My wife and I saw a lawyer on friday for a consultation. We were told that in order to protect our house and car, we have to file chapter 13. Our house has about 20k in equity. we have CC debt of 19k. we have a car that is worth less than what we owe. I am getting laid off in September and its well documented. After doing research about the differences between a 7 and a 13, I am still really confused. We need to keep our home and car. The lawyer said we make too much money to file chapter 7. We got behind on all our bills and the late fees accumulated. It made it so hard to catch up. But the lawyer set us up with a payment not much less than what we would pay without filing bankruptcy. my mortgage is current and my car is 2 months behind. I ask for your opinions since I feel getting feedbacks from a third party would help me decide. Thanks all...
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Your attorney is right in this respect, if you are behind on your car and cannot get it caught up AND you want to keep the car, then you will have to file a chapter 13. Also, if in fact you make too much money, then you will have to file a chapter 13. Too much money means your income exceeds what you reasonably need to live on (i.e. mortgage, car payment, utilities, grocieries, insurance etc).
The benefit to a 13 over paying back your creditors is that no interest will accumulate in a chapter 13. When comparing the payments, did you factor in the interest you would still be paying if you paid directly, my guess is, it would take you much longer to pay them back directly then to pay a chapter 13 if the two payments were the same. -
Thanks for the quick reply. We did the worksheet with the attorney and yes, there is some money after the needs are paid. But we just don't see it. It feels like the credit card bills are just simply choking us. I could make my car loan current but would it mean we might be qualified for a chapter 7?
We felt horrible just considering filling but if we were to have a screwed up credit for 7-10 years, then I would rather file for chapter 7 (if qualified). The reason I ask is because I just didnt feel comfortable with the attorney. I didnt feel he was working for our best interests.
Also his fee was $1700 and the trustee was $2900. Are those ball park figures?Comment
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Those figures seem about accurate for fees (the trustee fee is usually 10% of the total plan).
Obviously, it would be better to file a chapter 7, but the reality is, not everyone will qualify. Also, you need to put your credit in perspective, if you are already behind on payments, your credit is shot as it is, BK is not going to make your credit any worse and will probably make it better in the long run.
Remember, true insanity is "doing the same thing but expecting different results". The average consumer has about $8,562 in credit card debt at an average interest rate of 18.99%. If that consumer were to pay only the minimum payments over the life of the balance, it would take them 50 years to pay it off and they would pay $29,827 in interest.
If you are uncomfortable with the Attorney, go see another attorney, there has to be more than one attorney that does BK in your area.Comment
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