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  1. #1
    Join Date
    Feb 2008
    Posts
    10

    Default Which To File - Chapter 13 Or Chapter 7

    I have a house that I just purchased 6 months ago (and want to keep) and a car that I still owe on (and want to keep also, but my other creditors such as credit cards and payday loans are threatening me with legal action as I am 3-5 months behind on most of them. My priority is to keep current on my house and car but I cannot afford to keep paying the other creditors. Consumer Counseling said they cannot help me as my income was not enough to cover my bills as the payments would be the same as if I worked out an arrangement with the creditors myself to payt 2%! Which is still something I can't afford. 3 Weeks ago my position was terminated at my job and I am trying to collect unemployment but am not sure I will get it. I don't want to lose my house or car and cannot keep up with the other bills. I want to take action before I have judgements filed if its not too late already. I have had some creditors threaten with judgements already. I do have a judgement filed already regarding a couple of checks that bounced at my local grocery that I have to go to court on (which will be a different post).

    Can anyone steer me in the right direction please?
    Sincerely
    Thanks

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Which To File - Chapter 13 Or Chapter 7

    Read this.

    If you're unemployed, realistically you would be looking at Chapter 7. Without income, you can't afford a Chapter 13 repayment plan.

  3. #3
    Almosthome Guest

    Default Re: Which To File - Chapter 13 Or Chapter 7

    Quote Quoting Mr. Knowitall
    View Post
    Read this.

    If you're unemployed, realistically you would be looking at Chapter 7. Without income, you can't afford a Chapter 13 repayment plan.
    True, but the unemployment income may suffice. The real issues are whether s/he is current on the payments to the house and car creditors and whether there is non-exempt equity in these (or other assets). If, say, there is no non-exempt equity and these accounts are current, then the Ch. 7 would probably be the best choice. If, however, there are arrears with the mortgage co, say, then the 7 would not help with regard to that debt. The 13 would allow him/her to get the arrears paid. These are much more complicated issues than this forum can answer. Most BK attorneys do not charge for the initial consultation where all of these questions could be answered.

  4. #4
    Join Date
    Mar 2005
    Location
    Michigan
    Posts
    28,906

    Default Re: Which To File - Chapter 13 Or Chapter 7

    If unemployment insurance, which is limited in both amount and duration, is sufficient for Chapter 13, I would generally infer that the debtor's debt load is so small that they should simply pay it off.

  5. #5
    Join Date
    Jan 2008
    Location
    Alabama
    Posts
    114

    Default Re: Which To File - Chapter 13 Or Chapter 7

    When we had clients needing to file CH 13 and their only income was from unemployment, we typically had to set them up on a "step up" plan in which the payments would increase after a certain number of months. This allowed the Debtor the protection of the Ch 13 by making a minimal payment to start, and ideally the Debtor would have found new employment by the time the plan payments increased. We filed numerous plans with payments as low as $80.00 per month, but these were indeed typically cases where there was very little unsecured debt which was sometimes paid at 0%, and very small secured debts being paid through the plan... so I agree, in a plan with payments that low the Debtor would be wise to pay the debts off another way rather than scar their credit.

  6. #6
    Almosthome Guest

    Default Re: Which To File - Chapter 13 Or Chapter 7

    Quote Quoting aaron
    View Post
    If unemployment insurance, which is limited in both amount and duration, is sufficient for Chapter 13, I would generally infer that the debtor's debt load is so small that they should simply pay it off.
    I haven't looked at it lately, but isn't the test for a 13 more a function of disposable income rather than debt load? An ideal plan (from the debtor's perspective) is one that paid unsecured creditors as little as possible. I don't know that we can infer what the unsecured debt is but I don't know that that would be that operative of a consideration.
    Also, a stepped up plan may be good if the debtor gets a job and more income, but what if s/he doesn't? The plan will tank. I think that a stepped up plan must be chosen cautiously.

  7. #7
    Join Date
    Feb 2008
    Posts
    10

    Default Re: Which To File - Chapter 13 Or Chapter 7

    Thank you!
    Right now I am current with the car but almost 2 months behind on the house..I am filing an appeal with the state UC board as they have determined that I do not qualify for UC, so I am awaiting for a confirmation of a hearing date.
    So right now I have no income coming in..and my mortgager is threatening forclosure by the 29th...they are not willing to work with me at all..I told them I do have one months payment to send in but they ar telling me they cannot accept it as the system will only now allow both months payment??!!
    Ugghh

  8. #8
    Almosthome Guest

    Default Re: Which To File - Chapter 13 Or Chapter 7

    Yes that's right. Look up the Pennsylvania Mortgage Assistance Program call them and make an appointment.

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