is chapter 13 the way to go?

[GPFAY]

hi,this is my first post,just have to tell all of you this is one very informative
board,lotsa great advice.my situation is i have around 75k in unsecured debt
(cr.cards mostlly)due to 40% pay reduction a couple years back.am about
4 mos. behind in payments,most of the accts. have been turned over to collections,they are now threatening to garnish my wages (also wondering how long that process takes-i live in ohio if that matters)i own a home with
minimum equity built up house payments are current as are my 3car payments.theris no way though i can even make min.payments on cc though.
should i file a chap.13 or what-thanks for any input

[edwards2]

Consult an attorney asap...No way to know for sure which chapter your lawyer will file. Usually if you are current on your house note and you want to discharge your debts you file a Chapter 7. There is a means test and credit counseling involved under the new BK law so getting legal counsel would answer a lot of your questions. You will be forced to file a Chapter 13 if you dont pass the means test and have disposable income to pay your creditors. Keep us posted but dont wait too long given you are so many months behind on your credit card bills.

[SinkingFast]

Edwards is right. You're best course of action is to Consult with attnys. Get professional opinions on your particular situation. Go see several attnys. Consults are generally free.

Although, there have been recent reports on the Forum of attnys charging a fee lately. Generally the Consult fee get's applied to your filing fee if you use that attny. It's a way to prevent the attny from wasting time with Lookie Lou's.

Just a couple of FYI's for you about BK,..........

Ch 7 is Liquidation BK. You have to be current on the payments, and your equity cannot exceed the exemptions limits.

In your case, in Ohio, your Homestead exemption is $5,000/filer or $10,000 joint. That's the equity you have in your house. For the cars, it's $1,000/filer or $2,000 joint. Again, that's equity above what you currently owe on the vehicles.

Ch 13 is called "Wage Earner's BK". Basically, you pay back a portion of the unsecured debt. That may be the way to go if you really feel you must keep all the cars and cannot cover your equity with exemptions.

Filers can't choose which Ch they get to file. Except that is, if you qualify for a 7 and want to go 13 to keep property. That's determined by the Means Test and Median Income. Here's a link for you to learn all that's applicable to your particular location:

http://www.usdoj.gov/ust/

Median Income is determined State by State and according to the size of your family.

[GPFAY]

THANKS for the responses,one more question ,under the newBK laws,what
percentage do you normally pay back in a chap.13 or don't they really know
yet,sorry to sound like a newbie,but i guess i am (scared also)BTW i am going to see attys.monday thanks again.

[SinkingFast]

There's no set amount.

When the law was written, it was between $6K and $10K over 5 years had to be equal to 25% of your unsecured debt. That's $100-$166/month disposable income. If you could not pay back 25% of unsecured debt, you were allowed to claim Ch 7.

Our attny said, when we met with him a couple of weeks ago, the Court here is pushing for $6000 over 5 years. Flat. $100/month. Regardless of the payback level.

I think, and this is just my personal opinion, the New Law didn't quite accomplish what the Legislators had hoped for. And now the US Trustee's office is being pushed from above, to get as many people as possible into Ch 13 plans.

Again, that's a personal opinion.

[aa06a47]

There's no set amount.

When the law was written, it was between $6K and $10K over 5 years had to be equal to 25% of your unsecured debt. That's $100-$166/month disposable income. If you could not pay back 25% of unsecured debt, you were allowed to claim Ch 7.

Our attny said, when we met with him a couple of weeks ago, the Court here is pushing for $6000 over 5 years. Flat. $100/month. Regardless of the payback level.

I think, and this is just my personal opinion, the New Law didn't quite accomplish what the Legislators had hoped for. And now the US Trustee's office is being pushed from above, to get as many people as possible into Ch 13 plans.

Again, that's a personal opinion.

I think it is if you can't pay 10K or 25%, whichever is less, you can file Chapter 7. That is where the 166/month figure comes in. That keeps the "rich" or those that have really large unsecured credit from walking away scott free. Heck, if the 25% was the rule, it would encourage everybody to go max out all there cards. Chapter 7 would be easy then!!!

My disposable income shows I can pay more than 10K, but less that 25%, but I am still in a forced Chapter 13 because I can pay at least $10K to my creditors.

[SinkingFast]

From Nolo.com:

If your total monthly disposable income after subtracting these amounts is less than $100, you pass the means test, and will be allowed to file for Chapter 7. If your total remaining monthly disposable income is more than $166.66, you have flunked the means test, and will be prohibited from using Chapter 7.

So what about those in the middle? They have to do some more math. If your remaining monthly disposable income is between $100 and $166.66, you must figure out whether what you have left over is enough to pay more than 25% of your unsecured, nonpriority debts (such as credit card bills, student loans, medical bills, and so on) over a five-year period. If so, you flunk the means test, and Chapter 7 won't be available to you. If not, you pass the means test, and Chapter 7 remains an option.

That's the way the Law was written, but seems the application is quite a different matter.

As you said, Aa, people could run out and run up a ton of debt to escape the 25% repayment level.

But, the Court is already cracking down. As what happened with you. You had more than $100/month disposable income, but are not paying back 25% of your debt. And, according to what our attny said, is the same in the Court here.

The Court isn't looking at the % of debt repayment in the $100-$166/month range. The Court is simply looking at $100 or more in disposable income per month. Like a red rubber stamp, Poof, you're Ch 13.