Is a Chapter 13 plan the worst thing ever? ??

[RLOPE]

My wife and I get the sense that we may only qualify for chapter 13... and I'm curious - - is it really THAT bad? ? ? Is every single penny of income accounted for by the trustee for the term of the plan? Seems like a noose around the neck. Am I wrong? Hope so.

This forum has been so helpful. Thanks in advance to all who respond

[HHM]

Totally wrong. It's not, Now, it's not easy either, but it is not that bad. The budget is set up front, once the plan is confirmed there is no further oversight except that the trustee may want to see your tax returns each year.

Chapter 13 is one the 2nd most powerful tool for dealing with debt. In some ways the MOST powerful because you do things in a chapter 13 that you cannot do in a 7. The real questions is what alternative do you really have?

If you have a good attorney that is conscientious and aggressive about your budget and you have the discipline to make the minor lifestyle changes to make it work, chapter 13's are just fine.

[momofthree]

Ch.13 isn't a walk in the park, but it allows you to live comfortably and even save a bit each month if it is set up properly. We are living much more comfortably on our ch.13 budget than we did when we were struggling to pay all our debt. We've even saved several thousand dollars in an emergency fund since we've filed (Feb '10), and that's with claiming about 1/3 of the IRS standard amounts on our schedule J.

[shark66]

Well, no one ever woke up in the morning and said " I feel so good today so I'm going to take a ride to the BK court and file a Ch. 13 just for the fun of it..."

All jokes aside, it's definitely not the worst thing in the world, but most of it depends on the nature of the problem(s) one is trying to resolve by filing Ch. 13 in the first place. There is no "one size fits all" solution when it comes to solving serious financial issues, and all options should be carefully considered and weighed against one another before filing.

Without knowing more about your particular situation, this is all I dare say.

Good luck.

[papie]

I guess it depends on your situation and your current lifestyle. After struggling to make ends meet, buy groceries, and pay bills for two years straight....the day I filed a Chapter 13 was about the most relieved I had felt in years. I didn't know what to do with myself when there weren't 20 creditors blowing up my phone all day and I didn't have to spend my lunch hour at work trying to negotiate payment arrangements.

So...no...not the worst thing ever. It just takes some discipline.

[Flamingo]

If one needs to file BK, one needs to file BK, whether it is a Chapter 13 or they qualify for a Chapter 7. The only way out is if one receives an unexpected huge inheritance to pay everything off, someone knocks on your front door and hands you a check large enough to pay off all your debts or one has the winning lottery ticket for several million. We all know the odds of either of those scenarios occurring.

Chapter 13 is what one makes it and the biggest problem most have is a hard time handling the lifestyle change that occurs since one must now learn to live on a budget and learn to do without some things. I have always stated in this forum that Chapter 13 is the best budget teacher in the world and one comes out of it with a whole new outlook on life, money and credit. Filing a Chapter 7 is instantaneous with no budgeting and many fall back into the same credit pattern or lifestyle that put them there; going through a Chapter 13, as the poster above stated, teaches discipline.

[newbie2]

I can think of many things that could qualify as "the worst thing ever", but a Chapter 13 wouldn't be one of them. We are 5 months away from completing our 5 year plan (knock on wood) and it has been a lifesaver. Has it been difficult at times? You betcha. But it also helped us tremendously.

[drowning123]

Chapter 13 is rough. Ain't gonna lie. Be prepared. No sugar-coating here. Also, most folks end up in a 13 not by choice but because they don't qualify for a 7. A 13 beats stressing out on who to pay each month and dodging phone calls.

[Lynn12]

It is far from a walk in the park, but it is not nearly the worst thing. To me, the phone calls, the dread of getting the mail knowing that there were going to be more bills I couldn't pay, that was worse than the bk. The day we filed, I felt like someone lifted a weight off my shoulder & I don't regret the decision.

It's not the right move for everyone, but in my case, it saved my sanity and offered me some much needed clarity. One of the big things it taught me was the hard lesson on things I once considered "needs" when in reality, they were wants.

