Ch 7 or 13?? That is the question...

[nomoneynomore]

We live in Kansas and are thinking of filing. How do we know which to file? Is it based on income, assets/debts, or what?

Thanks,

[SinkingFast]

Primarily income based.

You live in KS. How many in your family and what's your annual income??

Do you have mortgage and/or car payments. If so, how much/month?? Alimony or child support payments?? Owe back taxes that are not Dischargeable??

Not meaning to be personal, but, beyond Income, Secured and Priority Debts do play a part as well.

[nomoneynomore]

We are a family of 4. We bring home about $35,000 after deductions.
Mortgage: $530
Vehicle: $265
Loans: $350
Credit Cards: $200
Medical: $150


Overall we have about $75000 in debt.
Mortgage $50,000
Vehicle $8,000
Loans $6,000
Credit Cards $6,000
Medical Bills $3,500
State Taxes '06 $600

[keepmine]

Do you intend to keep your home and car?

[SinkingFast]

The Median Income level works off Gross, not Net.

From the sounds of it, tho,......... Based on your Net,.......... You're probably gonna fall on the Ch 7 side of the fence.

The Median gross for a family of 4 in KS is $67,026/year.

Here's a quick and dirty Means Test Calculator that will give you a good idea of where you stand:

http://www.legalconsumer.com/means-t...ator/index.php

And here's a link for you to the Means Testing info:

http://www.usdoj.gov/ust/eo/bapcpa/2...anstesting.htm

You'll find Median Income, Schedules Allowables, and DOJ Approved Credit Counseling Agencies there.

Recent taxes are not Dischargeable so you'll still have that. You might want to work out some sort of payment arrangement with the State.

Loans will depend on what type of debt. Student Loans are not Dischargeable. A personal signature loan could be. Just depends on the type of loan.

The rest, you could potentially Discharge.

Looking at the bills you posted, your total payments are about half your Net. Many folks who do go on to file BK,......... Their CC minimums and/or other debt payments alone equal 50%-75% of their Net. That's not counting a place to live, food, utilities, car payment, and such.

For some people, tho, BK is not the answer. What are you looking to accomplish with filing BK??

[nomoneynomore]

Yes, we hope to keep our home and car if possible. IF we actually paid on every CC or debt every month, we would be deeper in the hole. Those amounts I put are what we try to pay each month. Several have not been paid on in several months.

We hope to get out from under the payments that are putting us in further and further. At this rate, we will keep sliding backwards rather than ever catching up at all. We were forced out of farming, with loans still due. We were catching up, but then my husband changed jobs with less ins, I had a bad preg. which caused a lot of medical bills. With all things compiling, we can't seem to keep our heads above water.

We hope to be able to just survive after filing. Just being able to provide good groceries and needed provisions for our family and keeping utilities paid on time would be a big step up for us.

[nomoneynomore]

I should also add that we have no assets. We had an auction last fall to sell off all farm equipment and assets to pay down on the farm debt.

[lrprn]

I should also add that we have no assets. We had an auction last fall to sell off all farm equipment and assets to pay down on the farm debt.

If you are farm owners, then there's a special bankruptcy chapter just for you - Ch 12. See http://www.uscourts.gov/bankruptcyco...chapter12.html for all the details.

Sounds like it's time to set up appointments for free consultations with several bankruptcy lawyers in your area of Kansas who can help you sort out of which chapter is going to best to file in your situation. We don't have any Ch 12 filers currently active on the board, but if as SinkingFast notes, you qualify for Ch 7 and that's the best option in your case, then we've got all kinds of experience here with that.

[nomoneynomore]

We don't own a farm, we farmed rented family land (doing business with family is what got us here!) So we don't qualify for anything special. I did the means testing, and we are well below and qualify for a Ch 7

Thanks so much for all the info!

[keepmine]

If you intend to keep your mortgage and auto loan, I doubt bk is in your best interest. You deperately need to raise your income.

We hope to be able to just survive after filing. Just being able to provide good groceries and needed provisions for our family and keeping utilities paid on time would be a big step up for us.

I'm troubled by that statement. Simply surving is not good enough. You should aspire to much more. You're only going to discharge $17K in debts. With your income, you'll be right back behind the 8 ball in a year. Were I you, I'd focus on getting a better job or, pick up pt jobs. Lack of income is a bigger problem than the debt level in your case.

[nomoneynomore]

I think we have gotten some information that isn't quite right. We were told that after you close a Ch 7 case, you no longer have to make payments on the mortgage or vehicle. If we file for Ch 7, when all is said and done, will we still have to make all the same payments we are making now?
Mortgage
Vehicle
Loan
Household expenses
Is this correct?

In the area we live in Kansas, we are at almost the top as far as pay goes. In all honesty, what good would filing Ch 7 do for us? If it doesn't do away with the large part of the debt (mortgage and vehicle) all we would really be doing is getting rid of the "little" debts that we don't pay on anyway right?

[keepmine]

If you wish to keep secured assets, you have to make your payments.

If you don't want to keep them, the debt will be discharged.

We had quite a discussion on another site sometime back dealing with underemployment. Over the past 2 months, we've had a few members decide to move where there are better employment opportunities. That's what I'd strongly consider if I'd topped out at a wage rate in my area. You gotta remember that life is not static. What happens with the next medicl emergency and you don't have good insurance? Just inflation alone will eat you alive. I'd not {and didn't} settle for the status quo. You have to do something to raise your income and protect your financial future.

[HHM]

I think we have gotten some information that isn't quite right. We were told that after you close a Ch 7 case, you no longer have to make payments on the mortgage or vehicle. If we file for Ch 7, when all is said and done, will we still have to make all the same payments we are making now?
Mortgage
Vehicle
Loan
Household expenses
Is this correct?

In the area we live in Kansas, we are at almost the top as far as pay goes. In all honesty, what good would filing Ch 7 do for us? If it doesn't do away with the large part of the debt (mortgage and vehicle) all we would really be doing is getting rid of the "little" debts that we don't pay on anyway right?

Short answer, yes

You need to understand that there are two liabilities associated with secured debts.
1. Personal liability, this is your personal, contractual, obligation to make payments to satisfy the debt.
2. Asset liability: a secured debt is secured by an asset. For example, when you take out a mortgage, the mortgage note is secured by the house. The purpose of the security is to retrieve value for the loan in the event you do not satisfy your personal liability.

When it comes to secured debt, Bankruptcy ONLY discharges PERSONAL LIABILITY. The asset that secures the loan is ALWAYS liable to the debt. So if you file BK 7 AND stop making payments on your mortgage, the bank can foreclose on your house despite the chapter 7 BK, (same thing applies to vehicles)

The long and short of it, if you want to keep the house, or the car, etc and file Bk, you have to continue to make your normal monthly payments.

[nomoneynomore]

Thank you for clarifying that information! I will talk with my hubby more before deciding what to do.