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Tooleman

chapter 13

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I'm getting ready to file chapter 13.. and I cant figure everything out..

When the bankrupcy happends what will happen to my credit report will it showed everything paid and included in bankrupcy.. even though im paying everymonth.. and how do they deside if im going to pay for 5 or 3 years..

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When the bankrupcy happends what will happen to my credit report will it showed everything paid and included in bankrupcy

Most likely your report will show included in bankruptcy Chapter 13 or it will say wage earner or simular plan.

how do they deside if im going to pay for 5 or 3 years..

Based on your income and debt, they will decide which is better for you, 3-5 years. Not sure but I think you can elect to pay in 5 years or a shorter term if you wish. Just let your attorney know what you want to do, and he may be able to persude the trustee.

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How long a plan youre stuck with depends on your DISPOSABLE income versus the amount of your debt. If you can pay a certain percentage in 36 months, that's what you get, if it takes MORE than 36 months to pay the required percentage, you get stuck with a longer term.

Keep in mind, a CH 13 is going to take ALL of your disposable income for the entire plan period. If your lawyer does not build in any padding in your budget, you're going to be up the creek w/o a paddle should you run into any emergencies that were NOT in your budgeted expenses. You will have NO extra money for anything - the court gets it ALL.

Why are you going for CH 13 and not a 7 ??

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so what do you mean by padding.. I dont get this.. isnt the lawer going to come up with some plan.. and ill have to pay just that.. I wont get to keep extra money.. why cant I..

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In a 7, you don't pay anything, unless you are keeping your mortgage and car (and therefore your payments for these).

The real question is why file a BK at all? You may have other options. Please describe your circumstances or at least give us the link to past posts.

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I know I have other options.. but I cant afford them..

I have about 40K in unsecured debt and credit counsoling didnt work..

I have 2 repos that add up to 20k.. if I file for chapter 13 we figured out that my payments would be about 500 dollars a month.. and that includes my car.. if I file chapter 7 ill just have my car.. which is like 460 a month.. so 40 dollars more isnt bad..

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Ok.. what was your lawyer's reasoning for saying you can't do a Ch 7 ? How would it be worse ? Unless you have a lot of non-exempt equity in property or other non-exempt assets, then doing a Ch 13 to pay unsecured creditors is, IMO, sheer lunacy. However, some people like that warm fuzzy 'moral' feeling of paying their creditors back -- I'm not one of 'em.. LOL.

Its also want to say that I've read many, many posts from people who have been told their payments would be $xxx.xx a month only to find out when the plan is approved and handed back to you by the court that the payment is actually FAR more than what their lawyers told them ! I would NOT bank on a number your lawyer pulls out of a hat, you could be in for a very rude awakening.

As for why you can't keep any extra cash - because the Federal Bankruptcy law says in a Ch 13 you pay in ALL of your disposable income to the Trustee. The Plan is BASED on your disposable income so they usually will come up with a number that takes every last penny.

Padding ? Is unforseen car repairs in your budget ? How about if the water heater in your home bursts or the fridge or the hvac craps out ?? THAT is what I'm referring to - if you don't build in some cushion for these types of things, you're likely to find out when something DOES happen that you either can't fix it, or you can't make your plan payment to take care of it.. then your case gets dismissed for non-payment ! Ch 13 is TOUGH !! You must live on a very strict budget. Don't plan on any partying for a while.

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I think if you could go Chapter 7 - you would be doing yourself a favor to just wipe all but the car out then.

So what if you just save a bit on your month to month payments, what counts is the total debt in the end due to each company. Plus you are not stressed with just living tight within your means. You have room to get by and move forward with rebuilding. I think chapter 13 keeps people down longer - even if it comes off of the credit report sooner. It still looks the same to a lender (a bankruptcy is a bankruptcy to them).

And you can just look around for yourself to see that even though chapter 7 reports 10 years, a lot of people shake these loose prior to this time.

