not filed yet...questions left unanswered

[busbis]

I have consulted a bk attorney who advised me that it will be best for me to file a chp 13 vs a chp 7. The reason for filing is I have 2 properties on the coast that the value has decreased quit a bit and continues to drain my families income. I only owe 5 payments left on 1 vehicle and the other is paid in full. We would like to purchase a more economical car before the filing, but unsure if this is such a great idea. Our attorney will not advise in any way. We do plan on surrendering both properties in the chp 13, but plan on paying all unsecured debt and the last few months of our car in full to the trustee. Can someone please advise me if I am willing to pay the car in full would this be okay. Also, we plan on wanting to pay off our plan within a year if possible and apply all monies to it during the first year. Is this something the trustee would be okay with? I am so confused and just don't know what to do. These properties are killing me, and this is the only means I see without the mortgage companies coming back after me for the difference. The values have decrease big time!!

[SinkingFast]

The reason the attny won't advise you is,.......... No BK attny in their right mind is gonna tell you it's OK to go out and take on new debt knowing you plan to file BK.

Look at it from the Trustee's perspective,........... You have a paid for vehicle and one nearly paid in full. Potentially lots of equity available to be collected in the plan. And you want to trade the paid off vehicle in for one with payments and no equity.

Plus, there's the whole "taking on new debt on the eve of filing BK" issue. Just doesn't look good.

Having said that,........ If you're going into Ch 13, possibly for 5 years, you're gonna need reliable transportation for the duration.

In Ch 13, you pay all your disposable income, every month, into the Plan. So I honestly don't see how you'd be able to pay out your plan within a year from the date you file.

PLUS, under Old Law, you couldn't pay off early until you'd been in the Plan 36 months. Unless you were in a 100% pay back plan. We don't know about New Law yet. The changes were only put into effect a couple years ago.

And even at that,.......... Some Trustees ask where the money is coming from.

[busbis]

I do plan on paying all my creditors at a 100% and surrending only the properties. By doing this it will obviously free a quit a bit of cash so I will have enough to pay the plan alot earlier than expected.

[SinkingFast]

If you're gonna surrender the properties in BK, that's disposable income available for your Plan Payments. That's the way the Trustee is gonna look at it.

Most, if not all, of the mortgage payments for the surrendered properties will be included into the amount you pay the BK Court.

[B12]

Just a thought. Why not just surrender and foreclose on the two properties and not declare BK?

It will be a lot cheaper.

[jenbes27]

If you surrender the property for less that what you owe, doesn't the mortgage company file a defiency claim against you and if you are in a 13 you have to pay that also over 5 years?

[busbis]

Yes they could file a defiency claim, so I thought that I could pay all that was going toward the condos which is about $4000 a month and pay my other creditors at 100% in hopes I can have it paid within 3-4 months. The only other thing I owe besides my primary home is a credit card around $13K. If I choose to just surrender the properties and let them foreclose they can come back and file a 1099 on me. I just received an assessment bill in the mail today for $7K on one condo, which is 1 of many and I paid over $7K last year. The value has dropped well over $100K. I just do not see any other means of getting out of this horrible situation. Which brings me back to my other question too, can anyone tell me if I should purchase a car before or just save for a few months and pay cash later. I guess my main goal will be to get a discharge as quickly as possible so there couldn't be any other claims.