Chapter 7 & Surrendering House

[dc2005]

What is the name of your state? GA We are currently in a Chapter 13 which at first provided some relief, but now is more of a headache than anything. We are wanting to convert to a Chapter 7. We are wanting to surrender our house since it has a $700/mo payment. We are wanting to rent a place at a substantial savings. The thing we were wondering is how soon can we look into renting because we are afriad of losing out on the place. Also how much time will we have before we have to leave our current house. We would like to lock into renting the place now if it wouldn't cause any problems. We would be renting from an individual with no overly formal agreements. Also, how much will it cost to do the conversion? Sorry so many questions, but our attorney is out of town and we're just wanting to get an idea of a direction to go in.

[Ladynred]

Why did you file Ch 13 in the first place ??
How much disposable income will you have by letting the house go and renting ??

If you have significantly more disposable income, then a Ch 7 conversion isn't going to do you much good and probably won't be granted. If you have too much disposable income, you'll be in Ch 13 anyway if you want bankruptcy protection at all.

[dc2005]

I said it was a "substatial" difference, but it is like $200 difference between the two places, but that is substantial to us as we bring home $2200/mo together and have about $500 or a little less to live on each month (for food, gas, etc.) after bills and Ch 13 payment.

[Ladynred]

Ok, but my point is that by dumping the $700/mo mortgage payment for a $500/mo rent payment, you are freeing up $200/mo in DISPOSABLE income. If you filed Ch 13 because you had too much disposable income for a Ch 7, then you will have even more and Ch 7 will still be out of reach, you'd still be stuck with a Ch 13.

[dc2005]

When we went to see about filing our attorney asked if we wanted to do either. Because at the time we wanted to keep the house we went with the 13 because we thought we were going to be able to handle it. He made no indication that income was a problem.

[Ladynred]

I'm not surprised, since the lawyer gets a much bigger fee for a Ch 13 than a Ch 7. Since you told him from the start you wanted to do a Ch 13, he appparently didn't bother to explain anything else to you. Its not income that is a factor, its DISPOSABLE INCOME- what you have left after all normal living expenses plus payments on secured debts.