Filing CH13...

[Tiwahe]

What is the name of your state? California


Filing CH13...we have two cars financed. (2004 and a 1999) We owe more than both are worth. (IE - No equity) Any chance of us being able to keep both? Maybe not file on one? Any advice greatly apprieciated.

 

[Ladynred]

You cannot selectively EXCLUDE debts when you file for bankruptcy. If you're going to file Ch 13, then you should have no problem keeping both vehicles. If you're going Ch 7, if you have little or no equity in them, then you just reaffirm the loans and you should be able to keep them.

 

[Tiwahe]

Thx Ladynred.

I have a few more questions if ya don't mind.

In California.

Whats the difference in Ch 7 vs Ch 13?

Is Ch 7 harder to file or something?

 

[Ladynred]

Bankruptcy law is FEDERAL. The only thing that varies by state is the exemptions.

A Chapter 7 is where all your dischargable debts are basically erased. Secured debts can be reaffirmed if you want to keep the property, such ase a house or cars. If you have any assets that cannot be protected by the available exemptions, that property is taken by the Trustee, sold off, and the money distributed to your creditors. CH 7 is also called "liqudation" but most people lose nothing. A Ch 7 takes approximately 4 months from filing to discharge.

A Ch 13 is where you pay back some percentage of your debt thru the bankruptcy court over a 3-5 year period. How long your plan is depends largely on how much disposable income you have, among other things. Secured debts must be paid back at 100% and unsecured debts get some percentage paid back. Ch 13 is used more often by people who are behind in house or car payments and don't want to lose the property. Arrears can be included in a Ch 13 plan, so people use Ch 13 to save their homes from foreclosure. You MUST have a steady income to fund a Ch 13 plan. Ch 13 puts you on a very tight budget, only certain expenses are allowed. ALL your disposable income goes to the Court to pay your creditors.

70% of all Ch 13 plans FAIL, and I think that number is going to go UP considerably when the new law goes into effect in October. Fewer people will be allowed to file for Ch 7 and will be forced into 5 year Ch 13's, which will be much MORE restrictive than they are now.

So, if you're considering any BK, do it BEFORE 10/15/05 !

 

[Tiwahe]

Bankruptcy law is FEDERAL. The only thing that varies by state is the exemptions.

A Chapter 7 is where all your dischargable debts are basically erased. Secured debts can be reaffirmed if you want to keep the property, such ase a house or cars. If you have any assets that cannot be protected by the available exemptions, that property is taken by the Trustee, sold off, and the money distributed to your creditors. CH 7 is also called "liqudation" but most people lose nothing. A Ch 7 takes approximately 4 months from filing to discharge.

Does this mean they'd sell off electronics like video games etc?

A Ch 13 is where you pay back some percentage of your debt thru the bankruptcy court over a 3-5 year period. How long your plan is depends largely on how much disposable income you have, among other things. Secured debts must be paid back at 100% and unsecured debts get some percentage paid back. Ch 13 is used more often by people who are behind in house or car payments and don't want to lose the property. Arrears can be included in a Ch 13 plan, so people use Ch 13 to save their homes from foreclosure. You MUST have a steady income to fund a Ch 13 plan. Ch 13 puts you on a very tight budget, only certain expenses are allowed. ALL your disposable income goes to the Court to pay your creditors.

70% of all Ch 13 plans FAIL, and I think that number is going to go UP considerably when the new law goes into effect in October. Fewer people will be allowed to file for Ch 7 and will be forced into 5 year Ch 13's, which will be much MORE restrictive than they are now.

So, if you're considering any BK, do it BEFORE 10/15/05 !

Ok...now I'm scared...does this mean I will have no money? I'm pretty much back to square one. What did it, is my youngest got in an auto accident, his insurance had lapsed. They want $6500. Since the car is in my wife's name, they are going after her now. They are threatening to attached my wifes wages, which means we would be unable to pay our rent. I checked Kelly Blue Book and his car has no value according to them, so I am assuming they won't sell off his car.

Our lawyer suggested CH 13, to help save both of our financed vehicles. We have a Toyota Tacoma private party value is $5500, we owe $7000. The other vehicle we have financed is a 2004 Blazer, Private Party Value is $17500, we owe $22000, we just bought this in 1/05.

Does this mean they'd make us get rid of our Satellite TV? We have a contract with them. Would they make us get rid of our Cable Internet? My work actually pays this because I have to dial in to work sometimes.

Should I pump up our monthly expenses? We honestly have more money going out then comming in, but this has got me thinking that I don't want to be right where we started -- broke.

What happens if you can't pay and the Ch 13 fails?

 

[bigun]

I gotta tell you, if you own no home the dumbest thing you could possibly do is file a chapter 13 to save to vechicles that you're upside down in the loan and they'll continue to depreciate.
Were I you,I'd talk with another lawyer and file a chapter 7 and blow off all unsecured debt and let 'em have the blazer.
Here are Ca, bk exemptions. There 're fairly generous.

http://www.thebankruptcysite.com/bankruptcy-exemptions/california.php

 

[Ladynred]

I would have to agree with Bigun, there is no point in filing a Ch 13 to 'save' vehicles you have no equity in and are upside down on. Find another lawyer.

If the son's car is damaged and worth nothing, then the Trustee isn't going to want it either, he/she won't get anything for it at auction. I don't think you'd either vehicle under the circumstances.

CA has some very generous exemptions for CH 7, you probably wouldn't lose a single thing, most people don't.

Does this mean they'd make us get rid of our Satellite TV? We have a contract with them. Would they make us get rid of our Cable Internet? My work actually pays this because I have to dial in to work sometimes.

Some Trustees will make a fuss about Satellite TV, it all depends on your other options and how much you're paying for it in relation to the rest of your expenses. In a Ch 13, it could be considered to be not 'reasonable and necessary' and it could be objected to as an expense. If you need your cable internet connection for work, then you state that on the bankruptcy schedules. Cable and DSL are becoming more and more common and isn't usually objected to any more.

What happens if you can't pay and the Ch 13 fails?

Then your case gets dismissed and you're back in debt soup as if you'd never filed for BK at all. EXCEPT the dismissed Ch 13 will sit on your credit reports for 10 years. Ch 13's can be converted to Ch 7's under some circumstances.