Chapter 13 Dismissed

[mamamama]

We recently received notice that our Chapter 13 was going to be dismissed due to nonpayment (since June). We filed ~ 10 months ago in hopes of saving our house from going into foreclosure since we were behind in payments. We ended up selling the house as a short sale this past May because we didn't want to continue to pay $5000/month towards a monthly morgage payment. Since the house sold, we no longer owe the $35,000 that was due towards the house which is included in the payment plan (we currently rent). The monthly payment plan was never reorganized to reflect the debt that was paid off.

Had we decided to sell the house in the first place rather than filing for Chapter 13, we would have been in debt by ~ $40,000 (not including student loans). Of that debt, we have 1 car in the plan that is worth~ $8000 - if that. It has over 120,000 miles and it is a 2001 SUV/gas hog.

I realize that the creditors will be after us for any debt that was put into the plan. I belive that we can work out a plan with each creditor to get them paid because we have the income to get it done.

My questions are as follows:
1) Does a dismissed BK effect your credit worse than a Chapter 13? If we pay off the creditors within the next year or two in a timely matter, will our credit bounce back? More to the point, since the BK will be dismissed and we will end up paying 100% back, will it be treated as if we never filed for a Chapter 13? If we can pay off the creditors, will it actually be more beneficial to us in the end?
2) Since it takes 10 years for a BK to come off your credit report, will the fact that it was dismissed and creditors paid within 2 years allow for better rates and lending options with a quicker timeframe versus a BK on your credit report or is it all the same?

Thanks for any info you may have.

[car67]

Thats very interesting

Ditched the $5000 payment didnt pay the Chapt 13 payment went to rental..
I think the creditors will work with you direct even if they dont force them to file a lawsuit and worse case creditor gets a judgement which I am sure the court will garnish your wages subject to your employers cooperation.

As for the credit report I think the fact you filed will remain for the 10 years
regardless of outcome but if your renting and have the income and extra cash flow why think about credit in 2 years as I am sure you can buy a decent ride with the savings you have completed just be prepared for legal action. They cant kill ya can they? Give em Hell!

[rrockinggramma]

dismissed is on credit for 10 years (some do 7 as it was a chapter 13)

Could you convert? You did a short sale and the deficiency balance may not be forgiven by the bank. And you may owe income taxes on that deficiency balance.

Before you throw in the towel, discuss your options with your attorney.

[MajorMike]

How can they dismiss you without at least letting you make up the payments? Here we get a letter and they ask if you can come up with the 2-3 months or whatever by a specific date before they dismiss. How can they do that?

[chloe0724]

MM,

I think they opted to get it dismissed. I'm not sure why though. I would have thought you could renegotiate the repayment plan with a modification. Then you would have still been protected from the remaining creditors.

JMO

[woeisme]

If you plan to pay everyone off at 100% outside the BK in a few years, why dismiss??? You are protected in the CH 13 from outrageous interest rates, penalties for late payments, taxes on the forgiven debt, etc. And it stays on your credit record for LONGER to dismiss than if you just did your CH 13 (10 years for dismissed, 7 years for CH 13). So I can't really see any advantage whatsoever to dismissal, you just need to modify the plan since you sold the house.