So just give a serious look at the chapter 7 before you settle on chapter 13, another thing I hear and see, is the worst case - where someone tried to go chapter 13, could not make it - defaulted. So the bankruptcy would get dismissed, meaning that you where put out back at the mercy of the creditors. With chapter 7, you don't have that fear of messing up and loosing ground. Or if people filed, chapter 13 - sometimes they had to realize that they could not make it, so they would up grade to the chapter 7 in the end. That is do-able also - but understand this, both bankruptcies get listed on the credit report so you end up doing double time for the same thing unfortunately.

Just some things to consider between the two, like Ladynred said. Don't jump before you really weight both options. The creditors are not going to go anywhere fast enough to do much more harm. When they know you are going to file.

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It sounds like a BK may be a good option for you. However, I can't see any reason to do a 13, still. With a Ch 13, you are not going to be able to purchase a home, get a credit card, a new card loan or anything until you are out of BK. With a 7 you can get new loans right away, albeit at higher rates.

However, have you considered just not paying your bills? Your repos are over with and the $40K in unsecured debt will just bring on the collection agencies, probably to no avail. You can get rid of them with debt validation and cease and desist.....If you don't have anything, the probability is high that they won't sue you. Just a thought.

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I would agree with most here, and say file the Chapter 7. Disolve all your debt, then in 3 or 4 years shake the 7 off your reports. (I did it in 3 years), Your credit will be like new again after you do major cleaning. I files 2 13's and the last a 7, 3 years ago, gave everything up. I got a car loan 1 year later, and as of todate I have around 7 (4 MasterCards, Target, Minekie, Lowes) credit cards, 2 car loans (the one from 2 yrs ago, and a new truck loan) and 2 installment loans. It can be done, but the chapter 7 will make it much faster and a lot easier to live with.

Either way good luck, my attorney screwed up with my case twice, thats the reason for my filing 3 Xs. He failed to file the plans in time so the cases were dismissed which left us no choice but to file a Chapter 7. Thankfully he has been disbarred since then.

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Either way good luck, my attorney screwed up with my case twice, thats the reason for my filing 3 Xs. He failed to file the plans in time so the cases were dismissed which left us no choice but to file a Chapter 7. Thankfully he has been disbarred since then.

Ahmen to that, I really do have a bit of an attitude towards bankruptcy lawyers, since they are so busy rushing things and treating people like numbers (namely numbers in their bank accounts) and get by doing half a$$ jobs of the filings.

You have to REALLY research the lawyer which you choose to do business with - get references and make sure they have no past records of having violations.

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I'm in Ch13 hell at the moment, I would do as they say and file ch7. I wish I would have found this board before I let the lawyer talk me into the purgatory that I experience everyday trying to pay my bills.

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Chapter 13 makes you a prisoner to the BK court until your plan is paid off. As someone stated above, if an emergency happens you are really stuck.

I developed dental problems that ended up costing us $400 cash upfront. Devastated the little we had left. With a BK 13 it is impossible to save, almost impossible to get any kind of credit, and you have to have cash for emergencies or big problems can happen. And you have no cash because your extra income is going to the creditors. You are treated like a child. It's almost like you were guilty of a terrible crime and are being punished in this way.

I saw somewhere where someone mentioned a BK 13 is little more then those debt reduction plans and can hardly be called a bankruptcy, which is supposed to help wipe out debts and let you start fresh. For the 13 months we were in it, we were stressed out all the time hoping that nothing major would go wrong. Our heater was on its last legs but we managed to make it survive for the winter.

We finally threw in the towel and converted. Filed BK 7 in 1/03 and received discharge 4/29/03. Free at last. Chewed up and spit out by the system, but have a savings account for the first time in decades.

Our lawyer was competent, and that's about it. Most BK lawyers do work the numbers game and just churn out their cases. There was a LOT he never told us. So maybe you should look into a BK 7.

Just my thoughts. Good luck.

