Chapter 13 bound!

[Dnrbroke]

Newbe here! I'll try to make this short as possible. 120K in total debt, CCs, 2 loans and tax debt. Spoke with attorney already. Planing to file in October, mainly because I'll be able to discharge some of the tax debt or move to non-priorty debt in the 13. I'm only 2 months behind on debt and possibly could turn something around by October and maybe avoid all together? Both me and my wife have jobs. Where we ran into our trouble was my wife's family owned a business in which she received a 1099 type of income for over 20 years. It was a decent weekly amount and we structured our financial life around that income. Fast forward to a year ago, between the pandemic and the financial backer pulling out, her family lost the business and in turn, we lost that extra income. We qualify for a 7 under the means test, but have too much equity in our home and we don't want to loose our house. My main question is, is chapter 13 a good option or is it a big nightmare? I hear some great outcomes on this forum as well as some horror stories. However the horror stories seem way beyond any issues I have. I'm just hoping that 13 can right our ship if we can't pull out of this on our own? Thanks In advance for any feedback!

[flashoflight]

The amount of non-exempt equity sets an extra minimum floor as to how much you have to pay into a chapter 13 regardless of future circumstances such as additional loss of income, death or disability of an income earner, etc. Chapter 13 is a giant math problem and hopefully you have enough remaining income to pay the non-exempt equity in a 36-60 month timeframe. It's a straight math issue and not the amount of desire to keep your home issue. Chapter 13 is potentially flexible enough to adjust to personal circumstances, but not when you have unprotected equity that you have to pay to your unsecured creditors. So we can't really say if you will have a horrible time or not. If you don't have enough income to pay for the unprotected equity in 5 years with no interest, you do a 7, give up the house, and receive a check for up to the max homestead exemption. If you do nothing, you may get sued and have your home equity drained by the unsecured creditors via their judgment collection powers.

My chapter 13 is nice, but I also didn't have to give up any of my property due to exemptions. So it really depends on the math and the amount of unprotected equity.

[Dnrbroke]

Yea I'm going to wait until September to do an appraisal to see exactly where we stand. Hopefully after the exemptions, there isn't much left? Thanks for the reply.

[Carmella]

Chapter 13 can be good or can be a nightmare--likely a combination of both.

Chater 13 is what we needed. Was in a nightmare, yes at times. Would I do it again (looking in hindsight NOT doing it a second time!) Yes.

If you have no choice Chapter 13 can be the best option to get out from under the debt and move on with your life. If you are educated you can go into the Chapter 13 in better shape than those of us who really didn't have a sound understanding of how it works. You can prepare yourself for the 3-5 yrs living without any or very little disposable income and dealing with whatever life (or "murphy") throws at you.

Chapter 13 is no cake walk. It's not easy and it stinks. But it was our best option and we are better off in the end.