BK Good choice or not
Date: Thu, 04/19/2012 - 20:14
I currently owe about $55,000 in cc
a car at $380/mo (maybe $2000 in equity - if lucky)
A house with $0 equity
I have for assets standard household furnishing - nothing special and 2 free and clear cars. One is mine worth $7000 and the other my wife worth $12,000.
I have $15,000 in an IRA that I am starting to cash out - was $20,000 6 months ago.
I see the handwriting on the wall - I am sinking and I hate it. I ran up the credit cards over the last 3 years which was helped by a failed business.
I am contemplating a Chapter 13.
I make $3,000 a mo. from a pension and my wife makes maybe about $700 part time.
The car I am paying on I owe about $7500 and it is register to both my wife and I but it was bought for my daughter who drives 1.5 hrs round trip - Monday through Friday to college. (Thank God for grants :))
Here is my question and correct me if I am wrong. If I go chapter 13 then my IRA cannot be touch? I live in California is my cars exempt.
And I guess how would they figure my 3-5 year repayment plan. By my calculations I have not much to give since we are taking money from savings and the 401K to keep the cards current.
Here is my plan - stop paying the cards. Keep paying the house and my daughters car and then after water, and power and food then we might have a little something.
How do they figure a budget and if it looks ugly can creditors or the court decide that I have to make a chapter 7 BK instead. I don't want to chance having assets seized to pay especially our cars since they are necessary for me to find work and my wife to work and daughter to college.
Is it best to borrow from family and pay off my daughters car and then transfer that to her free and clear before filing BK. That would be tough but it is an option.
I guess I want some general guidance on how to best prepare if I should decide to go that route to protect my family the best I can.
The sad part is I have never missed a payment and I have great credit scores. I even thought if it was possible to try to apply for new credit in my wife or my name only - move the credit that we are going to file BK on to either her or I and just have one of us declare BK.
Is that even possible?
Starting the process
I've done a lot of research on bankruptcy and have also contacted an attorney for a free consult.
What they do is they have you take a means test, which a lot of people don't immediately pass; but once you have done all the necessary deductions for monthly living expenses it will even out.
I have read that in Chapeter 7, they normaly don't sieze your cars since that is what you need to commute to and fro work.
Now your daugher's car you can probably do some time of a modification on the loan and still be able to keep it. I wouldn't suggest borrowing money to pay it off because you will still need to pay that money back. In regards to putting it under her name, check w/ an attorney because I did read somewhere that it's not adviseable to change property of things to someone else's name with in a year of filing for bankruptcy.
If you are really considering filing, stop paying your credit cards and continue paying your home and your daughter's car. The collection calls will come, but I personally would rather have a roof over my head and food on my table.
Seek and attorney to get a free consult. It never hurts :D
Hi Gripper, Your credit card payments in a 5 year chapter 13 (m
Hi Gripper,
Your credit card payments in a 5 year chapter 13 (most 13 plans go 5 yr. not 3) can be crammed down to whatever level of repayment you fit given a host of circumstances. If your situation in a 13 allows 10% of the credit card balances paid back over 5 years, that's what it is. If its 100%, that's what it is.
The means test to qualify for chapter 7 that eeyore references above in CA is roughly 70k for a 3 person household. You are under that. Chapter 7 may be a better option for you.
You should have the opportunity to reconfirm the home loan and your daughters car loan in the chapter 7, continue making payments and keep them. I am not sure how you came up with the value on the 2 cars you own outright, but if those values are close to how the court sees them, you may be able to keep yours and not your wife's.
There are other differences to consider between chapter 7 and chapter 13 bankruptcy. The limited detail you shared suggests chapter 7 may be an option and provide more relief. A chapter 7 can be completed inside of 6 months instead of the 60 months in a chapter 13. Roughly 2/3 of chapter 13's historically are not completed. The poor completion rates for chapter 13 bankruptcy are largely the result of the inflexible repayments that go 5 years. Who doesn't have unexpected life events come up over 5 years?
Speak with a bankruptcy attorney and learn more about both chapter 7 and chapter 13. Your IRA and pension should be protected in both.
Early Payoff
Further question about chapter 13 and the payment plan.
Let say for instance I end up with a Chapter 13 filing and a five year plan for repayment - is it possible to pay that off early.
I am sure I can go to my parents for some funds afterwards and they may lend or give me the money to pay that off and get it off my back. Is that legal or does that open a can of worms somehow?
Thanks
Speak with a bankrutcy attorney in your area...consultations are
Speak with a bankrutcy attorney in your area...consultations are usually free.
typically BK is payable in 5 yrs, after that time, whatever left
typically BK is payable in 5 yrs, after that time, whatever left over is discharged.
pay off
When you go into a Chapter 13 you are set up on a monthly payment arrangement that fits with in your budget. If you get money from a family member the trustee will "assume" you have aquired more money and that would go towards your payments, that's how my attorney explained it to me. It's always best to just stick w/ the installments until the end. After you are done w/ your chapter 13 the rest of the debt is dismissed.