Give up house to afford Ch13 payments

[southernbelle]

Has anyone heard of giving up/walking away from a home and living with relatives to be able to afford chapter 13 payments if there was no other option and a chapter 7 was dismissed for whatever reason? I have faith in my atty., but I like to consider all of my options so that I can prepare mentally and I haven't had a chance to ask the atty. about this yet. I really need to keep my house, but desperately need protection from the BK courts from lawsuits, garnishments, etc.

It sounds crazy, but with lots of non-dischargeable debt, I was wondering about worse case scenario options and walking away from the home would give me additional income to get a confirmed chapter 13. If a chapter 7 case had to be converted, would I include giving up the house in the paperwork at that time?

[Divorced-n-done]

Be careful!

Chapter 13 takes any disposable monthly income and requires you to pay that to the Trustee (your creditors).

If you move in with relatives, you will no longer have the expense of your house payment and all the expenses that go along with keeping up the house. The expenses that you currently have will be "freed up" and become disposable income. Guess what? You will then be required to pay that to the Trustee.

I would keep the house.

[howie]

Wouldn't it depend on what percentage you are paying back? If you are paying 100% back, than letting the house go may be a good idea. Am I thinking of this wrong?

[yak411]

Also you may give the house up but any money that you paid for rent would decrease the disposable income. Also, have you maxed out the maximum limits for things such as gas, food, leisure?

[brokeNconfused]

how do they figure the % of amount paid back? If you were doing 100% payback how is bankruptsy helpful?

[lrprn]

how do they figure the % of amount paid back?

Ch 13 payments are calculated through a complex cross-comparison of pre-set and actual figures for a filer's income and expenses. Even if two people have the same income, often their Ch 13 payments can be very different depending on all the circumstances of their individual finances. The final % payback is calculated comparing what is owed to all the creditors who file claims by the 90-120 day deadline and dividing that by the total payment that will be paid through the life of the Ch 13 plan.

If you were doing 100% payback how is bankruptsy helpful?

Read down the right hand Ch 13 column here - http://www.mroselaw.com/CM/Custom/Ch...Comparison.asp - to see a quick list of the advantages of filing Ch 13 over Ch 7. Paying some % (even 100%) back to unsecured creditors who file claims iis definitely not the only reason people file Ch 13.

[southernbelle]

If you were doing 100% payback how is bankruptsy helpful?

In my case I don't have a choice. 100% payback would be necessary since most of the debt is non-dischargeable and priority. The one benefit I see to a Chapter 13 is to stop or greatly reduce the amount of interest and penalties accrued while repaying the taxes I owe.


Be careful!

Chapter 13 takes any disposable monthly income and requires you to pay that to the Trustee (your creditors).

If you move in with relatives, you will no longer have the expense of your house payment and all the expenses that go along with keeping up the house. The expenses that you currently have will be "freed up" and become disposable income. Guess what? You will then be required to pay that to the Trustee.

I would keep the house.


You have a very good point Divorced N' Done, without the house and expenses that go along with it, I would be basically giving the Trustee everything I make ea. month (minus a little for basic living expenses). I guess keeping in mind that the IRS has a statute of limitations of 10 years to collect, it might not be a bad idea to deal with them along with other tax folks on my own. And there's always the fact that keeping the house means that I won't have to go out looking for somewhere to live. I will probably have liens on my property, but I guess that's the price I will have to pay.

[Divorced-n-done]

Hang in there Southernbelle!

Even though this has been incredibly stressful (I'm sure you know what I'm talking about), I'm starting to realize that the sun is still rising every morning. The only way these financial troubles win is if I let them control me...I'm not going to let that happen.

You shouldn't either!