Well here I am again, with making the decision between a 13 and a 7, not sure what to do and which would be the better...we have about 16K in debt and 2 vehicles, 19K and 11K owed on them, a home as well. We want to keep the cars and are debating on keeping the home. A 13 would pay the arrears and catch us up, we would pay 560 a month for a Chp 13 my initial thought is about the long term affects on the credit report and rebuilding credit and what will happen if we sell the home? After 5 years what happens when we paid the Chp 13 off? If we do a 13 are they going to snatch our taxes this year? Is it better to give up the home ( we have another place to live) and do a Chp 7? I am sorry alot of question but attny appointment is next week. Thanks
This sounds more like a question for your attorney. My thoughts...very rarely is a Chapter 13 a better move than a Chapter 7. A Chapter 13 will devastate your credit for 5 years. If you lose your job and/or miss a payment, the whole thing can be dismissed with prejudice. You can start rebuilding your credit immediately after a Chapter 7 discharge. Less than a year after filing, my FICO was already higher than it was before BK. You may be able to work out terms for catching those missed payments up in a reaffirmation agreement, if you file a Chapter 7. Your attorney, if he's worth his salt, should look at the particulars of your situation and tell you what he thinks.
Regarding your taxes, it depends on the trustee. You may be able to exempt them in a 7. Again, talk to your lawyer.
Since it is possible for us to work another way for our lates on the home, then we should do that out of court, keep the house and do a Chp7. Well that is just my thoughts. If we are to keep the home can we sell it later on without them coming after us later for the BK. We will ask the attny about excluding our taxes, becuase we wanted to use that to help pay off 2 personal loans we have that we can not include in the bk (personal as in family). Thank you
The home is a sticky situation. If you have serious equity in it, that would be a good reason to file a 13 over a 7. You'll need to find out what the homestead exemption is in your state to be able to make a decision on that. If you have little or no equity in the home, then selling it later wouldn't matter. If you have substantial equity in the home, that might knock you out of a Chapter 7, as the trustee could force you to sell the home to pay the debtors.
the only other thing is that we cannot have too much expendable income with a 7 and I just started working in Nov. so we just work the numbers....would there be any way around it? How much expendable income do they allow? I thought the attny said we should be close to 0 to not have to do a 13? I do find the 13 is the harder end of the BK's becuase it is 5 years before you can rebuild...they said with a 7 it is only 6 mo. not that I want to get over our heads again but to help rebuild it. Will having lates on the report for the few months we are catching up on the home better then a Chp 13? Will having the two cars with no lates, and keepin git out of a BK be beneficial as well, and in a couple of years the lates will be less effective right? Thank you
there is no equity in the home, the mtg is fairly new, what we owe would be max if we sold it on the market, we worry that if we foreclose on it and they sell it we are still going to owe money to the VA. I am not sure how the foreclosure works when they go to resell the home. It might be better for us to keep it the 3 years (stationed in the military and will be moving) then sell it later but will they take what we make off of it then?
My guess is your attorney can adjust your budget to handle the expendable income issue. As long as you both work, having two cars, and keeping them, is not an issue. You look to have about $5000 in equity in the cars, which you should be able to exempt.
If you file a Chapter 7, what matters is what the house is worth today vs what you owe on it. If you have no equity now, what you have years from now is irrelevant. If you surrender the house in the bankruptcy, you'll be free and clear of it. Your lender will have to write off the loss, if there is one. A good place for bankruptcy questions is www.chat-cards.com You can do a search on their posts, like here and it's all bankruptcy 24x7. Be glad to answer questions here, though.
thank you so much, your advice and info has helped. I appreciate it. I just wouldn't want to be caught in 3 years (if we keep the house) to lose all of that money, could be around 10-15K I wouldn't want to fork that over to someone. I will make sure to ask about the taxes. thanks again
The only way they can come after you years later on a BK is if you committed BK fraud...such as hiding assets and such.
One final thought...$16k in debt isn't a lot to file a BK on. Have you looked at consolidation options? Maybe you could take a 125% loan on the house and pay off the debt. Remember, you can only file a Chapter 7 once every 7 years...don't use it unless you really really need it.
o.k. well shouldn't be a problem then. But do you agree if we were able to afford the home that we would be better to do a 7 and keep the house, credit report wise, and a few years down the road? Would those 3 good lines still be beneficial with a BK on the report?
a home note and two car notes are excellent starts to rebuilding. Throw in an Orchard Bank card and a Target store card shortly after discharge and you're ahead of the curve. Still think 16k isn't much to BK though.
yeah i have heard that before about the 16K but I should never get into a situation again with credit. We way over extended ourselves and I lost my job had a hard time finding another one, but everything is looking sound now. We really looked around for a 125% loan but couldn't find one we could get approved for. So that is why it has come to this...Plus in TX they won't let you take an equity loan out for 12 months. I wasn't aware of that until a creditor told me. So that kind of shot that idea as well.
I agree you should look at options besides bankruptcy. You really don't owe that much. If you can get an equity loan on your house, or just a consolidation loan, I think you'll come out ahead. What about a second job, with all of the money going to pay debts? Atlanta's statement about the mortgage is only partially correct if you have a VA loan. The lender won't "eat it," the VA has guaranteed the mortgage and will have to pay the lender. I don't know if the VA can come after you for anything or not, but you will never get your VA eligibility back again. If you find a way to get out of the house being foreclosed, when you sell it you'll get your eligibility back again and can use it to buy another house in the future.
I'd be sure tempted to stonewall them for a year on 16k and then try to do something. Just don't let them get any judgments against you. How many creditors are involved in the 16k?
You better bring these loans to the attention of the attorney. I think its called prejudicial payments, which are a no-no, and especially making them to the family, could send up alarms with the trustee.
what do you mean by stonewall? If we foreclosed we would owe VA before we could get our elgibility back. Now that I do numbers it would be very hard for us to keep the home, we would not have any savings, which we need to start planning for. So if we throw in the house, and do a 7 we will have to finangle numbers for expendable income. Well it is lunch time I will check messages when I get back. Please check back later for more advice, I need all I can get! Thanks again everyone!
