Expecting 2nd child and 1 year into a Ch.13

[h4009]

We are expecting our 2nd child unexpectedly at the end of August and I am one year into a chapter 13. So far, the 2 secured creditors are almost paid off; our truck, will be paid in full at the end of June and the house arrears will be paid off at the end of August.

I am meeting with my lawyer in July and he mentioned that I may be able to convert to a chapter 7. I am just concerned that I may lose my home in the process if my arrears is not paid off and the trustee won't reduce my payments. My questions are...

1. Will I lose my home if he does converts to chapter 7 BEFORE I pay the arrears off in the current chapter 13?

2. How complicated is it and common is it to convert from chapter 13 to chapter 7 for a family household increase?

I calculated my expenses and I will not be able to maintain my current trustee payments, they will be just way too much. I filed by myself and didn't include the hubby since all the debts were mine.

Thanks for any help you can send my way!!

[lrprn]

We are expecting our 2nd child unexpectedly at the end of August...

Congratulations on the coming unexpected addition to the family!

1. Will I lose my home if he does converts to chapter 7 BEFORE I pay the arrears off in the current chapter 13?

Arrears are paid as a priority since they are tied to a secured asset. Since you say the arrears will be paid off in August, is there something that prevents you from converting after the trustee's payment records show the arrears are paid in full?

2. How complicated is it and common is it to convert from chapter 13 to chapter 7 for a family household increase?

Not complicated and it's common. Your lawyer files the official forms requesting the conversion with your local bk court and the bk judge approves it. Keep in mind this doesn't happen overnight. Until the conversion is approved, you still need to pay your current Ch 13 payments.

I calculated my expenses and I will not be able to maintain my current trustee payments, they will be just way too much. I filed by myself and didn't include the hubby since all the debts were mine.

If you decide to stay in Ch 13, your plan can be amended to include the baby as a dependent and include the extra expenses a baby creates on the reworked Means Test and Schedules. The key is whether with the additional family member, you still have sufficient disposable income to support a Ch 13 plan. If you do, then your Ch 13 payments will be lower that your current confirmed amount.

It sounds like you may have filed Ch 13 primarily to pay the house arrears and keep the home - is that true? With the extra baby costs and adding a family member to your plan, do you still have enough disposable income to support a Ch 13 plan? (Approximately around $160-175/month disposable income is needed.)

When you meet with your lawyer next month, be sure to ask him/her what the consequences of converting to Ch 7 could be and how the timing impacts what happens to the mortgage arrears.

[h4009]

Thanks so much lrprn!

Since you say the arrears will be paid off in August, is there something that prevents you from converting after the trustee's payment records show the arrears are paid in full?

No, I am actually looking forward for those arrears to paid off so I can feel that little bit of control over my home again I was just wondering what would happen to my home if those arrears are paid off and I did convert to a chapter 7. I took a means test online and found that I am below the median income for a family of 4. I owe more than my house is appraised at too, like a lot of people in my area now.

It sounds like you may have filed Ch 13 primarily to pay the house arrears and keep the home - is that true? With the extra baby costs and adding a family member to your plan, do you still have enough disposable income to support a Ch 13 plan? (Approximately around $160-175/month disposable income is needed.)

Yes, you are spot on about why I filed but I am not sure how much money I will have to pay the unsecured creditors. When I filed, I think I underestimated what my expenses were initially and I screwed myself with my 'disposable income'. My husband and I have only received 3% increases in pay so it has been very tight financially each month. I also have to pay about $1000 in medical bills for the upcoming birth. I have definitely kept track of my utilities/gas/groceries over the last 6 months and I am asking those to be revised as well. I am willing to pay something in a revised chapter 13 but not more than half of my bi-weekly pay like I have been.

My last question would be is how long does it typically take to convert from a 13 to a 7? And I do want to keep my home; if converting to a chapter 7 will put it at risk, I will back down and stay in a chapter 13.

[keepsmiling]

If arrears are paid and your house is underwater, there will be no equity for the tt to take- so you shouldn't have to worry about losing the house.

[h4009]

Ok, so I set up the appointment with my attorney a month and 1/2 prior to the baby's birth. That being said.....if I do qualify for a conversion to a chapter 7, how long does the conversion typically take? Hopefully I have given the court enough notice, I just know that the expenses will start piling up starting in August.

Thanks for all the feedback, I really appreciate it!!!