Question What would you do in this situation?

[marilynrob]

First, an introductrion, I'm a long-time lurker who has learned so much from the posts here. I have probably spent at least 100 hours here in the last month. Good stuff.

Second long story but I will try to be brief, my situation is a little scary for some of your veterans. I filed ch. 13 pro on Feb 2. I had to file immediately to stop a foreclosure on a home that I owned for more than 12 years. I am an unemployed grad student living out of state with a home that I leased to own to a neighbor. For a year, the leaser paid the mortgage and life was good. In Sept, he stopped paying but I wasn't noticed until December when I received the foreclosure notice. In 45 days, I had to evict him and his kids during the holidays and exams from afar. With only a week left before the auction, I was advised to file bankruptcy to get the stay. I quickly read up and filed the petitions pro se because I did not have time or money or hire an attorney. I have about 25K equity in the house and placed it for sale but didn't expect sale before June. Two weeks later received an offer for almost full price offered. I have 30K in cc debt, house owe 88K, car 8K, 40K in student loans (sounds horrible in writing). I have 341 on 3/17 and have filed a motion to sell but fear that trustee will keep all funds.

Should I dismiss now? What are the likely consequences? Anything I should have done different?
Disclaimer: I know no one can give legal advice and I cannot see an attorney because I cannot even get a free consultation answer. I've tried. I will consider all response as worth what I paid for. Thanks in advance.

[DebtHater]

Tough question. I'll answer it as what I would do if I were in your shoe's. Keep in mind I am by no means an expert in this and as you said, the advise is what you paid for it. I'm sure others will give you their input.

If you did dismiss you will still have the BK on your name as if you went through with it. Additionally your student loans will not be BK'd. With that said.....

Option A:

If I did dismiss, I would take the proceeds from the house sale and pay off any remaining debt. According to your numbers that would be $25K towards the remaining debt. I would pay off the car, as it's secured debt and the rest towards the credit cards.

Option B:

You go through with the BK, possibly convert it to a chapter 7 (you could reaffirm the car) and let the trustee take the proceeds from the house. He would then distribute the proceeds to what ever debt is left. Anything remaining would be BK'd (except the student loans).

If I were you I would explore the possibility of option B. The damage is done as far as credit is concerned just from the fact that you filed. It's now time to move forward and make the best of the situation.

[Dst1]

I agree with DH. What do you gain by dismissing at this point in time? Perhaps there is something there but I don't see it.

[filingin08]

Thinking outloud... could you dismiss the case, sell the house, put the excess towards student loan debt, wait the required # of months and then re-file?

[marilynrob]

thanks for the replies so far. I thought I would dismiss because I hastily put the plan together as a ch 13 and think that the trustee will find it not feasible since I'm unemployed. I never considered ch 7 because of the house, I'm going to see what I have to do.

Additionally, the student loans are not due yet, 35K is subsidized and 5K private. I have another year until graduation, very little interest right now.

Also, I don't want to give all the money to the trustee since I have books and living expenses for the last year of school that I need to fund since I can only get subsidized student amount (20K).

[DebtHater]

Also, I don't want to give all the money to the trustee since I have books and living expenses for the last year of school that I need to fund since I can only get subsidized student amount (20K).

Some of the proceeds from the house may be exempt. The exemptions vary from state to state.

Have you thought about getting a part time job after school? You may never get ahead otherwise.

[marilynrob]

debthater, I have been looking for a job since I moved here. no luck. i have applied everywhere including the day jobs and don't get call backs. hopefully i will be a census worker in may.

[justbroke]

I don't know how you file a Chapter 13 without "regular income". That's a requirement for a Chapter 13. I think you, as others have, used the system to stave off the foreclosure. The problem is, that dismissing a Chapter 13 could be opposed by the Trustee if the Trustee thinks the home is worth trying to administer in a Chapter 7. Not trying to scare you, just telling you the reality.

I think you need to sit back and perform a total financial analysis of your situation. You may "think" you have $25K in equity, but selling has other overhead and I'm not sure you included those amounts. If you file for permission to sell free and clear, you will need to make sure there are exemptions to cover the proceeds in your State. I'm sure the Trustee -- if smart -- will review all of this as well.

I think that the real problem is you are more than likely not confirm-able. I'm not saying that is what the Trustee would do, but I can see that happening. You are in a bad spot, as many pro se filers realize. Most Chapter 13s are not confirmed, so don't feel so bad (less than 40% make it to confirmation). I think you used this as a strategy to stave off foreclosure, but now realizing that maneuvering within the process is restrictive... as it should be.

Maybe you should just think, as DH wrote earlier, that allowing your case to convert to a Chapter 7 and allowing the Trustee to "administer" your Estate, is worth getting rid of the $30K in credit card debt. It's all about strategy.

[marilynrob]

Justbroke, I'm married and have a small Va pension as income about 1000 which I used to pay the credit cards and car while I was in school. Hubby paid all all of the other bills It worked fine until the problems with the house.

You're right it is a lot harder to move in the system than i first assessed.

the 25K is the proceeds after the lien balance, closing costs, etc. I got the prelim statement today and began to draft the motion to sell but cannot figure out how to get the exemptions to cover the entire balance. That's the dilemma. I have been reading like crazy trying to make sense of everything.

[justbroke]

Okay, so you do have the pension income... didn't know that. I'm assuming that the exemptions are not very generous in your State and was one of my concerns. I truly hope that you can work this out. I still don't have any good answers and I apologize.

What State are you in?

[marilynrob]

I'm in Ohio. Thanks so much for the replies, they are validating what I was thinking. I really screwed up with filing for the bankruptcy but didn't know what else to do. hard lesson learned.

[DebtHater]

I really screwed up with filing for the bankruptcy but didn't know what else to do. hard lesson learned.

Don't beat yourself up. Most lessons in life are learned in hindsight. The important thing to do is to move forward and make the best of the situation.

[justbroke]

Yes, don't beat yourself up. I see that the Homestead Exemption in Ohio is pitiful when it comes to a home. .

[ivehadit]

Yes, don't beat yourself up. I see that the Homestead Exemption in Ohio is pitiful when it comes to a home. .

The ammount for OH changed last fall I believe it used to be 5,000 but the Gov changed it to 20,200. When you do an online search many sites still list the lower ammount. Ohio Revised Code 2329.66(A)(1)(a) has the higher ammount.

[justbroke]

Still pitiful.