Need Advice $255k in unsecured debt

[igetit]

Any advice would be appreciated...
Here is my situation: My husband & I have approx. $255k in unsecured debt (this includes Student Loans). Our cc'ds are at 21-29%. We are not behind on any of our payments, yet, but things are getting tight. We talked w/ a BK atty. last Sat. (re: 100% Ch 13) and he told us to stop making our unsec. debt pmts. so that we can save the $5,000 pmt. we need to hire him. We are still unsure if this is the right avenue for us. My husband's total gross income last yr was $163k...but after insurance, 401k, 401k loan payback, etc. he estimates that net bring home is around $93k. He is in sales with a base pay we can count on of approx. $5,100/mo. and the rest is commissions & bonuses. pd qtrly.

Mortg. $2,200
2nd mtg 737
car 1 720 (pd off in 4 yrs)
car 2 510 (pd off in 2.5 yrs)
we have 3 young children.

Sorry this is wordy but I really need some well informed advice.

Thanks.

[kiddles]

Here's a few random thoughts from a random internet stranger

1. If it's a 100% payback plan, do the numbers yourself - could you make the payments without BK and pay it all back in 5 years anyway?

2. Are your student loans in deferrment? Are you signed up for the Income Contingent Plan? (and are you with the Dept of Ed for these - one of the laws passed this fall makes the Income Contingent plan an Income-based plan, and caps the max payment a family can be required to pay. Worth looking into!)

3. $5K seems high for attorney fees for a Chap 7 (VERY HIGH!) and if you file a Chap 13 (likely, with your income) his fees still seems high and are paid through the plan, not upfront. Consult a few other attorneys in your area. Get a feel for them, see what they say, then decide which attorney is right for you.

4. Read these boards obsessively (). LOADS of help here!

[igetit]

Thanks for your thoughts...

1. CH13 BK would take the 21-29% interest rates on our cards to 0% making it possible to pay off in 5 yrs.

2. CC's are our issue high bal's & high interest rates...Stdnt Loans aren't our real concern I don't think.

3. Thanks for the insight on $5k atty fees being excessive and that they would be pd through the plan...I thought as much

[ameliabedilia]

What would the payment be if it's 100%?
I don't know much about your total monthly expenses, but could you get rid of the huge $700 car payment? That would free up a lot of money each month.

[igetit]

At 100% the payment would be $4500 (that's including the 7% trustee fees)

We could pay this on our own if we could get our cresit card companies to lower our interest rate to 7%. Do you know how to do that?

[TLK]

My situation is very similar to yours ($300,000 unsecured debt., base pay + qtr. bonus checks, current on car and house $2100 mo.). I filed 13 in December after putting it off for a year, which I should not have done. My monthly payment is only $550.00 which is not bad for this about on debt. I look at it as a car payment every month- for five years.
I highly recommend to go ahead and file. It sincerely is not that bad once you get all the preliminary paper work done. I found a good attorney with a very good supporting staff that I guess they make things seem a lot more acceptable.

[ameliabedilia]

At 100% the payment would be $4500 (that's including the 7% trustee fees)

We could pay this on our own if we could get our credit card companies to lower our interest rate to 7%. Do you know how to do that?

I am confused- $4500 would be your monthly payment right?
When I do the math on your 93k take home, that averages out to $7750 per month. The expenses you listed add up to $4200 alone. Are you going to be giving up your house and a car? Even then, your other expenses are going to add up to alot more, like food, electricity, etc...
Tell me if I'm missing something, but I don't see how they could have you do a 100% payback.

I have heard of some card companies offering settlements after you have been not paying for quite some time, but then you have to pay taxes on the forgiven amount and it still really hurts your credit.

[AboutToBK13]

OP will most likely be less than 100% payback. Payback will depending on the budget presented by OP and the lawyer.

We are in a similar situation debt/income and our payback will be less than 100%. I am guessing between 20% and 30% for DW and I.

[igetit]

Thanks to all who replied This last year was hairy, but we got through it. We filed Ch13 paying back 15%- pmt $875/mo ~although we did have to fork over $25k to the trustee @ Christmas - a bonus my husband divulged during the 1st mtg w/ trustee & our attorney didn't ask us the amt prior to the mtg...ouch~

[catleg]

If you can stop paying cards now, use the freed-up cash to pay down the student loans, then file BK13.

As a beneficial side effect, once you start to look like a pending BK your cards may come back with 0% hardship deals to pay off and close the accounts. Would get you same result as a BK if they all play ball, and eventually they all usually will but you have to scare them.

How much are your student loans?

Seems to me that with your income and 3 kids your payback should be well below 100% for unsecureds.

[BigJohn]

To original poster, I would seriously think about getting a couple of new cars. It might be better to pay for the cars within the plan instead of paying creditors.

[catleg]

Oh, I get it now, this was an update on a year old thread.

[igetit]

If you can stop paying cards now, use the freed-up cash to pay down the student loans, then file BK13.

As a beneficial side effect, once you start to look like a pending BK your cards may come back with 0% hardship deals to pay off and close the accounts. Would get you same result as a BK if they all play ball, and eventually they all usually will but you have to scare them.

How much are your student loans?

Seems to me that with your income and 3 kids your payback should be well below 100% for unsecureds.

Advice to pay $25k bonus towards student loans would've been excellent had we received it sooner (like from our own atty...aaarrrgh)

Our Trustee used financial information older than 6 months prior to commencement in determining our Ch 13 plan payment...
Can the Trustee legally do that?
Contradicts U.S. Courts website of "current monthly income"...
Notes 1."defined in the Bankruptcy Code and means the average monthly income received over the six calendar months before commencement of the bankruptcy case..."

What is recourse against incompetent atty?
He contradicts "Rights and Responsibility Agreement" on several points