Not sure what to do 7 or 13

[RNmomtofour]

First of all, I have to file separate from my husband because his father co-signed on an auto loan of his and would freak if he filed bankruptcy. I have more credit card debt than him anyways. I am just confused about what you get to keep in chapter 7. Our house has no equity - in fact, we owe more than it's worth now I have a car loan, but it's small (4000). My mother gave me $15000 for a new mini van so that is all I had to finance - and it's not late or anything. I have about $45,000 in cc debt. We were working with a debt settlement firm, but they were charging us 40% of whatever they saved us - after paying them, we weren't saving much at all! I have 4 children and we make a combined income of around 90k/year. With all of our debt, we are really struggling and had to stop paying most of our credit cards since the fees/interest rates were so high. It was like we owned 2 homes. I would need to keep my van and home. Also, I am right in the middle of school with about 2 more years left and would have to take out more student loans next year. Not sure if I would be able to if I file? Any advice is appreciated.

[keepmine]

That $15K equity in the van is way over the exemption level for Il.

http://www.thebankruptcysite.org/exemptions/illinois.html

[RNmomtofour]

So 13 then? I am just a little leary since the attorney I am talking to tonight has this on their website about 13: Chapter 13 is also called “Adjustment of Debt”. Under Chapter 13 you file a plan with the court that shows how you will pay off some of your past-due and current debts over three to five years. Most importantly, a Chapter 13 bankruptcy will allow you to keep property–especially your home and car–which might otherwise be lost during the bankruptcy process, provided you can make the payments required to be made to your creditors. In the majority of cases, the required payments will be at least as much as your current, regular monthly payments plus some additional amount to catch up on the past-due amount. In order to file under Chapter 13, you will need to show that you have enough income to meet your living expenses and to keep up with the required payments as required in your bankruptcy plan."
The part that scares me is : "In the majority of cases, the required payments will be at least as much as your current, regular monthly payments plus some additional amount to catch up on the past-due amount" If I could afford minimum monthly payments, then I wouldn't have to file bankruptcy! Help!

[lillymarlene]

I would check out some other attorneys if you haven't retained anybody yet. I've been in a chapter 13 since October 2010, and my payments are no where near what I would have had to pay on credit cards.

[LadyInTheRed]

So 13 then?

Not necesssarily. What's the van worth today? Take that amount and deduct the loan balance to determine your current equity. In addition to the $2,400 automobile exemption, IL has a $4,000 wild card you can use. So, If you have $10,000 in equity, you can exempt $6,400, leaving $3,600 that is non exempt. In a Chapter 7, you will usually have an oportunity to buy back your non exempt equity. Ask the attorney about that option.

In a Chapter 13, your payment will have to be high enough to pay to your unsecured creditors during the life of the 36 to 60 month plan, an amount that is at least equail to the non-exempt equity. You will also have to continue to make your regular car payment unless it is paid through the plan, in which case the minimum plan payment will also have to be enough to cover the car payment. Because the trustee fee will be higher if you include the car payment, it is better to make the payment yourself if possible.

I think the quote you highlighted refers to payments for secured debt. Many Chap 13 plan payments will be lower than your total monthly payments if you included payments on credit card debt. IMO, if the plan payment, plus any secured debt payments made "outside the plan", is going to be higher than the debtor's pre-BK secured and unsecured debt payments, the debtor may be trying to keep assets they can't afford.

[LadyInTheRed]

I would check out some other attorneys if you haven't retained anybody yet.

I agree, if I'm wrong about my interpretation of that statement.

[Drazil65]

Also, do you and your husband have any joint debt? If you do then that is something you need to think about in case you both need to file. Do you plan to surrender the house or keep it? If you just keep paying and do a stay and pay you will probably be ok with it. Do not reaffirm especially if you are underwater that way you will not be stuck with it when you do want to walk away. Have you had any appointments with attorneys yet? If not, start making appointments and get your list of questions ready. Good Luck!

[ksgirl38]

Well, my situation is different than yours. I don't have a house and I'm current on my car loan and not reaffirming that, but I met with an attorney yesterday who basically said if you are going to file a BK and you qualify for a Ch 7 then you should go that route. He was actually very adamant about not filing a Ch 13. His reasoning was that a BK is a BK and you might as well wipe out all the debt at once rather than paying on a Ch 13 because the damage to your credit is going to be the same. Like I said, my situation is different, but I think someone mentioned you could exempt your vehicle. Not sure what to tell you on the house, but it's probably a good idea to talk to a few other attorneys and see what they say. From what I've seen things tend to vary from state to state quite a bit. Hope it works out for you.

[mslaw]

Can't you both file and just reaffirm the loan you are paying that your father in law signed for? Your situation sounds a lot like ours. A lot. RN here too (From your username I assume), 5 kids, tons of debt and upside down in our house BIG time. We met with an atty yesterday and I'm ready to move on. We are walking away from the house. Are you doing this too or staying put? I think with all you've listed, you'd qualify for Ch7.