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PatcNJ · #1 10-27-2009, 03:14 AM

Has anyone out there done this? I feel I need to look at doing this since I am so much in debt and am now facing possible garnishments which will destitute my family if they are successful.

I have no money whatsoever for an attorney.

Any ideas or thoughts would be appreciated.

I live in NJ

Thanks

SOAPLADY · #2 10-27-2009, 03:19 AM

It is not a good idea to do a chapter 13 without an attorney because of how complicated it is. It is not impossible but it is not a good idea. I do believe that they will put their payment into the 13 plan, you only have to pay the filing fee.

unclewulf · #3 10-27-2009, 03:31 AM

You can also talk to several attorneys. Keep after it until you find one who's willing to work with you, and whom you can work with.

DebtCruncher · #4 10-27-2009, 04:38 AM

Ditto. Chapter 7's are relatively easy to file pro se. 13's, however, require a lot more paperwork and creation of the plan itself, which is very complicated. If you don't dot your i's and cross your t's perfectly, your plan can easily get denied confirmation, which could then result in a dismissal of the BK if you don't get a plan confirmed within (i think) 180 days of filing.

PS the court itself does not provide legal advice -- and so they won't tell you how to fill the forms out or create a plan.

PatcNJ · #5 10-27-2009, 05:25 AM

If I can find an attorney who will put there fees into the plan that would be great. I also own a house with hopefully very little equity at this time....

What happens if you have equity in your house?

Thanks everyone for your help, I don't know what I would have done if I didn't find this site!

DebtCruncher · #6 10-27-2009, 06:08 AM

In a 13, your equity position in the house does not matter.* (To a degree, it does). It doesn't matter for the purposes of you keeping it -- you can have 100% equity in your house (own it outright), and still be able to keep it in a 13. If you have zero or negative equity, you might be able to cram down the secured value of the house and treat portions as unsecured. Or in the case of 2nd mortgages or HELOCS, if they have no equity position at all, your BK attorney may be able to strip those subordinate liens and treat them entirely as unsecured. (That is another thing you generally would not be able to do if you filed on your own.... I mean you could, but those mortgage companies will have their attorneys in court fighting for secured status, and you'd be ill-prepared to defend yourself).

Most BK attorneys I've heard of will include their fees in the plan, so I don't think you'll have trouble finding one.

PatcNJ · #7 10-27-2009, 09:28 AM

Debtcruncher

Thanks, I have some equity which is what has prevented me from filing 13 in the first place. I thought you couldn't have any or you would be forced to sell your house.

The other question I have is debt. I have 50,000 in cc debt which is what I would be putting in the plan. From my calculations I only have around $200.00 disposable income monthly. This would leave the creditors not getting much. Can they object to this and win?

Thanks again.

DebtCruncher · #8 10-27-2009, 05:37 PM

You may be thinking of a Chapter 7 .... if you have substantial equity in a house and file a 7, the trustee could seek a sale of your assets for the benefit of your creditors.

In a 13, because it is a repayment plan, and unless you have substantial assets (I'm talking million-dollar homes, luxury cars, etc), the trustee is very rarely going to try to force the sale of assets. Now I'm not sure exactly what the BK laws are, and what exemptions you get, etc. But my understanding is that you're able to keep your house, even if you have a lot of equity in it.

I've probably seen over a thousand 13 plans filed by my own customers. Most pay out anywhere from 10%-25% to GUC's (General Unsecured Creditors). Figure if you have $200/month to pay into the plan, and you have a plan term of 60 months, that is 200x60 = $12,000 you'd pay over the BK. Now you will have trustee fees of about $3K and probably attorney fees of $3K, which means only about $6K of that $12K goes to repay GUCs. $6K/$50K = 12%, which is within the common range I've always seen.

As far as the credit cards objecting .... Basically here is what I just found in quickly reading some bankruptcy laws :

Quote:

(a) Except as provided in subsection (b), the court shall confirm a plan if-
. . . .
(4) the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date; . . . .

What that means to me is that, as long as your 13 plan pays your GUCs at least at much as they would receive if your house/assets were sold in a Chapter 7, then your plan will be confirmed. Your creditors can file an objection, but under the circumstances I stated above, I don't think they would win. Besides, most credit cards are not going to file a claim, let alone send their attorney in to object to your plan.

PatcNJ · #9 10-28-2009, 02:24 AM

Hey debt

Thanks for the replys. I have been doing research all night and it seems when I do the means test I come out with negative dispoable income which makes me eligible for a chapter 7. My only concern is the equity in my house. In this climate it would probaly be worth around 575 with a mortgage of 522, After costs to sell it would be 545 less federal homestead deduction of 20 would mean equity 525.

Am I correct then is assuming I could file a 7 and keep my house?

This would free me to start over and not be in debtor's jail for 5 years. My means test came out with a negative $300 a month disposable income. NJ has high allowances.

bea2ls · #10 10-28-2009, 12:41 PM

i know in NJ if you are in active bankruptcy they cannot take your home. if can be in foreclosure though and instead of cancelling the sale many attorneys are now postponing them over and over again until the bankruptcy is discharged. if it already went to sale (and i know yours has not), all a bankruptcy will do is hold the deed.
maybe you can contact legal aid? i know they help with bankruptcies and you should be able to qualify.

PatcNJ · #11 10-29-2009, 03:46 AM

Ok, I consulted with an attorney yesterday who said I can do a Chapter 7. My house will be protected since there is no equity or very little.

He said this will also stop the bank levy. Only problem is it cost 2000. which I don't have......

I am just worried my mortgage company wiil cacel my mortgage or something if I file bankruptcy. I am current on my mortgage at this time.

This is something I never imagined I would be doing.

bea2ls · #12 10-29-2009, 06:31 AM

if you are current on your mortgage and upfront you should be fine

DebtCruncher · #13 10-29-2009, 04:59 PM

You will have to include your mortgage in the bankruptcy. Generally, as long as you reaffirm the debt, they should not have a problem with it.

Amber421 · #14 10-30-2009, 07:23 PM

Good Luck! I live in NJ as well and have come to the same point in my life. The only problem I have is that my assets are greater than my debt ( on paper,equity in my house) and I have been unemployed for two years now. I thought I could file chapter 13, but my 50,000. cc debit and the courts trustee fees of 10% would bring up the amount to 55,000. devide that by 60 months comes out to a payment of $917 a month for five years which is NO WAY do able for me. So I'm SOL and have a summons pending for a civil suit and CC collecters calling all day.

good luck

PatcNJ · #15 10-31-2009, 04:53 PM

Amber

Are you sure about the equity? My house is worth alot less now than it was 2 years ago.

Have you done the means test taking all of the federal exemptions. My exemptions were suprisingly high for a family of 3 in Bergen County. I would have put lower numbers.

Good luck, I am seeing a second attorney on Monday.

Amber421 · #16 11-02-2009, 02:12 PM

I sat down with a attorney and went over ther figures and taking the $20,000. off the top of the value of my house still leaves me with my house worth more than my CC and tax lien debt which amounts to $58,000. Which means chapter 7 is out and I can't afford chapter 13,the payments would be $917. a month for 60 months. That would be more than the min. payments on the CC's