Currently in a Chapter 13....

[jkim0907]

Hello, new to the forum. I've been in a Chapter 13 since December, 2011. I pay $800 sweltering dollars a month but my car is included in it so not too bad. Main reason for filing was because the tax debt that I foolishly incurred. Long, drawn out story. Anyway, I'm in a 5 year plan so I've just about reached the 1 year mark so still got a ways to go....I have a few general questions. If somene has the time to answer, I'd be much appreciative!! And I do apologize if some of these questions have been answered already.

1. I just checked my credit report and noticed that I have a judgement and a tax lien that's still shown on there. Is there any way to remove these since I'm paying these two items through the plan? I just dont like the fact that I have three terrible marks on the report. I just checked, and my credit score when I first filed was around 510...in about 10 months, it's gone up to 580. Still horrible, I know, but what can I expect my score to be, in say another year from now contingent on me not missing any payments? And what can I expect my score to be when I complete the CH13 and receive discharge papers?

2. When I finally do get discharged, does the BK stay on my report ANOTHER 7 years after that? So the 7 years DOES NOT start on my filing date? So essentially, will my BK be on my report to 12 years? (5 years in the plan + 7 years after discharge).

3. Anyone have any experience obtaining financing (of course with court approval) for a home and/or a car while in CH13? I know you have to wait a minimum of 12 months for an FHA and make good with all payments, but are there any reputable FHA lenders that may approve me for a mortgage in Illinois (again, contigent on Trustee approval)?

4. Finally, I'm assuming I'm not eligible for a CH13 to CH7 conversion since my median income is above the line....but I'm hearing a lot of people saying you're better off filing BK7 in lieu of BK13. Any opinions?

Thanks again all!

[LadyInTheRed]

Welcome to BKforum!

Assuming the judgment and tax lien happened before your BK, they will remain on your report until they fall off based on time passed.

The BK can stay on your report for a maximum of 10 years from the date you filed your BK petition. Based on reports from BKfourm members, a Chap 13 typically drops off your reports 7 years after filing.

People have obtained mortgages and car loans while in Chap 13. The only way to know your chances is to talk to some lenders or experienced mortgage brokers. Your attorney may know of brokers with experience working with Chap 13 debtors. For car loans, try Capital One Blank Check.

It's true that most people who qualify for a 7 should file a 7 instead of a Chap 13. But, if you didn't qualify for a 7 at the time you filed and nothing has changed about your finances, you won't qualify now. Hopefully, your attorney didn't stick you in a Chap 13 based only on over median income. It is possible for an over the median filer to pass the means test and qualify for a 7.

[lillymarlene]

Hi, Welcome. There is a lot of good information here. I'll try and answer a couple of your questions, but I've been in a chapter 13 about 2 years out of 4, and there are many people here with more experience.

I'm not sure you can remove certain items from your credit report (your judgement and tax lien) if they actually were your debt. It seems like in a way, most old debts are being paid, well at least a percentage, are being paid through a person's plan. For example, most of my unsecured debts are listed in my credit report as "charged off, being paid through wage earner plan."

I think chapter 13's stay on your credit report for at least 7 years from your filing date. I don't believe that the clock gets "reset" from your discharge date.

A few people here have converted from 13 to 7. I don't know much about that process, but I do know it would probably show 2 bankruptcies on your credit report. You're only one year in, but I think it would sort of be like starting all over.

Well good luck in whatever you decide.

[keepsmiling]

If your bk is only paying the secured debt of your car and the priority debt of taxes, it probably wouldn't make sense to convert.
You'd have to (possibly) surrender the car and (probably) have to work out a payment arrangement with the IRS.
We'd need more info to help you make this decision.
Safe to assume you are renting your home now?

[TheBajan]

Welcome! I'm very new in my ch 13 but I wanted to offer my perspective regarding your last question. Every BK case is different and perhaps the people you are hearing tell you that chp 7 is better than chp 13 don't know your case. It may be that it was better for them, but not for you. In our case, we qualified for a chp 7 but chose a chp 13 b/c it was the best option for us. Even if you qualified for a seven, you would have to weigh the pro's and con's of that choice to decide what's right for your situation.

Best regards,

The Bajan

[jkim0907]

Thanks for everyone's informative replies. Nice to have people that have been through/currently going through at CH13 and hear their persepective. It was a very difficult situation that I made, but one I know that I'll be thankful for down the long road to financial freedom (sorry for the cliche)...

Anyway, responding to "KeepSmiling's" comment, yes, for the most part, I decided to file because of the tax issues. It was in the $40K range. I was actually current on my car payments, and I had only a few cc's that were dated and old. One of the older ones was a judgment. I made the decision to file after i received that judgment ironically. I recieved a summons to appear in Civil Court. Probably one of the scariest days of my life because a Cook County (major county in the Chicago area) Sheriff came knocking on my door to hand me the summons. Was quite eye opening and scary. Anyway, when I first went to court, the CC attorney's asked if I'd be interested in settling. I told them I would so long as they could provide me the proper proof that I still owed this debt. They didnt have that information so they had to re-schedule another court date for me. And of course the date I was given was the time I had to leave out of town (close family member in California had passed away).

Anyway, thats my background.

A few follow up questions:

1. Wanted to see if anyone had any idea of what I might "expect" to be my credit scores a year from now, and then what I can expect it to be after my 5 years. Just general ideas if anyone knows.

2. I did call my attorney about the idea of possibly obtaining an FHA and he had told me that he's never seen anyone able to get financing for a mortgag in the middle of a CH13. Sorry to all the Attorneys out there because I know that most of your aren't like mine, but I feel like after I filed, and after he got his $3,500.00, he really stopped being an advocate. I realize its a business, but I did pay the man $3,500 to give me some personal attention!

Thanks again all! Will be posting regularly now!

[goon]

A few follow up questions:

1. Wanted to see if anyone had any idea of what I might "expect" to be my credit scores a year from now, and then what I can expect it to be after my 5 years. Just general ideas if anyone knows.

2. I did call my attorney about the idea of possibly obtaining an FHA and he had told me that he's never seen anyone able to get financing for a mortgag in the middle of a CH13. Sorry to all the Attorneys out there because I know that most of your aren't like mine, but I feel like after I filed, and after he got his $3,500.00, he really stopped being an advocate. I realize its a business, but I did pay the man $3,500 to give me some personal attention!

Thanks again all! Will be posting regularly now!

1. The short answer is that it likely wont change much during your 13, as for the most part you are restricted from doing anything which would affect the score ( it may go up some as some older things trickle off). As to how much it might go up after the 13, that is realistically going to depend on alot of factors and no one here will be able to give a clear answer... that being said it is likely to go up slightly but not much unless you do something to rebuild credit (ie have something that you are making payments on that is getting reported). (when the bk rolls off the credit report, likely 7 years from filing) you should get a good bump then as well.

2. While it is theoretically possible to get a mortgage in a ch13 it is very difficult to pull off, especially in the current climate. First you have to get approved (hard enough in itself) then you have to find a place and manage to make an offer such that it is contingent on approval from the trustee(and/or judge). Then it can take considerable time to get that yes or no answer. And as it is it is difficult for people with perfect credit and good down payments to get loans at the moment.
While I agree that in many ways the attorneys are not very responsive after confirmation, I would say that that is likely not what is happening here... the reason being that if you were to submit a motion to incur debt the attorney would likely be able to charge you to file it. So in this case it would be more money for him.... (they can also usually charge you to file any other kind of plan modification which a motion to incur debt for a home purchase would almost certainly include a plan modification as well as expenses would change)