Converting to Chapter 7

[livingonaprayer]

Well, after 3 1/2 years in a Ch 13 we are forced to convert to a Ch7. Just a rundown. We filed in Feb 05 and the last 3 1/2 years have been a nightmare. My husband has been laid off three times with the most recent being from Jan 08 till Aug 08. We have received 3 "3 month extentions" each upping our payments. We have paid over 21,000 into the plan. We are over $5,000 past due (I'm honestly surprised it took them so long to file a motion to dismiss) to the trustee with no way to pay that before our court date next month and we certainly cannot afford to pay over 1,000 a month after that even if we could borrow from a relative.

So our only option is to go Ch 7. We will have to give up both cars as they were both crammed down into the Ch13 and we simply cannot afford the payments on cars that are now worth way less and many more miles. So, we don't know what to do about a car. We have no money to go buy a car - not even a junker. Any suggestions? How long before they usually ask for the vehicles once we convert to a Ch 7?

My biggest concern is our home. Our mortgage balance is $136,000 and I'm finding that it may be worth 156,000 to 165,000, through real estate sales in our neighborhood. Our state exemption filing jointly is $20,000. Do you think the trustee will want to sell it? I've heard that they sometimes don't touch anything that close to the exemption. How is the value determined? Also, if the trustee decides to sell when would we find that out?

Also, we currently owe our Mortgage for September plus about $1,200 from when we were trying to work out paying from getting behind when I was out of work last year due to surgery. In addition, when we originally filed in 05 we turned over a check from husbands 401k that we had to catch up our home loan. Well, the attorney at the time (large firm, lots of attorneys - that one no longer there) told us that would go directly to the mortage company, but apparently that was wrong, so there is the matter of almost $2,000 there. My attorney said we don't have to be current when we convert, just get caught up as soon as possible. The mortgage company cannot discuss arrangements with us since we are currently in a Ch 13. We love our home, we have great payment and interest rate and we want to keep it. Do you think the mortgage company (Countrywide) will work something out with us if we can't get it all caught up and what kind of time frame do we have once we convert to a Ch7?

Now that my husband is back to work we can afford out home and living expenses - just not the Ch 13. What a hellish 3 1/2 years - all for nothing or so it feels.

I know there are a lot of questions here but I've been on this site everyday and you all seem so helpful.

Thanks

[JRScott]

On your home I'd get an updated estimate. You can probably get a real estate agent to do one. Also make a list of all repairs needed to the home, as this can help offset any extra equity.

As for your vehicles it depends though it is unusual for them to move to take them before the 341 happens though they can if they wanted to. They'd have to file a motion to lift stay before doing so. You might see if a family member could loan you a car, or help you get a car.

It is actually not unusual for people to find they cannot complete their Ch 13s, in fact the majority of CH 13 filers do later have to convert to a CH 7. CH 13s just do not allow any adjustment for loss of income or health and the budget is so tight folks can't manage. So you are not alone.

[lrprn]

Well, after 3 1/2 years in a Ch 13 we are forced to convert to a Ch7.

Have you talked to your lawyer about filing an amended Ch 13 plan to reflect your new income levels? Perhaps that's possible rather than having to give up assets and start from scratch financially?

[livingonaprayer]

My lawyer did not mention that as an option. I can honestly say though that we can't do this again. It has been an incredible strain on our marriage and it's been difficult to be the mom I need and want to be at times with the stress of a ch 13 and all of the unexpected things that have happened during the last 3 1/2 years. I am most concerned about my children losing the only home they have ever known and having to leave their school.

Has anyone out there been able to keep their home that has some equity when filing a Ch7?

[WoodSprite]

I can honestly say though that we can't do this again. It has been an incredible strain on our marriage and it's been difficult to be the mom I need and want to be at times with the stress of a ch 13 and all of the unexpected things that have happened during the last 3 1/2 years. I am most concerned about my children losing the only home they have ever known and having to leave their school.

Hi, LOaP - I'm so sorry for all you guys have been through, and I can certainly see how you could be feeling it was all for nothing right now. You ARE still together, though, which shows you both must be made of pretty strong stuff, and committed to making it work.

All I can say is that you're really not alone, and there are lots of folks here who will help you to get through this. It's bizarre for me to say this, since I was concerned above all with saving my home and my land, but I've got to believe that even if converting to a 7 turns out to be the best/only option for you, the ensuing relief of a fresh start, and the effect it has on your marriage may turn out to be the best thing that could happen to your kids. Sure, they won't be likely to be thrilled about leaving their school, but the stability of having a loving, intact family certainly trumps the stability of living in the same house your whole life. Kids are amazingly resilient if they feel loved. We all are.

Good luck, and keep coming back.

[keepmine]

I doubt your home is in any danger. Trustees face the same expeneses in a sale as you do-commissions, closing costs, the expense of insurance and maintenaince/upkeep while waiting for it to sell. Most will give a 7 to 10% cushion.

[TEW]

My lawyer did not mention that as an option. I can honestly say though that we can't do this again. It has been an incredible strain on our marriage and it's been difficult to be the mom I need and want to be at times with the stress of a ch 13 and all of the unexpected things that have happened during the last 3 1/2 years. I am most concerned about my children losing the only home they have ever known and having to leave their school.

Has anyone out there been able to keep their home that has some equity when filing a Ch7?

I could have kept mine if i wanted to. The truste asked me if i was keeping it but there is no way I be able to. unless the bank will write off some of the loan.
If the payments are up to date and you don't have a ton of equity in it then there should not be a problem.