Should I File and Which Chapter?

[tim273]

Hello Everyone,

I'm new to this forum and to bankruptcy in general. My family and I are in a situtation where we think we need to file, but not sure how to proceed. Here's our situtation. We have about $35,000 in unsecured debt, all of which we're behind on. We have a mortgage and a car loan, both of which are current and we haven't fallen behind on. We also have another car which I borrowed money from my mom to buy so there's no bank lease on it.

As for my family, my wife has fybromyalgia and is a stay-at-home mom of our 2 kids (3 and 1). Our 3 year old has autism-sepectrum disorder we would like to put him into ABA training, but not sure how to pay for it. Because of my wife's fibromyalgia she's unable to keep a job so she doesn't work.

In an attempt to pay off debt, I signed up with Superior Debt Services which is a debt consolidation company, one of the ones where you have a savings account and they settle your debts for you. I'm about 4 months into a 3 year program. I thought this program would cover all my debt, but there were some things that were not covered so we're still living paycheck to paycheck but usually have to choose weather to pay bills or put food on the table at times.

I have a couple concerns:
1. We need both cars because I have to drive to work and my wife has to drive our son to school.
2. How will filing affect the consoldation company I signed a contract with?
3. Can anyone reccomend a good laywer in the Minneapolis/St Paul area?

Thanks everyone,
Tim

[momxx5]

I am sorry that you find yourself in this situation but you have come to the right place.

First of all I suggest calling ACCC.....they were great discussing our options. They are truly a heaven send.

Also, talk to lawyers, not just one. Many will give free consultations and your heart will tell you what to do.

The Debt Solultion is scarey because they have hidden fees, etc.

Keep us posted.

[tim273]

Hello Everyone,

Thanks for the post momxx5 and here's an update. I talked with a lawyer and found out that chapter 13 is our best option. The situation we have is that we might need to shell out $900 for Tefra (county assistance for our children) for their special autism needs, but there's no way we can afford that unless we file for BK.

Right now, we're current on our mortgage and car payments which are the largest of our bills. I was thinking if I purposely got behind on both of them by a month or so, they could get included on the BK. The car and mortgage are both with the same creditor (along with a credit card) if that makes any difference. We owe more than the car and house are worth and it would be nice to get them restructured or however that works. I was wondering if that's a good idea or not.

Thanks for all the help,
Tim

[keepmine]

In a 13, if you've owned the car for over 910 days, it can be crammed down to fmv.
As to the mortgage. If you have a 2nd mortgage and the home is worth less than the value of the 1st mortgage then, the 2nd mortgage can be stripped.

Is this why, a 13 is the best option? What percent payback to unsecured creditors? If you wish to keep the car and home, you'll need to stay current. Any arreage can be put in the 13 and repaid at 100%.

[tim273]

As far as unsecured debt, we've actually stopped paying and we're using a debt consolidation program. With all that we're still living paycheck to paycheck. I'd have to get a better look at how much we're actually spending.

The reason we need to stick with 13 is because we need our second car so my wife can take to kids to various appointments and we want to keep the house because we want to stay in the area and moving would be hard on the kids.

I need to research more on the laws, but all advice is welcome.

Thank you very much for the advice.
Tim

[hamburgervol]

Have you done the means test?

http://www.legalconsumer.com/bankruptcy/means-test/

[tim273]

I saw a lawyer and he said that I make to much to qualify for the means test, but he mentioned an "extended" means test and that I'd have a 50-50 chance of qualifying for that.

His advice was to give up the Jeep (car we owe on) and our house and do chapter 7 and get a fresh start. But he also mentioned that he was biased because of all the damage he's seen that the banks have done to people in his years as a lawyer.

[tim273]

I will try the means test though and see what I qualify for.

[tim273]

Also, I have a second car that I borrowed money from my mom to pay for. If I file for chapter 7, the court will go after that money I have paid back to her in the last year (according to the lawyer). Neither my wife or I want to deal with that, because she's rather controlling and vindictive. If we file 13, I'll be required to pay that back, I can handle that.

[hamburgervol]

Also, I have a second car that I borrowed money from my mom to pay for. If I file for chapter 7, the court will go after that money I have paid back to her in the last year (according to the lawyer). Neither my wife or I want to deal with that, because she's rather controlling and vindictive. If we file 13, I'll be required to pay that back, I can handle that.

Who presently holds the title on this vehicle, you or your mother?

[lifelesson]

Does your wife get SSI and your 3 year old? They both might be able to get that. And are both of you filing or just you? cause is the car that the MIL helped get in your wife's name only? Maybe I'm off but thought I'd ask.

I am not an attorney. I just had my 341 hearing today.

[klandsb]

TIM 273... Stop paying the Debt Settelment agency ASAP... Been there done that..I was in for 8 mths ...Paid a total of around $4000 / $880 of that was in a stored savings account..( I got that back) I was sued by one of my creditors and the debt settelment company more or less says sorry about your luck .... It will happan to you sooner or later ....They just had a Dateline Special on Debt Settelment Companies...There all about the same and the majority of people that get involved end up filing bankruptcy...
My boyfriend and I are fighting hard to get some of my money back.. It amazes me how he can get so much further ahead arguing with these people then I could but he is willing and very good at taking care of things...After he saw the Dateline Special he got really fired up...Anyway, todays offer was $500...Waiting to see what he gets tomorrow

[tim273]

Wow, thanks for all the replys! Ok, here's the answers:

1. My wife and I are on the title of the car, not my mom.
2. My wife doesn't get SSI and my son is 4. It would probably be both of us filing because we share a debt.
3. Thanks for the advice Klandsb, I've actually had to miss 3 payments in a row so my account is on a "temporary hold." I guess I'll make it perminant.

Thanks again!
Tim

[keepmine]

Yeah, for darn sure stop paying the debt settlement agency. That debt will be discharged in your bk.
Were I you, I'd see another lawyer or 2 and get some hard numbers about the percent payback in a 13. Also, can you qualify for a Chapter 7. You don't have to file today. Many of us have had to put some time between default and filing.
Take your time and exam all of your options.

[tim273]

Thanks for the advice, I'm planning to see other lawyers to get other opinons. I need to first get a good grasp on our spending habits. Good thing I have a couple years of history in GnuCash.