new here and have some questions

[stoptheinsanity]

Hello all! I've been lurking and reading around here for over a month now and i think i have most of my questions answered from lurking but i was hoping for some input.

We are drowning over here. My dh makes about 2400/mth before taxes. We have cc debt, not quite 10k, tons and tons of medical bills, and some unsecured personal loans, student loans, secured loans and well, just a bunch of debt.

We went and talked with a bk attorney who thought we should file a ch 13. Main reason for this is that we have some furniture that we bought on a secure loan and we want to keep it and our van which is also a loan. we were current on our van until he told us to stop paying on it. at the end of this month we'll be 2 months behind on it. we are behind on everything else.

we do not own our home. we rent from my parents. we need to keep our van, whether we reaffirm or do the 722 redemption. our attorney told us on tuesday that our ch. 13 payment would be $320/mth. that would leave us with about $200 for food and other necessities for the month. we are a family of four in GA. we make way way way under the median for the state. our rent is $980 and then with our standard bills our living expenses (electric, water, phone, cable, ect.) are around 500.

we cannot realistically afford 320/mth for a bk payment. we cannot survive on 200/mth.

are we getting bad advice and being pushed into a 13? wouldn't a 7 be better for us?

we need to do something as we are seriously drowning over here. i am a sahm. i could work but the daycare costs would mean i would make nothing. plus, my 10 mo has severe GERD and i'm not sure we could even find a provider to care for him. and quite honestly i want to be home with my boys.

i know this is a ramble and i'm not sure i'm making sense. but please give me any input or thoughts you may have.

thanks for your time.

[keepmine]

First of all, how much equity is in the van?
Don't let furniture force you into a 13. That stuff depreciates rapidly. Post bk, you can either cut a deal with whomever finances the furniture or just tell 'em to come and get it.

[WantToBeDebtFre]

If you file Chap 13 it will only be to save your van and the furniture. So ask yourself if it's worth it. You'll be in a Chap 13 for the next 3-5 years. If you file a Chap 7 you could lose the furniture and the van but it will all be over in a few months. If you are able to catch up payments on your van a keep current you might be able to keep it during a Chap 7 bankruptcy. We're able to keep ours but we owe more money on it then it's worth.

Personally, I'd go with the Chap 7 but that's for you to decide. I also don't understand why your attorney would tell you to stop making your van payments if you planned on keeping it.

[325Falcon]

Go talk to another attorney ASAP!!

[Lindsay]

The advice from this attorney sounds horrible. We make about the same as you do and we own a very nice 2004 truck that we're not upside down on. It is financed at 1.9%. We hope to keep it (we only owe 13,000 on it now), but if the trustee wants it, we'll hand it over and buy a $1000 beater car until we get back on our feet. I would never want to go into a Chapter 13 to save a vehicle. You can buy a used van for relatively little money after the bankruptcy if need be. Many people keep their vehicles in chapter 7. I would run to a different attorney. If you are a family of 4 making 24,000 a year, you should definitely be in a chapter 7.

[ssdsco]

Go talk to another attorney ASAP!!

Ditto

[JollyGG]

Go talk to another attorney ASAP!!

I agree.

Can you get caught up on your van before you file? How much is it worth? How much do you still owe on it? What state do you live in?
If you can't get caught up can always give it back and buy a beater to get around in or get something different after discharge (high interst rate).

As for the furnature - File and list it as an unsecured debt. If the the place wants it back tell them to come and get it. Odds are good they won't ever show. If they do pick up a cheap couch at goodwill until you get back on your feet.

The vehicle and the furniture are not worth the price of a chapter 13.

[stoptheinsanity]

see, i thought the 7 was the way to go too. a crazy 5 year payment plan seems like we'd just be in the same boat for years.

our van is worth $5325 according to the lady i spoke with at 722 redemption funding. our attorney said a little over 6K.

i can't let it go for a junker because i have a son who has lots of doctor appts. i need something safe and reliable to ride around with the precious cargo. we'd have to borrow to get caught up on the payment.

i'm wondering if the redemption is the way to go.

we don't live lavishly. we are in a 1200 sqft home. we don't eat out or shop except for necessities and cheapo toys for my boys. we just want to sleep at night and not have so much worry. a fresh start. we tried our luck at our own little diner last year and maxed out on all our cc's and used whaat savings we had. hindsight is 20/20. right?

[woeisme]

I think it'd be nuts to file 13 if you can file 7 and all you are protecting is a small amount of assets. You don't say how much you still owe on the van, if that is about $5000, then you would owe as much as it is worth and the trustee wouldn't take it anyhow, so filing 13 to save it is unnecessary. Does your lawyer perchance have much higher fees to do 13 instead of 7? That may be why he's pushing it. I agree with the other posters on here, you don't want to get into a ch 13 that you can't afford anyway, then need to convert to a 7 down the line anyhow. And if the guy tells you not to pay on the van that you plan to keep, he really doesn't know what he is talking about!