[jetsfan2010]

A wise man told me "When your outgo exceeds you income, your upkeep becomes your downfall."
A 13 helps correct that while allowing you(most of the time) to keep what you have. Not easy, but sometimes the only option

[AKB]

I have found that it has been the best thing for us. We were spending all our money paying bills with not much left to even buy groceries. I was so thrilled to find out that I would be allowed money for groceries and even clothing. We were paying out about 4000.00 in secure and unsecured and now our payment is 1215.00. I now can buy groceries and not live on pintos and potatoes. We even had enough to pay our taxes this year. I am sure some months will be hard but for last few years all we have done is pay on credit cards and never getting anywhere at least now there is a light at end of tunnel.

[curiousbk]

sounds like a 13 isn't all that bad..

i've heard a lot of people saying a 13 sucks, and getting into a 7 is the only way to go.. but maybe not.

one thing I"ve learned is that if you own a home and it is really upside down, like I do, you can strip the second mortgage. my house has a 380 mortgae.. a 315 first and a 70 second. the house is worth maybe 250 on a good day. so since my first exceeds the value..the second becomes an unsecured loan and goes into the 13 plan. at the end of the plan..the second is gone. i'll still be upside down in my house, but since the int rate is so low, i'll pay $1500 a month, including taxes, to live in a hosue that rents for $2000.

i haven't filed yet.. i'm still looking into whether i qualify for a 7, and honestly looking into whether I should even file at all.. I htink I should..but i'm trying to assess how long it would take me to get out of debt if I just cut IT ALL... cell phone, eating out, sold one of my cars and went to a one car household. .i meanreally cut expenses.. and then see how long it would really take me to get out of debt..and then assess if I could handle living that sucky for that long...

ch 13 sounds like ti gives you the chance to pay off a lot of debt, but NOT all of it...and you get to keep you rmain stuff.. house / car and have room to breathe. you don't have to live on peanut butter and water.... you can live a somewhat normal life but get out of your debt.and the creditors get something...

i make a higher than median income...so given my expenses i probably won't qualify for a 7 anyway... but the idea of a 13 seems not too bad..

it's nto the end of the world that is for sure. my grandparents always said, if you have your health you have everything... when you get a life threatening illness, or something that is really really bad.. money suddenly doesn't really matter all that much.... if the worst thing in our lives we have to deal with is financial problems.. we will all be lucky. hey, i try to look on teh brightside.. but it's true.

[randy5724]

Thanks for the post, we will be filling Chap 13 1st of April, been doing a lot of reading past few weeks about chap 13 budgets and how bad they are, but currently most of income goes to CC companies just to pay the interest. We get gas & groceries with whats left which isn't much so I can't see a Chap 13 budget being worse than what we have been living this past year. Quit paying on CC past two weeks and phone rings 10 to 15 times a day already. Filing is the last thing I ever wanted to do but, looking for some relieve.

[Lissy]

It's not cake, but like others have said, it's better than creditors constantly calling and the stress of not being able to pay your bills. I was scared to death when I first made the decision to file because I had visions of eating ramen noodles and becoming a hermit because I couldn't afford to put gas in my car to go anywhere. But the reality has been anything but. I didn't have to change my lifestyle too much, just needed to learn to live within my means. And it does give you a whole new mindset about money. Just last week, I bought tickets to a sporting event and opted to pick them up at will call because that was the only delivery method with no charge. Printing them at home cost $2 and I was like, I'm not paying an extra $2! Before my CH13, I would have thought, It's just $2. No more! LOL

I am so much better off now than I was before I filed. I have been able to save several thousand dollars as an emergency fund, as well as re-furnish my house. It has taken awhile and I've had to do it in stages as opposed to using a credit card and going right out and doing it all at once. But it's pretty empowering to make a large purchase outright and know that you don't have to make any payments on it! I will never go back to credit, with the exception of auto loans and possibly a mortgage in the future. I will never have another credit card, not even for "emergencies." That's what my savings is for now.

[Guest123]

Depending on the situation and most importantly your lawyer it can be cake. Our is set-up were we will have more money then we ever had before from check to check.
Before we filed we lived on a very very strict budget trying to pay all the credit card billls. We weren't even close to spending the IRS standards for the items we needed.
Now we are doing good stress free.
But in our case we were lucky and didn't have a huge lost in income, just could pay all of the bills we occurred.
Our lawyer is very good and we couldnt be happier with what he has done. He definatley doesn'twant us to be stuggling during this ch13.