Meeting with BK attorney today.

[Ineedhelp2]

Just wanted to post the info I got from the attorney I met with today regarding a potential Chapter 13 in Oregon.

Since the homestead exemption in Oregon is low and since I have a lot of equity that exceeds it, it would not make sense to file Chapter 7.

He did say that depending upon my income level, it would be possible to pay out at a rate that only pays off 50% of the cc debt and the rest would be discharged.

What confused me is that he also said the debtors could require that I pay as much as if I were under chapter 7. He said the laws are not clear-cut and I don't really understand now how that would work out for me. In my current situation, I hav plenty of equity, but my income is low.

He also said that a chapter 13 can be dismissed at any time and revert to how things were before filing.

His fee would be $2,500, payable in advance. He only charged $40 for a half hour consultation.

I am still unclear about a few things and wish I would have pinned him down about that issue regarding chapter 7 payout as some kind of standard for chapter 13.

I'm beginning to think I migh be better off making my own deals with the cc companies. If I can get my 2nd mortgage refinanced and get some cash to work with, I don't think I will file bk.

[keepmine]

Talk with another couple of lawyers.
At the end of the day, creditors can't get less in a Chapter 13 than they would have gotten in a 7. Not murky at all.

http://assembler.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00001325----000-.html

(4) the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date;

[Ineedhelp2]

So there is no way through either kind of bankruptcy to reduce the amount of debt if there is a enough assets to repay the debt. (after taking exemptions into consideration).

[SinkingFast]

So there is no way through either kind of bankruptcy to reduce the amount of debt if there is a enough assets to repay the debt. (after taking exemptions into consideration).

Yep. That's pretty much it.

Say you owe $50K in CC debt. In Oregon, if you were filing single, you would have a $25K Homestead Exemption. For example purposes, let's say you have $100K in equity in your house. That leaves you with $75K of equity unprotectable by Homestead Exemption. IF you were to file Ch 7 BK, the Trustee could sieze and sell your home, give you your $25K for Homestead Exemption, and distribute the remaining proceeds to your Creditors.

SO, in a Ch 13, the Trustee would establish a basis of the value of your home, then deduct normal costs to sell and your Homestead exemption. If you have $50K or greater in equity remaining, then the Trustee would probably put you in a 100% pay back plan.

[Ineedhelp2]

How do they establish a value for your home?

Do they have it appraised?

Do they take into consideration that it could sell for less in a quick sale?

Let's say the home is valued at about $300,000 by a couple real estate agents. But in a forced sale, it could go for maybe $260,000, couldn't it?

[Jman30]

How do they establish a value for your home?

Do they have it appraised?

Do they take into consideration that it could sell for less in a quick sale?

Let's say the home is valued at about $300,000 by a couple real estate agents. But in a forced sale, it could go for maybe $260,000, couldn't it?

The Trustee has an appraiser come out and look. As far as mine went, they didn't even come inside the house. They just drove by it and snapped a couple of pictures. And it came in less than what it was appraised it by a "regular" appraiser. They appraised my house at 195,000 but right before I declared BK I tried to tap into the home equity and I was appraised at $208,000

[sophie]

Ok, now I'm confused. I just found out we have to do a 13. We have a good amount of equity in the house but not much income. I don't understand what sinkingfast mean about putting you into a 100% payback? Does that mean I will have to pay back my entire cc's? All my debt is cc's. Then if I have to pay it all back, why would I file and how will that help me have a new start?

[sophie]

Sinkingfast: I just found out we have to file 13. We have a good amount of equity in the house but not much in salary. What did you mean when you said the trustee would probably put you in a 100% payback? Do you mean if I had 100,000 in cc's, the trustee could say you need to pay it all back? Why then would I file? And second, how would that help me out with getting a fresh start in life? It would take me the rest of my life and then some to pay that back, hence the need to file!

Thanks.

[Ineedhelp2]

Sophie,

It looks to me like bk doesn't help much if you've got equity over and above your exemptions, sufficient to pay your unsecured debt. About the only thing it seems to help in your (and my) situation, is that if you are behind in mortgage payments, the amount in arrears will be spread out over 3 to 5 years, and it stops interest from adding on to the cc debt.

You might be able to negotiate some deals directly with the cc companies.

Have you tried contacting any of the debt negotiating companies?

[aa06a47]

Sinkingfast: I just found out we have to file 13. We have a good amount of equity in the house but not much in salary. What did you mean when you said the trustee would probably put you in a 100% payback? Do you mean if I had 100,000 in cc's, the trustee could say you need to pay it all back? Why then would I file? And second, how would that help me out with getting a fresh start in life? It would take me the rest of my life and then some to pay that back, hence the need to file!

Thanks.

sophie, what you need to do is figure out how much equity you have in your home, subtract your exemption and that will be your min pay back. So, let's say you have 100K in equity, your state exemption is 20K, means in a chapter 7, the trutee would have 80K to dispurse. In a Chapter 13, the trustee would also need to have 80k to dispurse to make the plan fair to the creditors.

If you owe 100K in credit cards, you would at best get 20K relief.

If you find yourself in this situation, your attorney will probably advise you to either take out a second mortgage to pay the creditors or sell your home.

I think the issue here is if your really bankrupt with that much equity in your home. I know this all suck and probably not what you want to here, but your not legally bankrupt as you have more assets than you owe.