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  1. #1
    Join Date
    Oct 2010
    Posts
    3

    Default Changing from Chapter 13 to 7

    My question involves bankruptcy in the state of: Indiana

    In February 2010 my husband and I filed Chapter 13. We were doing okay until June when we were informed of a mortgage payment not paid (January). So we were told that would be added into the bankruptcy but since that wasn't paid the trustee would want to include the mortgage until discharge and then we would take back
    over the payments. Since they changed the payments we
    are having difficulty with living (I also had my hours cut back at work). We were thinking about switching to a Chapter 7 (we do qualify under the means test).

    My question is: I have 5 children ages 12 and under. I am worried about losing my house and vehicle if we switch to a Chapter 7. They are my priority in all this mess. I don't totally understand the homestead exemption thing. We owe $240,000 and recently the value of the home was assessed at $256,000. My lawyer is a bankruptcy lawyer and is very difficult to get a hold of. Would another lawyer talk to me if I contacted him/her?

    Has anyone been in this predicament before? Does anyone have any suggestions?

  2. #2
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Changing from Chapter 13 to 7

    Why did you file a 13? What were you trying to accomplish in the 13 that made you believe a 7 was not the best way to go? Were you trying to pay taxes, protect non-exempt assets, protect a family member from a transfer. . . or what?

    Assuming the reasons for filing the 13 no longer concern you, converting from 13 to 7 means:

    1. If you want to keep your car you must bring the payments current or work something out with the lender and then reaffirm the debt.

    2. If your home's value (equity - $16K in your example) exceeds your allowed homestead exemption, the 7 Trustee can sell it. Further, if you have any other non-exempt property the Trustee may sell it.

    3. Assuming the value (equity - $16K in your example) of your home does not exceed your exemption you must bring your mortgage payments current. Do not sign a reaffirmation agreement. Just get the payments current and stay current.

    Make sure you discuss all options with your attorney.

    Best regards.

  3. #3
    Join Date
    Oct 2010
    Posts
    3

    Default Re: Changing from Chapter 13 to 7

    Our lawyer told us that a 13 is the way we should go since we needed to keep our house and cars to get to and from work. If we filed a 7 we would still make house payments (assuming we get to keep it) right? I am just concerned because I don't know where we could go with 7 of us if we lost our house I have heard of others filing a 7 and within a year getting a new house. Is that possible? I really find that hard to believe reading about what it does to your credit.

  4. #4
    Join Date
    Jan 2008
    Posts
    164

    Default Re: Changing from Chapter 13 to 7

    We did the same thing 13 first and then 7, but we are in calif and have a higher exemption, and there was only the 2 of us, but if we wanted to keep house we could have, but i surrenderd house back to bank, we are on our feet now scores were not dinged that bad, we are both in the high 600"s wife almost at 700, right now we don't plan on buying we are senoirs and can not justify at this time.You house may not have the equity that you think it has which would help you keep your house if there is no value for trustee to sell. Whatever you do do it with a lawyer and please do not (Do not sign a reaffirmation agreement on house just in case).


    God Bless

  5. #5
    Join Date
    Oct 2010
    Posts
    3

    Default Re: Changing from Chapter 13 to 7

    What does reaffirm mean?

  6. #6
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Changing from Chapter 13 to 7

    Quote Quoting Michellern
    View Post
    Our lawyer told us that a 13 is the way we should go since we needed to keep our house and cars to get to and from work. If we filed a 7 we would still make house payments (assuming we get to keep it) right? I am just concerned because I don't know where we could go with 7 of us if we lost our house I have heard of others filing a 7 and within a year getting a new house. Is that possible? I really find that hard to believe reading about what it does to your credit.
    Sounds like you have non exempt equity in the house and cars. If that is the case and you go to a 7 the Trustee will sell the assets, give you the allowed exemption from the proceeds and keep the rest for the benefit of the estate. You really need to discuss this with your attorney.

    As to your later post: Reaffirming means that you sign an agreement with the lender that reobligates you to the loan. You make your car payments and keep the car. If you fall behind, the car is repossessed and the lender sues you for the balance.

    Des.

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