Free consultation today - nervous!

[RNmomtofour]

A little background:
My husband and I make good money - but when I had my first child (we now have 4), I quit my job and we lived on credit cards to maintain our lifestyle (stupid!). We have a combined income of around 100k - with credit card debt of about 80k total. We did a debt management plan with Care One, but our payment is $1700/month (which is like another mortgage payment). We have fallen behind by 2 payments on our mortgage and we have to keep bumping back our Care One payment every month so now it is considered late and a few creditors have bailed on the plan. We have one car payment and 3 cards that we pay on that aren't on the plan. I am so nervous about filing chapter 13, but I think it's our only option. Will they take all of our income though and apply it towards paying the creditors? We need our payment to the trustee to be MUCH lower than 1700/month - just wondering if Chapter 13 will do this for us. Does anyone have any advice or suggestions? I am so confused and nervous.

[LadyInTheRed]

Welcome to bkforum!

Your payment to the debt management plan is based on what you owe to your unsecured creditors and what they would accept. Your Chap 13 plan payment will be what you can afford to pay based on your income and reasonable expenses, i.e., it will be equal to your disposable income. The payment also has to be enough to pay your mortgage arrears, attorneys fees included in the plan and trustee fees over the 60 month plan. If you keep any non-exempt assets, your payment will also have to be enough to pay unsecured creditors at least the value of your non-exempt assets. A Chap 13 plan won't be easy, but it should be livable. It will force you to live within your means.

There's nothing to be nervous about, things are going to get better from here. Keep reading the posts on this board, including the stickies, and keep asking questions. You'll get a lot of information and support here.

ETA: Once you decide that you will definitely file BK, you should stop making the Care payment and separate credit card payments.

[RNmomtofour]

We get to keep our cars and house correct? From what I have read that is possible. Also, with our current plan on care one we have to pay back the full 80k. With chapter 13 u don't have to pay it all back correct?

You can keep assets in a Chap 13. But, it isn't always the right decision. You will only have to pay back 100% of your unsecured debt if your disposable income is high enough to do so in 60 months.

As keepsmiling says, go talk to some attorneys so they can give you information based on your circumstances.

[keepsmiling]

Deep breath and.... WELCOME to your new home

You have made a good choice coming here. Relax, go talk to the attorney (realizing that you should make a few more appointments to check out some others as well) and come back and tell us about it. Don't sign anything just yet.

Relief is on the way.

[ValleYum]

RN Mom? How did your consult go??? Let us know!

[RNmomtofour]

Well, now we are thinking we might just stay with our debt management plan through Care One. The lawyer said our payment might very well be the same as the Care One payment ($1700/month) or higher!!! We make too much to do Chapter 7 - and he charges $3500. He said he wouldn't know our payment until we filed. I just can't risk giving up our debt management plan and paying MORE! That would really do us in. So confused and upset today

[IamOld]

RNmom - we too did care one for a few months - they didn't really exert themselves too much-well not at all actually.

However...just for your own sanity...maybe see if you can talk to an atty who maybe would be willing to at least look through your finances...if you're broke - which you are...how is it possible that Ch 13 would be HIGHER than CareOne???

See I realize now - among many other STOOOOOOOOOPID things that I did - we too paid the stupid credit cards before the mortgage...so maybe as the others here would say...and I KNOW how hard this is...but maybe one more consult??

[ValleYum]

Don't get upset... make more appointments with other attorneys. Lots of folks see 3-5 for a consult before selecting their attorney. It is an important decision.

Are you absolutely sure you can't file a Chapter 7? With a family of six - your six month gross combined income can't exceed $48,049 in Illinois in order to file a Chapter 7 under median income. That's really close to the amount you stated in your post above of $50k (for 6 months) (NOTE: This 6 month amount goes down effective November 1st to $47,037) If your income is more than this amount, it doesn't mean you can't file a Chapter 7. It just means you have to take the Means Test.

The nicest part of a Chapter 7 is that you are *typically* finished in 3-4 months and you don't owe any of the $80k to the credit card companies (as long as there were no huge cash advances recently, no trips to Europe, etc.) You can keep your house and cars in a Chapter 7 if you can cover the equity you have in them with exemptions - find those here: http://www.legalconsumer.com/bankrup...T=IL#homestead You can try running the Means Test yourself to see about a Chapter 7 here: http://www.legalconsumer.com/bankrup...tate.php?st=IL

If you absolutely do have to file a Chapter 13, your payment might be close to the $1700 but it will take care of your mortgage arrears (get you caught up and keep you current!) and could even have included the vehicle payment you are paying outside the care one payment. Did the attorney mention that? The means test calculator I listed above can help you come up with your disposable monthly income (DMI) amount. If you can currently either pay your mortgage or your care one payment but not both, then your DMI isn't $1700 or you may be trying to keep assets you can't afford.

Hang in there - you have time to find the right solution - but don't give up on a BK (either chapter) after having spoken with only one attorney.

[LadyInTheRed]

I ran some numbers. If you have $80,000 in unsecured debt and are $3,400 behind on your mortgage (you say $1,700 is like another mortgage payment), included $2,000 in attorney fees in your plan and pay 10% trustee fee (which may be high), the total you would have to pay in a 60 month plan to pay 100% to unsecured creditors is $85,400 which comes to $1,423.33 a month. It would be higher if the plan includes your car or mortgage payments. It is possible that if your monthly DMI is higher than $1,423.33 a month, that your payment would be whatever your DMI is for a shorter period than 60 months. Use the means test that Valle Yum linked to to get an idea of what your DMI is.

You obviously can't rely on my calculations because I don't know all of the deatils of your situation. But, don't give up based on the one consultation. See more attorneys. Bring a list of all your debts and monthly expenses. Also bring a list of your income and deductions for the last 6 months. I actually sent that information to attorneys before I met with them and they estimated my plan payment before I got there.