How much will I have to Pay?

[nohope]

I've come to the conclusion that I must file. I have substantial equity in my home and substantial debt. I live in NJ. How is it determined how much of your debt you pay back? By income? By assets? I owe income taxes as well and student loans. Since they have to be paid back, what happens to all the other debt? I owe divorce lawyers $40K - they've sued me for their fees (originally told me my ex would have to foot the bill); do the divorce lawyers get more of a share than my other creditors? Are there guidelines on how much I can expect to live on?

[keepmine]

In a Chapter 13, unsecured creditors can't get less than they've have received in a Chapter 7.
You got a lot of things that makes this a less than routine filing. Most bk lawyers give a free or low cost initial consultation. Speak with a few and get all of your options explained.

[angles]

You posted lots of questions so I will try to touch on a few as best I can. In a chapter 13 (which it sounds like you are considering) from what I understand they will suspend your tuition payments until after you are out of BK. Taxes have priority over other debts so they would get paid back first. Outside of that all debts are treated equally. How much you pay back depends on your expenses vs income and will very from person to person. This is where a good attorney becomes really important. From what I understand in a BK 13 you have to pay back at least the same amount that you would if you were to file for a BK 7.

So why are you looking at filing a chapter 13 rather then a chapter 7?

[momofthree]

When filing ch.13 your unsecured creditors have to receive at least as much money as they would if all of your assets were liquidated in a ch.7.

I don't think NJ has a homestead exemption, but you are allowed to use the federal exemptions, which includes a homestead exemption of $20,200. If you have more equity than that, then you will have to pay at least the amount of the non-exempt equity into your bk plan.

For example, if you have $100k in equity, you'd have to pay at least (100k - 20,200) $79800 into your plan in order to keep your home -- or pay 100% of your debt, whichever is less. That would be a payment of $1330 a month for 60 months. Back taxes, mortgage arrears, attorney fees, & trustee fees would be added on top of the min. payment as well. Your income must be able to support the min. plan payment in order to qualify for a ch.13 plan.

Your other option is to surrender your home and pay off the debt yourself. Or, surrender your home and file ch.7.

As someone else mentioned, student loans go into deferment (is that the right word?) while in a ch.13.

[nohope]

Thank you all. So just to understand, if the equity in my home is more than what I owe (which is well over $100K), I will have to pay it ALL back which in effect means my house will need to be sold. I am disabled and do not work. I had to give up my health insurance; now with the new health care plan there is insurance available to me which I can't afford now, was hoping that bankruptcy would help me with that. Unfortunately, my disease is progressing. My income would not support the payments you've mentioned (if it did - why would I be filing?). I thought filing would decrease the amount I owed.

[momofthree]

Unfortunately, NJ is one of those states that has a very stingy homestead exemption. It's not very bk friendly towards homeowners.

Something someone else posted about recently (she was also from NJ. ). You could sell your home in NJ, buy a home in a more bk-friendly state, wait a couple years to fulfill the residency requirements and then file. Then you'd still have a home, and would be able to wipe out your debt.

[nohope]

I guess if one could sell their home quickly (impossible these days) and continue to make all their payments for those couple of years, one could try to do that. Better hope nothing else bad happens during that time.