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My husband and I are in the early stages of filing for chapter 13. When we submitted his paycheck stubs to the lawyer his monthly payment was misrepresented by $300 a month. We did a budget for this month and we are not going to be able to make the payment to the trustee and pay for groceries and my husband's diabetic supplies. Are we stuck with this payment or can it be lessen? The lawyer told us that it had to be that much based on the equity in our home. We also are below the state median salary level and thought we would only pay for three years, but the lawyer said that if we pay for three years our payment would be more. We are in Alabama. We would have filed for chapter 7, but we have $30.00 equity in our home.




$30.00 equity??? Or $3000? From what I just read you can up to $5000 in your state to qualify for chapter 7.

Sub: #1 posted on Sun, 10/21/2012 - 17:37

SOAPLADY SOAPLADY
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I just read the same thing... are you sure this lawyer isn't screwing with you?

Sub: #2 posted on Sun, 10/21/2012 - 17:40

waffles waffles
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I agree with the other 2 posters that the issue is not $30 of equity. It is probably $30,000.00 of equity. If so and you convert to a 7 the Trustee will take the home.

During the course of the 13 you must pay to your creditors the value of the non exempt equity in the home (and any other non exempt assets you have). If you cannot afford the current payment you need to discuss alternatives with your attny. Maybe a reduced payment for the first year and then an increase beginning the second year - "graduated payments". Another alternative may be a balloon payment towards the end of the 5 years by a refinancing of the home. This suggestion is extremely speculative and risky but you might want to ask about it.

Des.

Sub: #3 posted on Mon, 10/22/2012 - 04:40

despritfreya despritfreya

(Posts: 170 | Credits: )

Sorry about the typo, we have $30,000 equity in the house. We were able to talk to the lawyer today, he stated payments were based only on the equity and not how much we can afford to pay. It really worries me that we are not going to be able to eat or afford my husband's diabetic supplies if we go through with this. I hadn't realized that we are too poor to file for bankruptcy. :confused:

Sub: #4 posted on Mon, 10/22/2012 - 19:21

Unregistered


It's not that you are "too poor to afford a bankruptcy". It's that you want to keep an asset that has non-exempt value. This is not a bk issue. It is an issue created by your State???s legislature by placing a very low cap on the allowed homestead exemption.

You can always file a Chapter 7 (assuming you otherwise qualify), but, by doing so, you run the risk of losing the home since it apparently can be sold for the benefit of your creditors.

Again, there are options in providing payment over the 60 months of the 13, thus allowing you to protect the home despite its non-exempt value. You need to explore them as you do not necessarily need to make level monthly payments.

Des.

Sub: #5 posted on Tue, 10/23/2012 - 04:37

despritfreya despritfreya

(Posts: 170 | Credits: )

"Again, there are options in providing payment over the 60 months of the 13, thus allowing you to protect the home despite its non-exempt value. You need to explore them as you do not necessarily need to make level monthly payments."

What are the other options? We have already filed, so trying to make a deal is impossible now. Our lawyer said that we do qualify for chapter 7, but that we would defiantly lose our house in the deal. Right now my husband and I our trying to see if we can beef up our income. Chapter 13 is going to help us (we owe over $45,000), and we are going to pay back $25,000 in the next five years-it is just going to be a very rough five years.

Sub: #6 posted on Tue, 10/23/2012 - 18:47

Unregistered


Quote:
What are the other options? We have already filed, so trying to make a deal is impossible now


Filing Amended Chapter 13 Plans are routine

In my district it is not unusual to propose a Plan that has graduated payments.

Let???s use an example of paying $30,000 over 5 years. If you had a level payment that would be $500/month. But what if you can???t afford $500/month right now? What if you could only pay $300/month but believe that in a year you could increase the amount? Of course, there has to be a reason why you think you can increase it like one spouse will take on a second job or some expense you have right now will be reduced or go away. But let???s say you could "justify" an increase. . . you could then propose a Plan that provides for $300/mo for months 1 through 12 and then $550/mo for months 13 through 60.

It is also not unusual to propose a Plan that provides for a balloon payment, say in month 55. The balloon would be accomplished by refinancing the home and pulling out some of the equity.

Using our example of $30,000 and the ability to only pay $300/month, the Plan could propose a payment of $300/month for months 1 through 54 and in month 55, through the refinance of the home, you make a balloon payment of $13,800.

You (or, rather, your attny) need to think outside the box if you really cannot afford the current Plan payment. Now, if you can struggle and make that Plan payment, it is better to do so. Having one level payment throughout is less speculative than playing with the numbers.

Des.

Sub: #7 posted on Tue, 10/23/2012 - 19:11

despritfreya despritfreya

(Posts: 170 | Credits: )

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