, it could amount to a lot of extra income and taxes to pay on that income.

[bmrigs]

I tell you what is going to happed if and when I do file Chapter 7 and its dismissed by the Trustee. Im going to give the finger to the trustee, the court, the creditors, mortage co., IRS, and anybody else that thinks they are going to get something out of me. I am self employed so they cant garnish my wages and I will close all accts so they cant go after that. Let the house go cause I will have milked it as long as I could and live somewhere where they cant find me. Either way Im going to walk away from debt for good.

[laurannm]

I tell you what is going to happed if and when I do file Chapter 7 and its dismissed by the Trustee. Im going to give the finger to the trustee, the court, the creditors, mortage co., IRS, and anybody else that thinks they are going to get something out of me. I am self employed so they cant garnish my wages and I will close all accts so they cant go after that. Let the house go cause I will have milked it as long as I could and live somewhere where they cant find me. Either way Im going to walk away from debt for good.

LOL good luck with that strategy

[liz417]

I think that in the next few months if fuel and grocery costs continue to go up there will be a tidal wave of bankruptcy filings. Maybe the government will do something to help. I'm not holding my breath, and believe me, I am getting my ducks in a row in case we need to file 13.

Good luck to you also!

Hi Help,

I believe this too, what is the government going to do when 50-75% of people can't afford the basics anymore? I scan the paper everyday, hoping to find some more information on this.

What ever decision you make, I wish you the best!