Would Chapter 13 Be Better?

[Phoebers]

Okay, I posted a few questions on the Chapter 7 board regarding my husband. If he was willing to walk away from the home, this would be no problem. Okay, he is behind on about everything. We have made arrangements in late April/early May with our mortgage company to get that caught up after we were three months behind. We are paying extra amount per month until the end of December. We paid a good portion down to keep the house, which included their lawyer fees since they had started the actual foreclosure proceedings. It says if we miss one payment, then they will start this process again. We've been regular with that. We also have a 2nd mortgage which is about a month behind but we can catch up on that next month. If we decided to go Chapter 13 route, will we have relief from the mortgage agreement we made or would it come back to bite us in the butt? He has some other personal loans credit cards that are late as well. Would they be unsecured debt if they are secured with tv/computers/tools? There are no car titles involved? If we get things caught up over the next few months, then he might be able to file Chapter 7 but he is above the state median. I think the other living expenses might wipe that out since he does have a dependent. He has one older daughter in college that we did claim on his last year's tax return. I don't know if that could be a consideration since she is going to be a sophomore and living on her own this year. I highly doubt that. I think I'm thinking too much and just driving myself crazy. Thanks for listening.

[Phoebers]

Also, he has another loan co-signed by his mother that she is considering paying off. The balance is around 10,000. Would this be considered bad if we decided to go with Chapter 13? I've heard somthing about showing favoritism over one creditor or another.

[keepmine]

In a Chapter 13, mortgage arreages can be thrown into the plan and will be paid off at 100%.Secured debt must be repaid at 100% so, that'll take care of the stuff secured by the hiusehold goods.
Your MIL has nothing to do with her sons bk. She is the cosigner on the debt and has a legal liability to pay if her son defaults. She can payoff the note and it will not be seen as a preference payment.

[Phoebers]

Thanks again for the reply. That is valuable information. My head is swimming because I've been reading so much on the board here. It has been very informative. I think our best bet is to see an attorney and get our ducks in a row before we file. We have a lot to think about but I'm happy to know there will be a solution for us. One thing that is confusing to me is some of hubby's loans, it states collateral. I'm not really sure if that is secured but it sounds like they could take those items if he defaults.

[SinkingFast]

Hubby probably cannot include daughter that is living away at college. Opinions have already been rendered regarding that subject.

When the "adult" dependent college students live at home, they can be included. But if the college student works, a portion of their income MUST be included in the total Household income. Recent decision in Western District of Washington State. May, 06.

When they live away at college, they cannot be counted in the Household number. An opinion has already been rendered on that issue.

Which I don't get. Because parents are typically paying a lot of the college student's expenses anyway. And the parents get to claim the students on their income taxes. But it seems that the BK Court can and does have their cake and eat it too in this particular area.

[Phoebers]

Thanks for the advice, you've been a great help. We've been going back and forth all week whether hubby wants to file or not. I told him today that he needs to contact the lawyer tomorrow after the notice we received yesterday. It seems a good option right now. At least we could get some free advice on the current situation and find a solution. I just wish he would stop dragging his feet. Things are definately not getting better financially for us and I can't afford to keep making small payments for him.