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7 vs 13? Vs credit counseling?

lkcrew426
Regular Contributor

7 vs 13? Vs credit counseling?

Between my husband and I we have around $75k in CC. He was injured on the job as a firefighter while I was in nursing school so we lived off of them for a while. We tried to un-bury ourselves for a while unsuccessfully but now are not able to consistently keep up. He just got a job for the first time in 2 years post his injury in January, and as a result I think our income is too high to file chapter 7. (I make about 45k pre-tax & he is about 25k with 3 kids and another on the way) Our end goal is to be able to buy a home as soon as possible. What is the benefit of chapter 13 versus credit counseling? Also, our baby is due in October. I only have about 3 weeks paid time off; if I take the rest unpaid vs going back to work 3 weeks post party could that help make us eligible for chapter 7? I'm trying to make the best long term decision. Thanks for the advice!
Message 1 of 7
6 REPLIES 6
2GreenThumbs
Frequent Contributor

Re: 7 vs 13? Vs credit counseling?

Just my experience:  We filed ch13 in May 2011 due to job loss, sickness, and being severely upside down on our home. Ch. 13 gave us a way out of a very dark time.  We are now at the end of the road with the BK and expecting a discharge sometime soon.  We chose Ch13 because the end goal was to keep our home and get a lien strip for the second mortgage, something our lawyer said wasn't possible with a ch7.  What I also like about 13 vs 7 is the amount of time the BK will be on our credit reports (7 years from date of filing vs. 10), so the BK should drop off just 2 years after our discharge.  Both hubby and I had great credit before the job loss.  Then lived on credit cards to make ends meet.  I tried credit counseling before we filed, but our main asset was our home and when we were in danger of losing it, ch13 helped us to keep it.  In the years since filing we've learned to live on cash.  Since our repayment plan was completed in March, we've been putting our repayments in savings until we receive our discharge.  I noticed that you have an NFCU card, I don't know if you'll be able to save that one or if you'll have to IIB, but my one regret was that I had burned them in the BK.  We've been members since the early 90's and I would love to be able to use them for our rebuild but now I can't.


Message 2 of 7
lkcrew426
Regular Contributor

Re: 7 vs 13? Vs credit counseling?

Thanks for the input. We sold our home in July of last year & used the equity towards CC which in retrospect was dumb. I wish we would be just kept our house, but at this point all we have is cars with large loans & a ton of credit card debt. As a nurse, I could take a travel contract & work 5-6 days a week versus my normal 3 and pay off our debt in probably 2 years but I'd basically miss out on that part of my kid's lives. Ughh. I've read around here, but I'm not understanding the benefit for us (without a home) of doing bankruptcy if we just have to pay it all back versus just saying goodbye to my life and working nonstop until it's paid back?
Message 3 of 7
2GreenThumbs
Frequent Contributor

Re: 7 vs 13? Vs credit counseling?


lkcrew426 wrote:
I could take a travel contract & work 5-6 days a week versus my normal 3 and pay off our debt in probably 2 years but I'd basically miss out on that part of my kid's lives. 

 

 

 

I understand not wanting to miss out on any part of your childrens' lives.  But my outlook is, "What will make an improvement in their lives?"  Decades ago, I was trying to decide whether or not to go back to school at night.  It would take time away from my kids and that was the drawback.  It took almost 3 years but, in the long run, the increase in pay/income that the continued education provided allowed us a much better quality of life.  I would weigh what you miss with what you are able to provide.  If you can forgo BK, than that would be preferable, IMO.  If 2 years of hard work would give your kids a parent who's not preoccupied/stressed about bills, then, to me, it would be worth the time and effort.  In the end, everyone must do what is best for them.  I just wanted to share my perspective.  Good luck, whatever you decide.  


Message 4 of 7
ksb1
Valued Contributor

Re: 7 vs 13? Vs credit counseling?

I would talk to a bankruptcy attorney regarding your situation.  They usually have a free consultation and can tell you what your options are. 

 

The first thing I would do though is get together an inventory of where every single last penny of your income is spent - you need to determine if you are breaking even, negative or positive each month.  Filing a bankruptcy will delay your home purchase.  You will have to wait 2 years after discharge to obtain a FHA loan or 4 years after discharge for a conventional loan.

 

If you need to file, just get it done and over with.  I'm not a fan of credit counseling - I looked into it and it would have destroyed my credit worse than the ch7.  The fees were high and there was little benefit to me.  I found it very easy to rebuild - at exactly the two year mark I was applying for a mortgage and at the 2 1/2 year mark I have a home, newer car, and over $100K in available credit.  A ch7 or ch13 is not the end of the world, the effects of the mark on your record diminishes over time.  My only regret was not filing sooner.


back to a seedling 3/17/18
Message 5 of 7
2GreenThumbs
Frequent Contributor

Re: 7 vs 13? Vs credit counseling?


@ksb1 wrote:

 

If you need to file, just get it done and over with.  I'm not a fan of credit counseling - I looked into it and it would have destroyed my credit worse than the ch7.  The fees were high and there was little benefit to me.  I found it very easy to rebuild - at exactly the two year mark I was applying for a mortgage and at the 2 1/2 year mark I have a home, newer car, and over $100K in available credit.  A ch7 or ch13 is not the end of the world, the effects of the mark on your record diminishes over time.  My only regret was not filing sooner.


In retrospect, I would have forgone credit counseling as well.  And, like ksb1, my regret was not filing sooner.  5 years after filing ch13, I feel like I can almost breathe again.

 


Message 6 of 7
Zeethan
Member

Re: 7 vs 13? Vs credit counseling?

Avoid a chapter 13, it was pretty degrading imo. Look up on the court website for your state to see what the limits are for a family your size. Include things like pest control, carpet cleaning,  life insurance, yard maintenance,  kids' sports fees, etc., when tallying expenses.

Message 7 of 7
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