Who is a creditor?

[teresa]

Bear with me folks, appointment with attorney is still 5 days away...

Do I have to list my personal physician? I owe him about $150 (not past due yet) and I plan on paying him this month with the money I will not be paying on my car loans. Why do people list their utilities? I've been behind, just paid a big past due amount the other day, but so far I've been able to keep the lights on.

Also, one of the things that spurred me to consider bankruptcy is the fact that my kid needs braces. Should I get the ball rolling on that so that it can be counted as a monthly obligation, but not have the balance included in the BK payoff? I don't think I'd want an angry orthodontist reaming on my kids' teeth...

Should I start my 401K at work? Do I have to have had it going for a certain amount of time before filing? Should I increase my taxes at work, begin a medical expense saving plan? My family has an average of $100 month medical expenses, more once my max coverage is used up for one of my kids' doctors.

Should I quit paying my mortgage? If I go Ch13, won't I get 2 years to bring up the arrears? I plan on keeping the house. I thought that maybe I could use that money to save towards the purchase of a vehicle since i'll probably let at least one of the rigs go in BK.

If I let my cars go in the BK, will the money I am not using to make those payments go towards what is available to pay towards the BK?

I've read the BK manual from the sticky on this site, and they say it is ok to "plan" your BK. I'm not going out and charging stuff up, just wanting to take care of a few things that I need done, but have not been able to do because of lack of fundings.

thanks

[keepmine]

If you're filing a Chapter 13 to keep a house with negative equity and a car where you're badly upside down then, you are making one more foolish financial decision. There's just no polite way to phrase it. The goal of bk is to come out in better shape than you went in. Not, to rearrange the deck chairs on the Titantic.
Sure pay $150 bucks to your doctor. Hold off on the braces until you see a lawyer. You can get the work done but, the dentist is a creditor and you will have to list him in the filing. You can file a chapter 7 and reaffirm the debt to the dentist.
It's OK to plan a BK. many of us have done that. We took our time about doing it. Since the consult with the lawyer is in a few days, just do nothing until you see where you stand. And please, don't reaffirm stuff where you have a negative equity. It'll evetually come back and bite you.

[13inOR]

I would be careful about getting behind on the mortgage until you know if you qualify for a 7 or not. Reason being, if you are behind on your mortgage a chapter 7 WILL NOT save your home, whereas a chapter 13 will, but you might not want to be forced into a chap 13 if you could have otherwise met the qualifications for a 7, just because you got behind on your home.
Does that make sense? Of course, if your home has negative equity, you may decide you don't want to keep it after all.....
As far as the orthodontist goes, I had one kid in braces when we started and I just didnt include the dentist, I just put the payment down as a medical expense, and we paid them off eventually.The attorney said this was fine. Our other child needed them in the middle of the plan, and we were able to get trustee approval to pay for those by lowering our chapter 13 payment for a couple months to accumulate the down payment for them.

[teresa]

13inOR, I just don't think I'll qualify for a 7. Over the median income for my state. But money owed monthly exceeds what I bring in. So, that would lead me to a presumtive....I don't know what to call it, like some sort of abuse. So I should probably plan on going 7 for now. I wonder, will my first appointment w/ attorney give me a better idea of which way I can go?

[teresa]

keepmine...

thanks for your reply and for your patience with me
I guess I want to keep the cars because I am under the assumption that if they get discharged in a Ch13, then that will be all the more money available to go to the creditors. Am I wrong? Also, I drive almost 100 miles/day round trip for work, and I've really enjoyed having a reliable vehicle to get there and back. Ive already determined I am over on the median income test, and can't quite figure out the means rest. I'm stuck and waffling. I've seen different means tests within this forum, and still can figure it out.

[teresa]

I only have about 6K equity in the house, and there's no way my husband will let it go. I think I could easily walk away from it, maybe I just need to convince hubby....