[stoptheinsanity]

oh, i forgot we owe just over 10K on the van.

[JollyGG]

oh, i forgot we owe just over 10K on the van.

Ummm. It may not be in your best interest to keep it anyway if it is that upside down. You can get financing right out of bankruptcy if that is your only choice. The interest rate will be sky high.

I'm not sure if you need to be current in order to do a redemption loan or not. Does any one else know?

How long have you owned the vehicle?

You said that you would have to barrow the money to get current? Is there someone (parents or siblings) who would be willing to loan you the money to get current?

[SinkingFast]

The attny told you what you both wanted to hear.

You said you have furniture with security interest loans that you want to keep. Ch 13 is the only sure way to accomplish that. By having you quit making your van payments, now the attny can throw those arrears, and possibly your van payment, into your Ch 13 Plan.

PLUS, the attny gets a bigger fee for filing a Ch 13. AND, Ch 13's grease the Trustee's palms too. Not to mention,......... A couple of years from now, when you can't afford living with the Ch 13 payments,........... You'd be back begging the attny to Convert your case to a Ch 7. Kah-Ching!! Another fee for the attny.

Filing Ch 13 for you was a Win/Win for the attny.

Don't worry about the furniture. If they come and get it later, so be it. You can get decent stuff by shopping around yard sales, garage sales, and 2nd hand stores.

As for the van,......... You can negotiate better terms with the Lender during the Reaffirmation process. You'd have to bring the van payments current to do that. OR, you can surrender the van in BK and get a different vehicle with a 722 Redemption Loan. A 3rd option, if you have temporary transportation available, is,.......... Surrender the van in BK and wait until after Discharge. Then apply with one of many BK friendly car loan Lenders. Get a new vehicle after your BK is done.

[biotechsolution]

How much in medical bills and unsecured loans? because 10K in credit card debt is not a lot. The students most likely will survive.

The big question is has your health insurance changed for the better since the initial bills were applied?? If you are in the same situation with health coverage what would stop this cycle from repeating.

Remember the bankruptcy 'silver bullet' can only be used every 8 years and if your health insurance situation hasn't changed it may be worth waiting until the coverage has improved.

Just .02

[keepmine]

Yeah, you got a loser for a lawyer. With $5K negative equity, the van is not at risk. Don't get hung up on the furniture. A bk is a fresh start-don't encumber it by hanging on to consumer goods that depreciate rapidly-like furniture. A 722 redemption may well work if it lowers the loan amount on the van to a reasonable current value.
In addition to biotechsolutions thoughts, you guys have to raise your income. You can't support 4 people on less than $30k/year. Your husband needs to get a better job or find some pt work. Or, you find a job working nights while he's home with the kids. On $that income,, you'll be right back in the same boat a year after the bk is discharged. Filing bk is the easy part. The hard part is what comes next. Fixing the issues thatc reated the bk and raising your income.

[stoptheinsanity]

Yeah, you got a loser for a lawyer. With $5K negative equity, the van is not at risk. Don't get hung up on the furniture. A bk is a fresh start-don't encumber it by hanging on to consumer goods that depreciate rapidly-like furniture. A 722 redemption may well work if it lowers the loan amount on the van to a reasonable current value.
In addition to biotechsolutions thoughts, you guys have to raise your income. You can't support 4 people on less than $30k/year. Your husband needs to get a better job or find some pt work. Or, you find a job working nights while he's home with the kids. On $that income,, you'll be right back in the same boat a year after the bk is discharged. Filing bk is the easy part. The hard part is what comes next. Fixing the issues thatc reated the bk and raising your income.

we won't worry about the furniture. maybe we can exempt it or they won't mess with it. either way, we'll make do.

as of nov. 1 my dh and i are insured through his work. my baby is on medicaid which i hope they will extend because of his issues. i've also applied for ga peachcare for kids so i'm anxiously awaiting word on that for my 2.5 yo.

of course we'd love to make more money but my dh has a good paying job for our area. i know we need more money but with my sons health issues i just cannot afford to go to work right now. dh is up at 4am and wouldn't make it through a day physically if i weren't here for the hour long crying sessions we go through during the night. in a perfect world we would all make more money and we wouldn't be here right.

we're not looking for an easy way out. this is the hardest decision we've had to make but it's ssomething that we know we have to do at this point. it's just figuring out the logistics of it all.

big thanks to all who have offered such helpful insight. i'm sure i'll be around picking your brains for a while.