I've posted the gory details before but here's a rundown. We just moved from FL (where we were going to file a 7) to IN. We decided to hire a local lawyer and file here. Well, I start my calling around and threw a few lawyers out of the list without even meeting them - just things I didn't like. I found one that I really felt comfortable with and was surprised when he told me the following:
"A Chapter 13 might be better for you than a 7".
Now, I've been reading these boards a lot and wanted to make sure that he just wasn't fishing for a bigger paycheck but I ask him to explain. He said,
#1) You owe $15K in backtaxes to the IRS, which you pay $263/month
#2) You owe $5K in a student loan, which you pay $75/month.
#3) You are current on your car AND you rent a house.
#4) You have no assets to speak of
#5) You are carrying almost $150K in CC debt, personal loans, etc.
In a Chapter 13, the interest and penalties on your IRS bill and your student loans is frozen. They are considered priority debts so they will get paid first in a 60 month plan and when they are paid, only then will unsecured debt get paid. At the rate you are going with the IRS, it will take you forever to pay them back with all the interest and monthly penalties. Why not file for 13, pay the monthly bill to the court, which will pay the IRS/student loan and be done with it a lot sooner?"
I replied with, "yes, but what would you think my payment plan would be?" He said that he was figuring $200-500 a month because we are a smidgeon over the median income. If that's true, then it's not a heck of a lot more than I am paying now to the IRS and student loans and WELL within our comfort (we live VERY modestly nowadays).
Any thoughts on this? Does any of this ring true or false to anyone?
"A Chapter 13 might be better for you than a 7".
Now, I've been reading these boards a lot and wanted to make sure that he just wasn't fishing for a bigger paycheck but I ask him to explain. He said,
#1) You owe $15K in backtaxes to the IRS, which you pay $263/month
#2) You owe $5K in a student loan, which you pay $75/month.
#3) You are current on your car AND you rent a house.
#4) You have no assets to speak of
#5) You are carrying almost $150K in CC debt, personal loans, etc.
In a Chapter 13, the interest and penalties on your IRS bill and your student loans is frozen. They are considered priority debts so they will get paid first in a 60 month plan and when they are paid, only then will unsecured debt get paid. At the rate you are going with the IRS, it will take you forever to pay them back with all the interest and monthly penalties. Why not file for 13, pay the monthly bill to the court, which will pay the IRS/student loan and be done with it a lot sooner?"
I replied with, "yes, but what would you think my payment plan would be?" He said that he was figuring $200-500 a month because we are a smidgeon over the median income. If that's true, then it's not a heck of a lot more than I am paying now to the IRS and student loans and WELL within our comfort (we live VERY modestly nowadays).
Any thoughts on this? Does any of this ring true or false to anyone?
. Definitely explore Ch 13 - it could be the best answer for you in the long run for the exact reasons the lawyer explained to you. Those are legitimate reasons to consider a 13 given the financial information you've shared.
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