[13inOR]

I know, we would have never qualified for a 7 either, over the means and also
our mortgage was behind so chapter 13 was our only recourse.
But--you mentioned you had 6K in equity, while not a lot thats certainly not negative. I don't blame you for wanting to keep your home.
I guess what
you need to ask yourself is, why have you had the financial problems?

Is your house payment or maintenance too much for you, or are your financial problems completely unrelated to your home? If keeping your house is whats killing you, then maybe its time to let go.

BUT--if its other things that are the problem, and if you didnt have those things, the house payment would not be an issue, then you might want to keep it.
As far as the cars go, my understanding from our attorney was that they couldnt force you to pay what you owe, they were only allowed to collect the KBB value of the car if you keep it. This is not something I know a whole lot about though, so some of the others may have more insight. There are probably different variables involved.
I am sure once you have your attorney consult that he/she will be able to clear up a lot of your questions too.

[SinkingFast]

thanks for your reply and for your patience with me
I guess I want to keep the cars because I am under the assumption that if they get discharged in a Ch13, then that will be all the more money available to go to the creditors. Am I wrong? Also, I drive almost 100 miles/day round trip for work, and I've really enjoyed having a reliable vehicle to get there and back. Ive already determined I am over on the median income test, and can't quite figure out the means rest. I'm stuck and waffling. I've seen different means tests within this forum, and still can figure it out.

Going thru the Means Test is really no big deal. But there are fine points you need an attny to figure.

Like your house payment. At the start of the Means Test, you get a standard allowable deduction for rent/mortgage and utilities. If your house payment is more than that, one attny told us he'd add the difference back into the Means Test on the "Other Priority Secured Debt" line. As long as the mortgage can be amortized out over 60 months. The Means Test is new so that may be allowable.

Also, the Trustee's Administrative Fee calculation. I know the % for our area, but I don't know what to multiply it against. And no attny has explained it. I did tell one attny I'd run the Means Test and came out with $115/month disposable income, but that was without the Trustee's fee deducted. The attny muttered, under his breath, that the Trustee's fee would eat up that $115/month. But I still don't know an exact # is or how it's figured. I've seen on other people's filings on PACER, the Trustee's fee listed at $75-$100/month on the Means Test.

Just some thoughts for you.

[teresa]

Would you have qualified, 13inOR?

I know, we would have never qualified for a 7 either, over the means and also
our mortgage was behind so chapter 13 was our only recourse.

13inOR, would you have otherwise qualified for a Ch7, if you were current on your mortgage? Did you "pass" the means test?

[edwards2]

I think keepmine makes some really good points in particular, the goal of filing BK. While we are not in great financial shape post Bk obviously we are better off than we were. Still the scars from BK will be there for some time especially with your creditworthiness so you want to be sure whatever you do is the best for your situation in the long run. This is no time to bandaid your situation because whichever Chapter you file will impact your credit and creditors. It is a painful and embarrassing decision but we all survived it and you will too. For my husband and I we had no disposable income to speak of to pay creditors so a Chapter 7 was the one we wanted to file. We were and had been, current on our house note because we wanted to keep our house if at all possible. Yes, all of us did research and semi-planned our BKs but with plans that fit our particular financial situations. Obviously Chapter 7 does not work for everyone and you have to meet the criteria to file anyway. You need to decide what you can and cannot afford to keep and sometimes the decisions will be very painful. There are several of us on this forum who have had to give up their houses because there was no other way. You will be able to answer a lot of your own questions after you meet with your attorney. Keep us posted.

[13inOR]

Teresa, we never even considered going 7 because of our home, but we wouldnt have passed the means test anyway, because we had enough disposable income to pay $1302 a month to the trustee and that was paying back 100% in 29 months. We didnt even have to stretch it out to 36 months like is usually the case.

In our case, the house arrearages was what forced us into BK. We didnt have cc debt to speak of, just a lot of medical and the house arrearages.

Ours is paid off now, and we are really glad we did it because even though we didnt have a lot of cc debt, we were still getting nowhere getting what we did have paid off, this way, we learned to live within a budget and hopefully will always be better off for it.