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Switching from 13 to 7?

Date: Thu, 03/14/2013 - 13:03
Submitted by davidperez on Thu, 03/14/2013 - 13:03
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Hello Everyone. So I am currently 2 1/2 years into a 5 year chapter 13 plan. I have been paying the trustee and he has been paying the house payment and part of the past due amount. The credit cards where I thought charged off. We just got approved by the mortgage company for a modification which would put the past due amount at the end of the loan and lower our rates and payment considerably. The mortgage company says they will send paperwork to the lawyer that needs to get it signed by the BK judge. When I emailed my lawyer he says that the only way to do it is to modify the current agreement to reflect the new payment and continue to make payments through the trustee, because if we don't we fall out of chapter 13 and will owe all the credit cards and collection accounts we had before the filling. This defeats the purpose of the mod because the trustee is charging us $280 a month. Plus what use is the trustee now? We will have no back due amount with the mortgage company and the payment will come from us not the trustee. So I asked if we could switch to Chapter 7 and he said we would have ot qualify but didnt answer us as far if this was the way to go. Any ideas?


A trustee is not an attorney and in his job capacity, he cannot give you legal advise. Did you not have an attorney for your 13??? Ask him! Or consult a local attorney.


Submitted by SOAPLADY on Thu, 03/14/2013 - 15:59

SOAPLADY

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If you do the loan modification your mortgage payments will decrease. Assuming nothing else in your budget changed, your ability to make payments to the Trustee will correspondingly increase. This is why your attny made the comments he made.

If you no longer need a Chapter 13 maybe you can convert to a Chapter 7. You would have to "qualify" - show the Court that you cannot afford to make payments in the context of a Chapter 13. Further, if you convert, any non-exempt assets you had will go to the Chapter 7 Trustee.

Alternatively, if you no longer need the 13 and do not qualify for the 7, you could dismiss the 13. However, once dismissed all creditors will be free to collect, only subject to any SOL defense you may have if they try to sue you.

You need to sit down with your attny and discuss all options so that you can make and informed intelligent decision.

Des.


Submitted by despritfreya on Fri, 03/15/2013 - 08:00

despritfreya

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