Should I file Ch.7 or Ch.13?

[hamburgervol]

I understand I would have to pass the means test to file Ch.7 and do not believe it will be a problem. I have about $52,000 worth of unsecured debt that I'm only able to pay the minimums on. About $19,000 of that is an unsecured loan that I used to pay off other CC debt.

FWIW, I talked with Consumer Credit Counseling and their DMP was -$400. I took that as indication Bankruptcy was my only option.

I also have 1 car that I owe $20,000 on that's worth $10,000 that I would like to keep. (we must have 2 cars)I also have another very good dependable car that's worth about $3,500 that's paid for. I have a 1st and 2nd mortgage(HELOC). We want to keep the house and try to refinance so we can combine the 1st and 2nd ($242,000 combined, house is worth $250,000 per an appraisal).

We are current on all our debt except 1st mortgage(20 days over due date because I get paid monthly)

I would prefer to wipe to unsecured debt clean rather that do the Ch.13 repayment. Most of my debt has been accumulated over a 17 year period.

Do I have a choice which way I file? Any input would be greatly appreciated!

This is an awesome forum!

[BigJohn]

How much do you gross each month?

How long have been paying on the one car that is not paid for?

How much is your 2nd mortgage?

How long ago did you get your house appraised?

[OhioFiler]

You need to determine what the exemptions are for Tennessee residents to understand the effect of a Chapter 7 on your home and vehicles.

I'm not sure why you would want to keep a car worth $10,000 you owe $20,000 unless you will be able to do a 722 redemption.

[hamburgervol]

How much do you gross each month?

How long have been paying on the one car that is not paid for?

How much is your 2nd mortgage?

How long ago did you get your house appraised?

$5330 per month gross

Have had the car for about 1 1/2 year

2nd Mortgage is $50,000

Appraisal was this month.

[hamburgervol]

You need to determine what the exemptions are for Tennessee residents to understand the effect of a Chapter 7 on your home and vehicles.

I'm not sure why you would want to keep a car worth $10,000 you owe $20,000 unless you will be able to do a 722 redemption.

We like the car and it has 10/100,000 warranty. I'm not sure how easy it will be to replace after BK. I'm not sure what a 722 redemption is.

[keepmine]

www.722redemption.com can answer some of those questions.
The means test is just step 1. You need to fill out schedules I and J to determine monthly disposable income.

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

Fill this out and see where you stand.

[OhioFiler]

We like the car and it has 10/100,000 warranty. I'm not sure how easy it will be to replace after BK. I'm not sure what a 722 redemption is.

So the car is worth $10,000 and you value the warranty as worth $10,000. I would suggest getting a less expensive car and buying an extended warranty for considerably less than $10,000.


We need to separate our emotions (we like the car) from the facts (worth $10K vs owe $20K) as part of planning for BK. In the end you'll be much further ahead.

[hamburgervol]

So the car is worth $10,000 and you value the warranty as worth $10,000. I would suggest getting a less expensive car and buying an extended warranty for considerably less than $10,000.


We need to separate our emotions (we like the car) from the facts (worth $10K vs owe $20K) as part of planning for BK. In the end you'll be much further ahead.

I agree with you but wonder how hard it will be for us to get financing for a replacement vehicle after BK. It would be great is we could do a 722 redemption on in (I know understand 722 redemption).

Looks like the only draw backs in 722 is finding financing for 722 and high interest when you do find financing.

[OhioFiler]

I agree with you but wonder how hard it will be for us to get financing for a replacement vehicle after BK. It would be great is we could do a 722 redemption on in (I know understand 722 redemption).

Looks like the only draw backs in 722 is finding financing for 722 and high interest when you do find financing.

There is a lot of discussion on this site regarding replacing a car after BK. It will most likely be easy for you to finance a car after BK. You'll pay a higher interest rate of course but many people are reporting rates as low as 12%. Not bad really.

You may also be able to save money over a few months and buy a car for cash! This is a preferred method by many. Do some research on Dave Ramsey for reasons why this is a great idea.

Planning the BK is the smartest thing you'll ever do. Look around here for posts from people who dreaded not reading these forums and planning their BK.

Good luck to you!

[hamburgervol]

www.722redemption.com can answer some of those questions.
The means test is just step 1. You need to fill out schedules I and J to determine monthly disposable income.

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

Fill this out and see where you stand.

per the means test: I says I fail the means test If I did it correctly. The Vehicle Operation Expenses and Vehicle Ownership or Lease Expense was a bit confusing. Line 22= 2 or more Line 23=1

Monthly disposable income $134
60-month disposable income $ 8,044

[hamburgervol]

per the means test: I says I fail the means test If I did it correctly. The Vehicle Operation Expenses and Vehicle Ownership or Lease Expense was a bit confusing. Line 22= 2 or more Line 23=1

Monthly disposable income $134
60-month disposable income $ 8,044

Ok so I failed the means. I have been thinking of getting a term life insurance policy on myself that's about $58 per month. Would that be permissible? Also we do not have dental insurance and have thought about checking into that. Would those expenses help us pass the means test? Is there a time period in which such things as purchasing insurances have to be done before you file?

[keepmine]

If your DI is $134, you should be in good shape to file a 7. I think the threshold amount that is a minimum to fund a 13 is $187.
I'd speak with a few lawyers and see what they say. Most give free or lowcost initial consultations.

[limegreen260]

Ok so I failed the means. I have been thinking of getting a term life insurance policy on myself that's about $58 per month. Would that be permissible? Also we do not have dental insurance and have thought about checking into that. Would those expenses help us pass the means test? Is there a time period in which such things as purchasing insurances have to be done before you file?

I'm curious about this too.

[Clouddancer]

I get the impression that even if you pass the means test the trustee could still push you to 13 because of presumption of abuse.

[hamburgervol]

I get the impression that even if you pass the means test the trustee could still push you to 13 because of presumption of abuse.

$134 per month wouldn't put much of a dent in my unsecured debt. It would only payoff 15.5% of the total.

I'm not dead set against Ch.13. The failure rates of Ch.13 seems futile though.

As for the term insurance...If I die who's going to take care of my family and pay off my house, especially after BK?

Is Life insurance a luxury in a trustees eyes?

Maybe I'm wrong?