Can surrendering secured debt push me into a 13?

[Frshstart09]

Good day everyone. New to the forum. I'm well over the median income for a two person household, but failed the means test because of the secured debt from my home and two vehicles, thus allowing a Chapter 7 filing on May 7th. I would like to surrender everything and start fresh, but I'm afraid that doing so might push me into a 13 because that surrendered property will then become disposible income. Has anyone heard of this? My vehicle payments are 900/mo. I much rather get something used and have no payments, but not at the expense of the chapter 7. Suggestions? Thanks.

[StartingOver08]

Did you already file on May 7th or are you planning to file later this month?

I also filed a Ch 7 and was over median income substantially and was successfully discharged without being thrown into a Ch 13. I too had large amount of secured debt ($850k) and about $145k unsecured debt plus some priority tax debt.

I was able to surrender two homes (personal residence and rental property) and one of two vehicles. Naturally, this wipes out my debt entirely except for the one car payment that I reaffirmed.

Get confirmation from your attorney, but the issue is: what is your disposable income as of the date of filing. There are differences in the various districts as to whether you can use your mortgage payment on property you are surrendering, but apparently most districts allow it. This could be a major factor for you, so find out what your district will allow.

As to the vehicles, you could always start off with the intent to reaffirm the vehicle payment so it is an allowed expense. Then during the automatic stay period you can try to renegotiate the payment with the current lender, that's what I did. One of the lenders (a local CU) negotiated a lower payment and I reaffirmed the debt as it is short term anyway. The other vehicle lender was not cooperative, so I ultimately surrendered the car. However, as of the filing date I was able to use both vehicle payments.

If you do something similar and you are not able to renegotiate the payments to your satisfaction, you can then surrender both vehicles and purchase something after you Ch 7 with no payments. If you are going to surrender, you must do so prior to the discharge. All I had to do was change my statement of intentions and refile it prior to discharge.

[Frshstart09]

Thank you so much! That helps a lot. I've already filed, now I'm trying to decide if I should hold payments to save for a used car and surrender the vehicles. I'm upside down on both, so I'm leaning toward letting them go and being completely debt free. Do you have to be current to negotiate new loan? Thanks again!

[StartingOver08]

If you are in the automatic stay you do not have to be current. You will need to speak directly to the BK dept to negotiate the loan. Some lenders are cooperative and others are not. I had one of each.

I would suggest not paying any payments until you get the loan negotiated. If they will not work with you, why send them any $$$. On the one that I reaffirmed, I was able to negotiate a skipped payment too.

[Frshstart09]

Thanks for the info!