ch 13

What is the name of your state? CA

Anyone ever file for CH 13 and ended not having to pay any debtors or just pennies on the dollar? What are the primary reasons for a CH 13 instead of a CH 7

[Elmo-1]

Ch 13 is more of a debt reorganization where Ch 7 is 'liquidation' bankruptcy. In Ch 13 you get to keep your assets and repay creditors the best you can. That 'best' has to meet the court's minimum criteria, has to be your best effort and has to be at least what creditors would get if you liquidated all your assets in Ch 7.

In a Ch 7 the Trustee liquidates (turns into cash) all worthwhile non-exempt property of your estate and uses that to pay creditors (after taking his cut). In Ch 13 the 'estate' that the Trustee administers is your disposable income. There are a few more debts that can be included in Ch 13 than 7, but for the ordinary law-abiding person, not much more.

Chapter 13 bk stays on your credit report for 7 years, Ch 7 for 10. You can voluntarily dismiss a Ch 13 any time after you file and re-file Ch 13 or Ch 7 immediately (with some exceptions); Ch 7 has to be dismissed by the court once filed. If Ch 7 is dismissed by the court, you can't file again for 6 months. Both will remain on your credit report for the full term even if dismissed.

The biggest difference between the two is Ch 7 is over & done with in 4-6 months where Ch 13 takes a minimum 36 months and as long as 60 months before being discharged. Bottom line, there's no real advantage to a Ch 13 as both are looked on as bk by potential lenders, and you have a better chance of finding lenders after discharge - which is a major advantage for Ch 7.

[Elmo-1]

A correction to a statement in my earlier post as it should also cover an important issue regarding Ch 7:

"Ch 7 has to be dismissed by the court once filed. If Ch 7 is dismissed by the court, you can't file again for 6 months." It should read you can't file Ch 7 again for 6 months.

The court can dismiss your Ch 7 case for 'substantial abuse' if it finds that you have enough disposable income to repay a significant amount back to unsecured creditors. You won't be allowed to proceed with a Ch 7, but you will have the option to convert your case to a Ch 13. The amount that's considered 'significant' varies from court to court. I've talked to several CA filers (Northern District) who said that if your 36-month disposable income allows you to repay more than 40% of your total unsecured debt, your Ch 7 case will be dismissed for substantial abuse. Many places that number is 20%, so Ch 7 petitions appear less difficult to get approved in California.

Elmo:

Can you take a look at these numbers and give your opinion on what you think:


cc balances
-22000
-25000
-13000
-12000
-7000
-5600

I am married. Her cc debts are follows

7 cc for a total of $75000

She is not filing. All her cards are in her own name as are my cards. She is current with all her cards with minimum pymts.

As for disposable income and monthly expense, if we only look at my wages, there is definitely no left over money. It is about -600.

If we combine our monthly incomes, there is about 700 to 1000 left over. However, that does not include her pymts she is making to the 7 cards.

I have a car pymt that I am current on and would like to continue doing so.

Please let me know, with this info I gave you, if you think I would qualify as CH7. I am confused with the CA law and how eveyrthing is 50/50. Even at 50/50, we would not have any left over $$ after we pay her cards. Will the trustee not take into consideration her cc bills and only look at the expense. If that is the case, then I am in trouble.

Thanks for your insight

[Elmo-1]

Since all community property is part of the Bk estate in Ca, both incomes will have to be used to calculate your disposable, even if you file seperately.

That's why it may be better to file jointly and get her debts discharged as well. Combined you have about $160k in unsecured that could be discharged. If she has property she stands to loose in a Ch 7, a joint Ch 13 may be something to consider.

It'll still take more than the posted info to tell whether you can (or want to) go forward filing Ch 7 seperately. You really need to know exactly which propety is part of the marital community, and which isn't (specifically and documented as yours / hers before getting married). That includes seperate real estate, tangible assets, and any savings acquired before the marriage.

Filing seperately the Trustee will go after your property / assets first, then go after any non-exempt community property. That would be your house, or anything else acquired since getting married.

Even if you end up petitioning for Ch 7 alone, you should also look at the option of filing jointly. With your next post include your combined net income and what you feel are your combined living expenses, including car payments (for both of you) and mortgage payment, excluding credit cards.

With your next post include your combined net income and what you feel are your combined living expenses, including car payments (for both of you) and mortgage payment, excluding credit cards


1 car payment of $500/month
no mortgage/rent and no properties
combined income is about $5600/month after taxes
combined living expense are about $4600/month

I suggested to her filing and she said no.

[Elmo-1]

Just a couple more questions before the numbers can be run:

1) Does the $4,600 posted for living expenses INclude credit cards and EXclude mortgage or rental payment?? If that's the case, they're probably too high and may not be considered 'reasonable' by the Trustee. Break down the expenses to show how you're comming up with $4,600.

2) If there's no mortgage payment or rent, do you own the house you live in? That could make a difference in what you stand to loose in Ch 7, and what alternatives might be available.

You'll need to take her with you when you see the attorney. Filing bk in a community property state will definitely affect her and without her you may get both of you in a bind (i.e., Ch 13).

