Difference between CH13 & CCS?

[redemption]

I plan on filing for BK on Tuesday. Not 100% sure just yet if it will be 7 or 13. My lawyer told me it doesn't look too good for a 7 because I am over the median income for my state (FL) by 5K. My question is, if she says I have to do a 13, what's the difference between that and going through a CCS? I know the 13 has legal aspects to but I just can't see myself paying 1700+ for a 13 and I can pretty much do the same thing through a CCS for little to nothing. Can someone out there break it down for me? TIA!

[HHM]

CCS has it's pros and cons. The main con is generally, not every unsecured creditor works with every CCS. So if you have many different credit cards, you may not find one CCS who can work with all of them. Also, if your case would involve issues of secured debts, CCS in no way can help you. CCS only works with unsecured debt (essentially credit cards only). Also, ALL CCS plans are 100%, they cannot reduce the existing balance owed. Thus, if you cannot afford the payment to payback 100%, then you are SOL with CCS. Granted, they can stop interest from accruing, but that is about it. Also, CCS does take a fee, (and this is the shady aspect), but it is usually not disclosed. The fee is usually up to 2% per payment (plus the back-end they get from the credit card companies).

CCS also affects your credit report, creditors tend to note in their remarks section for your account that you are in a CCS program.

[lrprn]

My question is, if she says I have to do a 13, what's the difference between that and going through a CCS?

We did both - here's my perspective....

We worked with a DOJ-recommended CCCS debt management company as a last ditch effort to avoid filing bk. After CCCS added their fees, we paid CCCS $800/month - an amount that did not include all our non-secured creditors because several outright refused to join the plan. After seven months and $5,600 in payments, when we added up what we still owed all our credit cards inside the debt management plan, we were only $900 ahead. At that rate, we would have been paying CCCS *plus* our non-secured credit cards in the plan forever! Also CCCS could not help with arrears on our secured debt, and also we did not have the protection of the automatic stay so creditors continued to harass us daily.

In the end we found no relief at all using CCCS - in fact, if we had filed Ch 13 when we went into the debt management plan, we could have filed under the old bk law which would have been more favorable for us than filing under the new law - a double loss for us.

Legitimate debt management plans can help a few people who have primarily non-secured credit card debt that is less than 40-50% of their net income, but for most people who reach a dire enough financial state to be considering both bankruptcy and debt management plans, debt management plans rarely work - they only delay the inevitable as ours did.

[keepmine]

In a 13, you are in control of your creditors. Depending on the amount of disposable income in your plan, you may have a payback to unsecured creditors at well under a 100%. Plus, interest charges stop.{on unsecured debt}
If you have a car financed and you've owned it over 910 days, that value can be cramed down to FMV.
And, creditors can be sloppy. If they fail to file a timely proof of claim, their debt is discharged and they get zip.
All in all, life isn't a bed of roses in a 13 but, if a 7 isn't doable it's a reasonable alternative.

[rrockinggramma]

Just as an aside to all of this, I have done both also. On my credit report, being with a CCCS program was just as damaging as having the BK 13 on my credit report (wage earner plan). Many of my creditors listed my CCCS as this way. Also, in a chapter 13, your creditors cannot call you. And if they don't file a claim, they don't get paid. I would never go with CCCS.

[redemption]

Thanks to everyone for the knowledge that you've shared. I feel a lot better about going the CH13 route. I guess I just really needed to hear the pros and cons.