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There is a lot of misinformation on this thread! In nearly every case, Chapter 7 would be the most desireable way to go and for obvious reasons. No one in their right mind would truly desire to be chained to creditors and courts for several years! However, bankruptcy rules are location specific and not uniform across all 50 states. Many filers cannot file under Chapter 7 if they own real property and certain other assets because their state exemptions are too low or as in the case of Delaware and some other northeastern states, there is NO homestead exemption! Therefore, creditors would usually be entitled to what they would have received had Chapter 7 been filed and liquidation of assets occurred minus allowable exemptions. So someone who may have $50,000 in home equity may be required to demonstrate they have the income to repay at least $50,000 over 3 to 5 years! Otherwise bankruptcy will not solve the problem. Some districts, for example, Florida are scrutinizing C7 filers to determine if they have the means to payback under 13. People with homes they would like to keep should by all means retain an attorney before considering anything.

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GHA corp: Thanks for the info. Just curious: what does happen in a state without homestead exemption? I'm a little confused--does that mean you lose your home no matter what? That's really rough, especially if one is NOT behind on mortgage payments. What you said in your message coupled with the new BK laws, if passed, would just about condemn a lot of people to living in poverty. Nice way to further erode the middle class.

Since the stereotype BK filer in the public's mind is a person who runs up credit cards going on unnecessary shopping sprees and vacations, I guess this would sound OK. This is also the picture lenders like the public to think about when BK comes to mind. The folks who have suffered devastating illnesses, accidents, unemployment woes don't even enter this picture.

It really stinks. Someone forced to continue living in poverty is of no good to the economy but rather a burden on it. We're not like the ones who make these laws, with their chunky salaries, great medical and pension benefits etc. So why should we expect them to understand and/or even care?

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This is why I filed chapter 13 instead of 7.. I owe tons of money on credit cards and I have 2 repos adding up to about 20k.. and I owe taxes that cant be wiped out.. I also own a car thats worth 15k but I owe 21k..

What happend is that my loan got knock down to 15k.. and all my creditors that I owe money to get nothing.. my money for the next 4 years goes to pay off my taxes and my car.. and the payment ends up being what my car payment is now.. but my taxes and all my bills are gone.. I live check to check now anyways.. chapter 7 wont change that.. so Im going with 13.. and I have talked with a lender for home loans and she said after a year all I need is a letter from the trusty and I can buy a house with a good intrest rate.. chapter 7 it would take 2 years.. I like this way..

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Unfortunately, bankruptcy is not a cure-all for everyone. In states with no homestead protections people can lose homes in a Chapter 7 case if they cannot at least pay back to unsecured creditors the value of their home equity and non exempt assets. That is also true in many Chapter 13 districts. Generally, the least amount acceptable over 3 - 5 years is what the creditors would have received under a 7. Then the court takes all disposable income and those amounts vary state to state. So, in reality it's the attorney who works out the matrix and recommends the appropriate filing. In states like Delaware, it's better to hold off filing until lawsuits or home foreclosure actually makes a bk filing imperative to keep a roof over your head. In all truthfullness, I believe it is well worth the potential consequences to convey (transfer) all property possible to relatives and the like when you realize you are in financial distress. Creditors are more likely to sue when they see income, homes, late-model cars, etc. Truly in Delaware, the less you have the better off you're going to be! Oftentimes only one of two creditors will ultimately sue and win a judgment. The SOL in Delaware like most other states is 3 years. Once you're debts are beyond the SOL, further collection efforts are time-barred and can be defeated. Fortunately for the poor old debtors of Delaware, the SOL is 3 years and the courts do not allow any monkey business with respect to creditors and debt buyers pursuing old debt and subsequently slipping through a lawsuit. Delaware as most know is a state run by banks and lawyers for banks and lawyers!

As to the proposed bankruptcy reform bill pending in Congress it is interesting to note that many districts are now scrutinizing Chapter 7 filers as never before and in effect dismissing more filings than in past history. When the bill actually passes, it will be virtually impossible for most people to file 7 and Chapter 13's as well will become more stringent. President Bush wants reform, however he is opposed to capping the homestead exemptions in Texas at a measly $100,000! So, in other words it's okay in the other districts, but not Texas. Remember some states are ZERO! Go figure!

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