Choosing between 7 and 13

[Anonymous]

Hi All, I have finally made the decision to pull the trigger on filing.  It's been a long struggle that I have fought for a long time and it has become too much.  I am looking for advice about which way I should go.  I am literally at the median line for my state so I could go either way.  I have about 100k in miscellaneous credit card, medical and business loan for a defunct business.  I also have about 10k due in income taxes over the last couple of years and am also paying an extra 600 a month to get caught back up on back child support which I owe about 5k remaining to be brought current.  2013 and 2014 were the worst years of my life with divorce and cancer coming in back to back years.  I also have a car that is worth about 5k that I still owe about 8k on and it's approaching 180k miles.  So here is the dilemma:

Filing chapter seven would free up about 250 a month in cash but I will still be paying large chunks on the taxes and back child support until I am caught up.  Filing a chapter 13 I would be able to roll most everything into the 13 to pay back at lower monthly amount.  Depending on what the payback monthly figure is with me being right at the median income level it could free up over 1200 bucks a month.  Also I need a car for work but this one is nearing the end of its life before it becomes a money pit.  Do I include it in the bankruptcy and try and get another car as soon as possible?  Thanks in advance for the advice!

[Anonymous]

I went with Chapter 13 and kept my car payments and home-improvement loan outside of the filing. I owed the IRS about 12k. I lived on a strict budget for five years and a tight budget for two. However, the Chapter 13 has now fallen off my reports (after seven years for Chapter 13.) I have 230k in credit lines and have learned to manage my finances really well. I am in a happy place with many lessons learned, although I was in circumstances not of my own making. 

Talk to a bankruptcy attorney and see what works best for you. Good luck!

[TRC_WA]

I also did a 13... in April 2009 that fell off my reports last month.

It's my understanding that you don't get to choose whether you file a 7 or a 13... it's based on income and obligations.  If you make too much you may be forced into a 13.

I don't recall my attorney telling me I HAD to file a 13... but I wanted to keep my car at the time (2006 Chrysler) and I liked the idea of the attorney fees being included in my monthly payment plan... so I had to pay nothing up front other than the filing fee.

Back then I knew little compared to what I know now.  I probably could have done a 7... but it doesn't matter now.  I'm free and clear of it with clean reports.

[CH-7-Mission-Accomplished]

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@TRC_WA wrote:

I also did a 13... in April 2009 that fell off my reports last month.

It's my understanding that you don't get to choose whether you file a 7 or a 13... it's based on income and obligations.  If you make too much you may be forced into a 13.

I don't recall my attorney telling me I HAD to file a 13... but I wanted to keep my car at the time (2006 Chrysler) and I liked the idea of the attorney fees being included in my monthly payment plan... so I had to pay nothing up front other than the filing fee.

Back then I knew little compared to what I know now.  I probably could have done a 7... but it doesn't matter now.  I'm free and clear of it with clean reports.

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If there is an way on earth to avoid the 13 and file the 7, do it!   With a 13 you are stuck for five long years paying everything back and your credit scores will suck that whole time.  You can't even get new credit to rebuild.  A chapter 13 is nothing less than living hell.

You owe 100K in credit card/medical/failed business debt.  You have an upside down car.

File the 7, dump the car, and focus on paying off IRS and child support.   You can start rebuilding immediately with some secured cards and a credit builder loan.

If you are on the line for income, I would quit my job and hold out till I did qualify for a 7.

The only folks who should file a 13 are those who have to because their income is too high or they are trying to keep a house.  Otherwise, a 7 is always best.

[mynameainttracy]

People who get stuck in a CH13 had no choice. Given a choice I would have taken a 7 in a heartbeat.

[Anonymous]

Ok thanks guys, I think looking at the 13 would be short term gain for me but long term pain.  If I'm going to bite the bullet I might as well go all the way to the 7!

[CH-7-Mission-Accomplished]

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@Anonymous wrote:

Ok thanks guys, I think looking at the 13 would be short term gain for me but long term pain.  If I'm going to bite the bullet I might as well go all the way to the 7!

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Good choice.   Creditors don't cut you any slack because you filed a 13 over a 7.  They just see BK and react the same.

The only benefit, as pointed out above, is that the 13 falls off at year 7 versus the ch 7 that stays on till year 10.  But that is a very minor concession.  

[Anonymous]

 ch 13 is better than a 7. we did the 7 in 2011

[TRC_WA]

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@CH-7-Mission-Accomplished wrote:

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Good choice.   Creditors don't cut you any slack because you filed a 13 over a 7.  They just see BK and react the same.

The only benefit, as pointed out above, is that the 13 falls off at year 7 versus the ch 7 that stays on till year 10.  But that is a very minor concession.  

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I'd say that depends on the creditor.

My home CU loan officer told me face to face that she values a 13 higher than a 7 when it comes to reviewing a CR and making a lending decision.  She told me that when I was refinancing my previous vehicle.

It probably doesn't make much difference to Chase or BoA though.

For me it's a pride thing... as I said I probably could have filed a 7.  I didn't know any better and took my attorney's advice to file a 13 and keep my car. So I didn't get to rebuild right away... I waited 4 years to discharge (I made a balloon payment to end the plan 1 year early)  and rebuilt the last 3 till everything fell off.

Now I'm rebuilt and am not looking at a Ch 7 BK PR on my report for the next 7 years.  No regrets here.

[FireMedic1]

IRS back taxes will be discharged if your a no asset and tax liens released also. Child support wont go away. 7 and be done with it. See my siggy.