BK Help

[Gen]

BK 13 help
I am filing Chapter 13 due to overwhelming bills.....I am wondering what life is like during the 5 year process? We want to move in a few years and the lawyer said that as long as we do not receive 1/2 a million from our sale we would be able to keeep to move? I hope this is true and believe me we are hoping that the market goes up maybe get 10k. How do you all manage with any in increase in income when you find a job? Do the change your payment drastically ? Any insight to how life is during this process would be wonderful, thanks

[justbroke]

Welcome to BKForum!

The life of and in a Chapter 13 is different based on the person involved. You will have an initial budget, or sorts, set for you based on your disposable monthly income. So long as you can keep on budget and not miss any payments to the Trustee, you are good to go. Depending on your attorney and their prowess, you could have enough cushion which should allow you to save for a rainy day fund... because it IS going to rain! As I always say, life happens.

As for any equity you accrue in your home while in plan, sure, that's you're to keep. So long as you don't materially affect what the creditors are getting the Trustee usually doesn't care what you do. As for increases in pay, you'll have to inform your attorney. You attorney will decide whether you need to report any increases (or decreases!) to the Trustee and help you negotiate a new budget. Not all increases in income are met with a parallel increase in your plan payments. We often say that an increase of over 10% will likely raise the Trustees eyebrows and you'll be required to file new forms in order to determine the new budget, if any.

Life is what you make of it. I found that i started enjoying the little things like going to the park or beach (free things). I had ample budget to save money which helped because 2 weeks in, I needed new tires. A Chapter 13 will never work for a person who can not or otherwise refuses to budget. You will have ups and downs, but hopefully mostly ups. It is akin to living on a fixed income with varying costs thrown at you.

[Gen]

Thank you so much.
I suppose I am worried that I won't. e able to save because any in tease will have to. E paid to the court. I am 53 yrs old and have nothing saved for retirement so I doubt I will ever beable to do so. My husband is not filing with me but his income is also put into play. He has credit cards and will continue to use them don't know how that will effect me? Anyone know that one? My debt is from a business I had and was not his so I'm taking the hit.

[justbroke]

Your husband's credit cards, if they are in his name only, should not affect you. The unknown is always a tad bit scary, but a Chapter 13 can bring you financial relief. Is there a specific reason that you are going the Chapter 13 and not the Chapter 7 route?

[Gen]

Do not qualify for 7. Missed the mark by 5k. I was told that the chapter 13 your credit can go up after a year of on time payments? I get the feeling the court becomes your parent in a way that they are managing all. At my age 5years is long time hope we will. E able to move and buy a small place in a few years. Do you know if that is possible 2years into a 13?

[justbroke]

I really don't understand the "missed the mark by 5K". Chapter 7 is not based on whether you are above or below the median income. It's about your "disposable income" (DMI) after taking into account allowable expenses. Did you shop this around to more than one attorney? I'm just wondering and only because you say that you missed it by $5K. People can't obtain a Chapter 7 discharge because they have too much DMI (or are excluded for some other reason related to previous filings or attempting to save property).

Your credit will improve over time simply because you don't have any credit and the bad (IIB) tradelines start to age. About 2 years post filing, your credit lines should stabilize and not move higher than low 600s unless you actually have new credit. Since your husband is not filing, you could be added as an "authorized user" to some of his credit accounts and be in the mid to high 600s within 2 years post filing (depending on your husbands credit, how he uses it, his balances, and types of credit).

[Gen]

The attorney went by our income we had to be below 58k for a household of 3 (my 82 yr old mother lives with us). I have already paid the retainer😞

[justbroke]

Ouch. The attorney should have run the numbers. If your DMI was less than about $207, then you would otherwise qualify for Chapter 7. So what is your DMI?

[Gen]

Don't know. Did all the paperwork have 6months bank statements etc...waiting to hear back😳

[justbroke]

Well, let us know how it turns out. Maybe you have mortgage arrears and/or car payments that they're going to cure with the Chapter 13.

[Gen]

Thank you for the insight!

[LadyInTheRed]

If your debt is more than 50% business debt, make sure your attorney knows that. That would mean you don't have to pass the means test to file a Chap 7. If the attorney tells you again that you don't qualify for a Chap 7, have him explain why. If it doesn't make sense, maybe we can help you understand or let you know if we think you should consult with other attorneys. It may be worth losing your retainer to make sure you have a competent attorney.

The court does not become your parent in a Chap 13. Once your plan is confirmed, you make your monthly payment and go about your life. You may have to send copies of your income tax returns to the trustee every year. If your income increases or if your disposable income decreases in a manner that makes you unable to make plan payments, you contact your attorney. I received modest bonuses and raises every year during my Chap 13. I called my attorney every time and he always said "Congratulations. Keep making your plan payment." Chap 13 is not as scary as many think, especially if you are willing to make any adjustments necessary to live within your means.