Thinking about Converting to 7

[tedrow]

We're currently 2 years in our 5 year chapter 13 bankruptcy. I've been laid off since October of last year and have been unable to make our regular payments. My atty did put in a suspension of payments for 3 months which helped but now the payments are piling up again. My husband and I are considering converting our 13 to a 7. His income currently along with my unemployment barely pays the bills and buys groceries. He is going to be changing jobs at the end of July to drive OTR in hopes of making more money. We don't have a house the only thing we have that is secured is a 2004 car. We also have back taxes from 02-05 and 07-08. I know in a 7 we could not eliminate 07-08 taxes but the others we should be able to. My question is should we let the trustee dismiss our case and refile a 13 in hopes that our payment will be lower so that we can keep our car? Or convert the case to a 7, surrender the car then hope and pray we can get financing for a better car? I need dependable transportation since we have a 3 month old. Anyone have any suggestions?

Thanks

[justbroke]

We also have back taxes from 02-05 and 07-08. I know in a 7 we could not eliminate 07-08 taxes but the others we should be able to.

I don't think you can elimited the 2002-2005 taxes because you may have "stayed" the collection, making them still, nondischargeable. Of course, talking with a good bankruptcy attorney, will let you know precisely if what I write is the case.

My question is should we let the trustee dismiss our case and refile a 13 in hopes that our payment will be lower so that we can keep our car?

If the Trustee files with prejudice, you won't be able to file for 180 days. Some Trustees will file with prejudice if you miss payments. However, given your loss of income, I think the Trustee would work something with your lawyer to dismiss without prejudice and allow you to refile. I have seen such things happen in court right before my eyes. However, this doesn't mean that this strategy will work for you. Local rules, procedure and customs always prevail.

Or convert the case to a 7, surrender the car then hope and pray we can get financing for a better car? I need dependable transportation since we have a 3 month old. Anyone have any suggestions?

You could Redeem the Car (722 Redemption) if it's worth it. If you're not too upside down, you may also be able to stipulate in a reaffirmation agreement with the vehicle lender to satisfy the post-petition arrears on the car in some manner (make sure it's workable and not that the arrears are due in payments over 6 months or somesuch). Your lawyer will help you with that decision.

[CH33 Paralegal]

If you convert, then true, you'll have to reaffirm on the car. You will be behind on the car as well. Even if your trustee payment is up to date, the car creditor has been receiving ADEQUATE PROTECTION PAYMENTS which do not equal the amount that the car note would be by itself outside of bankruptcy. If you add up what's been provided to the car creditor and compare it to what would have been expected otherwise, you'll see how far "behind" you are outside of a stay.

Now about the trustee dismissing your case. If you are dismissed for failure to pay, it WILL NOT be a dismissal with prejudice. you can turn around and refile the next day if you want. Now if YOU DISMISS your case, you can refile instantly UNLESS YOU'VE HAD AN MFR IN YOUR CASE. If you have, then you have a 180 day wait if you voluntarily dismiss. The only way I've seen someone get dismissed with prejudice is if it's just certain that they were trying to abuse the code. I had people that tried to provide voided checks as Proofs of payment before and they weren't even dismissed with prejudice...they just didn't get confirmed.

The car creditor could choose to reaffirm with you though. They also have the right to take it back if they want. It depends on the value of the car, how much is owed, and what the creditor thinks will put them in the better financial position out of the two scenarios.

Otherwise, if you can qualify for a 7 and you haven't done one in the last 8 years, then it sounds like it could give you guys some good relief. You're correct about your taxes.

[tedrow]

If you convert, then true, you'll have to reaffirm on the car. You will be behind on the car as well. Even if your trustee payment is up to date, the car creditor has been receiving ADEQUATE PROTECTION PAYMENTS which do not equal the amount that the car note would be by itself outside of bankruptcy. If you add up what's been provided to the car creditor and compare it to what would have been expected otherwise, you'll see how far "behind" you are outside of a stay.

Now about the trustee dismissing your case. If you are dismissed for failure to pay, it WILL NOT be a dismissal with prejudice. you can turn around and refile the next day if you want. Now if YOU DISMISS your case, you can refile instantly UNLESS YOU'VE HAD AN MFR IN YOUR CASE. If you have, then you have a 180 day wait if you voluntarily dismiss. The only way I've seen someone get dismissed with prejudice is if it's just certain that they were trying to abuse the code. I had people that tried to provide voided checks as Proofs of payment before and they weren't even dismissed with prejudice...they just didn't get confirmed.

The car creditor could choose to reaffirm with you though. They also have the right to take it back if they want. It depends on the value of the car, how much is owed, and what the creditor thinks will put them in the better financial position out of the two scenarios.

Otherwise, if you can qualify for a 7 and you haven't done one in the last 8 years, then it sounds like it could give you guys some good relief. You're correct about your taxes.

We are behind about 3000.00 on our car due to the bankruptcy per the company that we are financed with. I called a few days ago to see how much we would need if we wanted to reaffirm. To be honest with you the car probably isn't worth that much. I know it's not worth no where near the remaining balance of the car. I just have no idea what we should do. I keep leaning towards a chapter 7 but I am worried we won't be able to get a car financed because my husband is changing jobs and I'm unemployed. My atty says we can do either they won't really give me a straight answer one way or the other. I'm glad to hear that the 2002-05 taxes can be done away with.

Thanks for your help.