Ch 7 or Ch 13?

[keepsmiling]

Ahhh.... well as Emily Littella used to say, "that's different then. Never mind"
In that case, a 13 will help you ditch the Heloc. But... you will still be underwater. Some people choose at that point to just let it go, save up a bunch of cash, maybe live rent free for a while, and look for a better deal down the road. Do you love your house? Can you afford it? Could you live elsewhere for less? Big decisions.
Many have been successful with settling the second with a 7 as well, for 5-10%. Unless both are with the same bank... that could be a problem.

[despritfreya]

In Arizona, and in response to. . .

"Cannot stack on one car. Most Trustees will not allow this in any way."

Depends on what you mean by “stacking”. If you mean using some other exemption to puff up the allowed vehicle exemption you would be correct. If you mean combining one spouse’s exemption ($5k) with the other spouse’s exemption ($5k) (which is technically "doubling") into one vehicle for a total of $10k you would be incorrect as such is allowed by Statute and done all the time.

"6 months food, fuel, provisions - does NOT include prepayment of utilities"

Not correct as it relates to electric and gas and that portion of a deposit for other services for the purpose of adequate assurances of future performance - at least in the eyes of one judge. See - In re Ward, Case No. 07-4183-SSC ruling dated 2/9/2010.

The sole issue for determination is whether the Debtors' prepetition deposit of funds for future utility payments is within the parameters of ARS 33-1124, Arizona's food and fuel exemption law. . . (In addition to prepayment of gas and electric), it appears that the Trustee in this case is concerned about the six-month deposits placed with Qwest and the City of Phoenix. Therefore, although the Court agrees with the Trustee that such funds are not within the Arizona food and fuel exemption, a certain portion of the deposits would normally be provided by the Debtors postpettion to continue to receive services from Qwest or the City of Phoenix. The Trustee should determine what portion of those deposits may be retained and utilized by the Debtors for the separate requirements of Section 366. The Court will not order a turnover of the funds placed on deposit with Qwest and the City of Phoenix at this time. . . The Court overrules the Objection of the Trustee to the Debtors' claim of exemption in the deposit of $1,400 placed with Arizona Public Service and the deposit of $183.50 placed with Southwest Gas Company.

Des.

[Forza42]

Ahhh.... well as Emily Littella used to say, "that's different then. Never mind"
In that case, a 13 will help you ditch the Heloc. But... you will still be underwater. Some people choose at that point to just let it go, save up a bunch of cash, maybe live rent free for a while, and look for a better deal down the road. Do you love your house? Can you afford it? Could you live elsewhere for less? Big decisions.
Many have been successful with settling the second with a 7 as well, for 5-10%. Unless both are with the same bank... that could be a problem.

We absolutely LOVE our house and do not want to move. Obviously I would if I had to, but we wouldn't be saving much. The rentals I've looked at are pretty close to what we pay for a mortgage

Our first and second are with different banks, whew!

Thanks for your help!

[Forza42]

There is one key factor that determines if you have the option of a 3 year plan or MUST do a 5 year plan: your gross income for the 6 months prior to filing. Such as if you file in July, then your income (check dates, not earning dates) from Jan-June are averaged out. If the amount is above the median income for your state & family size, you must do a 5 year plan. If below, you might be able to do a 3 year plan.

If you have the option of a 3 year plan (due to being below the median income) then it becomes a question of whether or not you have enough DMI to pay in for 3 years & make a feasible plan. As has been explained - the worst case scenario on your car is that you'll have $10,000 of non-exempt equity. Meaning if there are no other requirements, then your plan will need to cover $10,000 to unsecured creditors + attorney fees + trustee fee. The trustee fee is 5-10% of your payment, depending on district. So if you pay $300 x 36 and take away 10% (trustee may be less, but this is an example) then that leaves only $9720 for attorney fees & debt payments. That would not be enough if you need to pay $10,000 to unsecured. You'd need to find a way to pay in more per month and/or for more months.

There may be other things that must be paid in your plan. If you're behind on your mortgage then the arrears must be paid in full - and that would not count in this $10,000 example to go to unsecured creditors. Discuss with your attorney so you understand exactly what MUST be paid, and how the attorney is determining the minimum amount you need to pay in to make a valid plan.

Is there any reason to file ASAP? Are you facing foreclosure, repossession or a judgment from any creditor? If not - then perhaps you should discuss waiting with your attorney. Waiting until the overtime stabilizes. Once that happens, calculate income for each month to see how close you are to median. If November '11 - April '12 have you slightly over median, perhaps filing in July (and using Jan-Jun '12) would be below median. Use money now in ways that can help your bankruptcy case. You would not want to use it to create non-exempt assets. But use it on things that would be exempt. Like stocking up on groceries, taking care of household repairs, or setting $ aside to pay your attorney in full before filing.

One more question! If we don't have enough DMI for 3 years, would they just make us pay less for a longer amount of time, or would we have to do a ch7?

[despritfreya]

If we don't have enough DMI for 3 years, would they just make us pay less for a longer amount of time, or would we have to do a ch7?

If you are below median income you can elect to do a 36 month Plan but, if you need to extend it out because you cannot afford to pay what needs to be paid in 3 years, you can - up to 60 months.

Des.

[Forza42]

Thanks!