CH13 Credit Report

[jss001]

Really depressed, but due to divorce its looking like I may have to file for a 13 full-repayment. Few questions:

1) Full repayment means 100% of the balance on my accts as of today + a trustee interest fee / 60 correct? For example, $25,000 + 6% interest = ~$480/mo for 60 months. I can afford $480/mo, but won't be able to cover the $1000/mo I'm paying now in the next month or two. Have read several posts from people that tried to keep going, but ultimately damaged their credit and finances worse by not filing.

2) If full repayment is a given, do I need to hire an attorney?

3) All accounts are current, but as stated previously will be in trouble if I don't act soon. If I file tomorrow and stop paying my accounts will 30-60-90 day late payments or Charge Off's show up on my credit report once this is done?

4) I've read that you have to get permission to open new credit after 13 is discharged. Does this also apply to secured cards, i.e. deposit $5000 (anticipated bonus in January) in the bank 6 mos from now and ask for a secured card. Will the trustee force me to pay the $5000 into the bankruptcy trust instead of putting it in the bank?

Sorry for the ignorance, but I'm new to this whole thing. Thanks.

[poor@budgeting]

Trustee gets fee % from the total debt; not on top of.
Seems it is really complicated to do 13 without an Atty.
It's not really possible to file 'tomorrow'.
Report will show any late payments.
One is not allowed to get new credit WHILE in 13 without Trustee's approval.
The expected bonus is part of the future annual income.

[lrprn]

1) Full repayment means 100% of the balance on my accts as of today + a trustee interest fee / 60 correct? For example, $25,000 + 6% interest = ~$480/mo for 60 months. I can afford $480/mo, but won't be able to cover the $1000/mo I'm paying now in the next month or two. Have read several posts from people that tried to keep going, but ultimately damaged their credit and finances worse by not filing.

Ch 13 doesn't work this way. Your disposable income calculated on the Means Test and Schedules I & J often have little relationship to your actual costs (thanks, 2005 Congress).

Once you file, your non-secured debts like credit cards can no longer charge interest. What you owe them freezes on filing day. However, your secured creditors (house, car, etc. and non-secured student loans) can continue to charge interest and if you have an adjustable rate loan, the APR can change even during Ch 13.

Your trustee is paid the designated percentage for your local court out of your monthly payment - this can be anywhere between 2.5 to 10%.

2) If full repayment is a given, do I need to hire an attorney?

YES!! You need to set up free or low-cost initial consultations with 3-4 experienced bankruptcy lawyers in your area now. Ch 13 is NOT a do-it-yourself project, especially since you are divorcing/recently divorced. Finding the right lawyer is key to surviving Ch 13 for 3-5 years. Setting up a liveable plan is an art - you need solid legal counsel to file a good 13.

3) All accounts are current, but as stated previously will be in trouble if I don't act soon. If I file tomorrow and stop paying my accounts will 30-60-90 day late payments or Charge Off's show up on my credit report once this is done?

You can't file tomorrow - there's a required pre-filing credit counseling course you MUST take before filing. Each state has a list of approved courses - some are online, some are in person, some are over the phone. Here's the link - http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm - look up your state to find the approved agencies you can use. Expect to pay between $25-50.

Right now your credit score and report are the least of your worries. After filing, all non-secured creditor balances move to zero and should show as IIB (included in bankruptcy). However, late payments on secured assets will continue to show after filing.

4) I've read that you have to get permission to open new credit after 13 is discharged. Does this also apply to secured cards, i.e. deposit $5000 (anticipated bonus in January) in the bank 6 mos from now and ask for a secured card. Will the trustee force me to pay the $5000 into the bankruptcy trust instead of putting it in the bank?

It's possible. There's a great deal of variation between how different Ch 13 trustees operate across the country - this is an excellent question to ask during your lawyer interviews.

Sorry for the ignorance, but I'm new to this whole thing.

We all had to start at the beginning and learn - no worries - we're glad to help. Here's two excellent links that explain Ch 13 well - http://www.uscourts.gov/bankruptcyco...chapter13.html and http://moranlaw.net/13workings.htm#C...013%20practice . Both are well worth a thorough read. Then come back with any additional questions you have.

Hang in there. We'll help you sort things out as best we can.