Should I File Chap 13? Chap 7 Rejected

What is the name of your state? MI

I appreciate any information you could provide. Thanks in advance ...

I recently filed chapter 7. The case was recently dismissed. The court thought I had more disposable income than I claimed on my schedule J.

It was suggested to me that I file chapter 13 and repay my creditors. I filed the papers for chapter 13. Can I dismiss the case? And if I do, would it prevent me from filing chapter 13 again, and if so, how long would I have to wait?

I have only $6000 in unsecured debt. $2800 of that debt is for a loan I co-signed with my ex-girlfriend (dumb). So, it's my understanding I would only have to pay a percentage (usually 10%) of the $2800 (since my ex-girlfriend would still be responsible for the $2800). So, really, I have approx. $3200 in unsecured debt.

Question: If I continue with my chapter 13 case, would they set up a re-payment plan for 3 years, resulting in a minimal payment amount (good)? Or would the payment amount be based on the amount of disposable income I have available each month (bad)?

I have a 1st and 2nd mortgage on house, a mortgage on a vacant piece of land and a boat loan ALL with my ex-girlfriend (dumber).

I have no desire to retain any of this property. The ex-girlfriend still lives in the house, etc. She hasn't made a payment in nearly a year. The boat has already been repossessed. The house and vacant land are all in the process of being foreclosured on.

The reason I feel the need to file bankruptcy is to protect myself in the case where all of this property is seized by the secured creditors and then re-sold, resulting in a shortage or remaining balance due to the creditors.

I am afraid the creditors would come after me and that I could owe them tens of thousands of dollars. What are the chances they would come after me? Could I then file at that time or would I be up a creek without a paddle?

My ultimate question is should I file chapter 13? Will it do me any good? I want to clean up my credit and can pay back the $3200 in unsecured debt on my own. If I do file, I will owe another $2500 in lawyers fees.

I know this is a lot. I appreciate your time and help.

Brian

[Ladynred]

What you pay back in CH 13 is almost ENTIRELY determined by the amount of disposable income you have. ALL of that disposable income will go to the Trustee for the life of the plan 3-5 years.

so, if my total unsecured debt is only $3200, and my monthly disposable income is $500, you are saying I would have to pay $500/month for 3 years ... in other words I would have to pay back $18,000 when I only owe $3200?

The only reason I'm filing bankruptcy is to protect myself from secured creditors when they foreclose on my house, vacant land and boat.

Thanks

[Ladynred]

No, you would probably end up paying back 100% of the $3200 you owe, not 5X that.

Secured debt cannot be discharged. You'll end up paying back some percentage of all that secured debt over the life of the Ch 13 plan. Filing will stop the foreclosures. The boat, since its already been repo'd, if there's a deficiency on it, is no longer a secured loan, its an unsecured debt. The same will happen with the property once its sold at auction - the deficiencies, if any, will then be unsecured debt and fully dishcargable.


Do you really have that much disposable income, or did you just severely underestimate your TRUE expenses ?? That is a big mistake that people make.

as far as my disposable income, when I attempted to file chapter 7 I claimed I had $150 disposable income left each month. The court didn't believe me and motioned to dismiss the case .... my lawyer suggested I convert to a chapter 13.

I used the $500 figure as an example for the scenario in my last post.

I'm meeting with my lawyer today. I don't like him much. He is very inpatient when I ask questions. I don't feel he listens very well. And I feel he has been rushing me through all of this.

Do you know what percentage (generally) of the secured debt I would be required to pay back. In all, counting the boat, there is about $160,000 in secured debt owed.

If I chose not to continue with my chapter 13 case, what could happen to me. As far as the foreclosures, how does that work if I am not interested in keeping the house, lot and boat? What good does having the foreclosures stopped do for me?

Thanks again!

[Ladynred]

If I chose not to continue with my chapter 13 case, what could happen to me

The Automatic Stay is lifted and the creditors come back after you as before you filed. You're dumped right back into the mess of collection agencies hounding you and the threat of lawsuits.

As far as the foreclosures, how does that work if I am not interested in keeping the house, lot and boat? What good does having the foreclosures stopped do for me?

Doesn't do a thing for you if you don't want the property. People usually file bankrtupcy to STOP foreclosures so they can KEEP property.

Do you know what percentage (generally) of the secured debt I would be required to pay back. In all, counting the boat, there is about $160,000 in secured debt owed.

It depends on your disposable income. If your disposable income over 3 years allows you to pay 25%, then that's what they get.

The boat has been repo'd right ?? Has it been sold ?? If so, then its NOT a secured debt any longer, the deficiency, if any, is UN-secured debt now.

I would guess you need to take a hard look at what you put down for expenses. There's some reason they thought you had more disposable income than $150. Usually, if you have $100 or more a month in disposable income, you'll get pushed into a 13 anyway. You want that number far below $100 as you can get it. If you can't do that, you're stuck with a 13.

You're paying this lawyer to handle your case, the hell with him if he doesn't like you asking questions, answering them is part of what you're paying him for. Don't let him rush you, its too important.

Thank you very much Ladynred! I appreciate your help. I'm off to see my lawyer now. I feel more prepared having the information you've provided. Thanks again!

Brian