1) Does the $4,600 posted for living expenses INclude credit cards and EXclude mortgage or rental payment?? If that's the case, they're probably too high and may not be considered 'reasonable' by the Trustee. Break down the expenses to show how you're comming up with $4,600.


-includes 500 car pmt, 400 tax installment pmts, 600 child care, 300 car isnurance, 350 car maintenance (250 for gas and 100 for upkeep and registration) 500 food, 200 food for parents (i live in a house my parenst own..no rent) 90 phone, 120 electric, 30 water, 30 ISP, 150 entertainment, 200 diapers, 100 outside food, 50 gifts, 100 life insurance, 250 dog care (food and 3 walks per day)
THis is $4000 here. I do not have the paperwork here, but this is the majority. It may actually be this amount now that I think about it.



2) If there's no mortgage payment or rent, do you own the house you live in? That could make a difference in what you stand to loose in Ch 7, and what alternatives might be available.


-live in parents home. we pay them child care and grocery

[Elmo-1]

I've run the numbers you gave using both incomes and credit card debt. There are LOTS of things you listed that'll have to be changed, adjusted and corrected and/or removed, even some that can be added before this will ever get a Trustee's approval.

For comparison sake, lets say you get your expenses approved at the amount you listed ($3,970/mo). Without your wife's cc debt your 36-month payback to unsecured will be 69% of your total cc debt. This would virtually assure you of a Chapter 13 with payments of $1,630 / month for a minimum of 3 years. If you include your wife's $75k in cc debt, the payback to unsecured drops to 37%, which would at least give you an arguement for Ch 7.

Missed Monthly Expenses with typical monthly amounts:
$50 Cell Phone
$100 Home Insurance
$100 Home Maintenance
$50 Miscelaneous
$80 Medical Co-pays
$40 church donations
$40 Cleaners
$25 Cable
$20 Monthly Bank Charges
$505 Total


Comments:

$600 could be considered preferential payment to your parents - may need to call it "rent"
$250 for dog will never fly unless it's an income producing show dog - $30/mo will usually get approved
Find a way to include the Missed Monthly expenses ($505/mo)
Add "outside food" and possibly food for parents to monthly "food" expenses, total 500 + 100 + 200 = 800 (don't separate)
list "diapers" as "clothing"

Question:

Is the total premimum for your Tax installments included in the $84,600 debt? Hopefully not.

If you post your e-mail address, I'll send you the spreadsheet I used and you can work on the numbers to see for yourself how the above changes might affect your case. You really need to sit down with a good Bk attorney to get this straightened out. Be sure to take your wife.

Is the total premimum for your Tax installments included in the $84,600 debt? Hopefully not

-arey ou asking if i took into acct my back taxes in my debt? No. My debt is only in credit card. I tried sending you an email. Let me know if you received it or not. If not, I will post my email.

[Elmo-1]

I haven't gotten the e-mail yet. I went through another thread and just realized you've already filed Ch 7. Did your attorney recommend that your wife file jointly with you, or say anything about the expenses you turned in? Just curious why you were inquiring about Ch 13 on the other thread.

I guess I shouldn't have said filed. We had our initial meeting and she said "lets shoot for a 7." I dropped off her lists of questions 2 days ago. She said she will let me know if a 7 would be best for me or not. I brought up 13 because of the possibility that I may have to do this and wasn't sure how it worked. Wanted to be prepared for the worse. My lawyer did ask me if my wife would consider? I did bring it up to her again yesterdayand she is thinking about it. But she has been using her cc frequently, so that woulddelay any filings for another 90 days. I am concern as to what would happen to me and any possible law suits that may happen soon if I delay any further? I have a feeling I may get one any week now. Should I just go ahead and file on my own. Would it be better if I filed joint? According to your analysis, looks like joint is better for a 7. But, as I said, I am concern about a law suit coming if I wait another 90 days. Also, I am not sure how I could possibly not qualify with a 7 on my own. I really do not have much money left at the end of a month, much less the $1600 you think I would have to pay in a 13. Also, if I do joint, you said we would at least have a case for a 7. Not sure why it wouldn't be an automatic 7 if we combine $160,000 worth of debts.

[Elmo-1]

Law suits take at least a couple of months before they have any affect on you. And whatever effect it has will be nixed by bk. First, the complaint has to be filed, you have to be served with a summons to a hearing, then if the court rules in the creditors favor, a writ of execution has to be processed, then comes the garnishments, etc. Bk will stop the garnishments, recall any money taken from your bank account or salary in the last 90 days and return it to your estate.

The reason I said you'd have $1,600+ disposable income is because in a community property state, both incomes (yours and your wife's) are used to evaluate your finances for possible substantial abuse. Substantial abuse means with your combined income, you can afford to repay a significant portion of your unsecured creditors and the system would be abused if forgiving those debts were allowed. The only alternative at that point would be to file Ch 13.

Try sending another e-mail from the profile page if you don't want to post your address here. I'll send the spreadsheet and you'll be able to see where the numbers came from. The messages from the forum won't allow attachments.

here is my email

[email]nonsense1970@yahoo.com[/email]