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    Unsecured Debt negotiation

    We had our initial 341 meeting on January 28th but it has been continued until March 4th as the Asst. US Trustee has requested additional information. Some of this information was on our children (work, college, etc.) and some questioned the numbers on our Means test and schedules. It definitely appears that some of these calculations are incorrect.

    From the initial filing, we were a border line Chapter 7 but could go into a Ch 13. As of the filing, we had about 50k in unsecured debt.

    Now, here's the wrinkle. My wife will be starting a new job in two weeks. Her annual income will rise substanially. We have advised our attorney of this but since this is a future event and "could" change, it was not mentioned at the 341 since that is based on prevoius and the here and now. I am afraid that if we get pushed into the Chapter 13, then the new income will come into play and we will be at 100% payback, negating the income increase and locking us down for 5 years. Within this time period, our children's student loans will have to start being paid, as they are currently deferred while still in college. Both could graduate as early as May, 2014.

    I am wondering if, should the Trustee force us into a Chapter 13-or at least if we appear to be heading that way, would we have any success at negotiating and settling the debt prior to confirmation and withdrawn the BK petition? We are expecting a decent tax refund and could conceivably offer abut 15% to the creditors, but it would take a 100% buy-in from all of them. This way though we lose our refund this year, the eventual pay increase would be protected. Thoughts?

    #2
    It is very unlikely to get that kind of settlement from all of your creditors under any circumstance. I doubt any creditors will settle after you convert to a 13 and submit a plan to pay 100% of unsecured claims.

    Why are your children's student loans a factor? When they graduate, they should get jobs and pay their own loans. If they can't get jobs or get low paying jobs, they can apply for deferments or income based repayment plans. Even if you co-signed the loans, the primary expectation should be that they will make the payments.

    Take a long-term view and celebrate your wife's new job and increased income. If you end up in a Chap 13, it is not the end of the world. Even if you pay 100% of unsecured debt, it will be interest free and get paid off sooner than if you didn't file BK.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

    Comment


      #3
      Not sure of your question exactly, to clarify...your wife's new job is not what is going to push you into 13 since it arose after the filing (assuming good faith).

      Also note, you don't get "forced" into a 13, you are given a choice, either convert to 13 or have your chapter 7 dismissed. If you dismiss, you may go down the (pointless) settlement path at that point. However, your expectations on what you could settle are not even close to realistic. You need to budget for 40% with a buffer of about 10% more to deal with hold-out creditors. So, with $50,000 debt, you need a LUMP SUM of $20,000, ready to go (no payment plans), to have a realistic shot at settling all your debt.

      Your plan is a non-starter on a technical point, your creditors are not allowed to negotiate with you while your BK is active.

      Comment


        #4
        HHM, based on the following quote, it sounds to me like the OP was aware that an objection to a Chap 7 discharge was likely for reasons unrelelated to the post-petition increase in income.

        "From the initial filing, we were a border line Chapter 7 but could go into a Ch 13."
        LadyInTheRed is in the black!
        Filed Chap 13 April 2010. Discharged May 2015.
        $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

        Comment

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