Change in financial situation...

[sparkle1908]

Has anyone filed bankruptcy (chapter 13) and then had a substantial increase in salary(like a $20000 increase) due to a new job/promotion? I know they will "increase" your payments anyway but in order to be more in "control" of your own money/savings... I have several small credit cards that were included in my bankruptcy (the highest was $4000...lowest $200)...along with my mortgage and car note...would the mortgage company work with me (loan modification) or would they immediately start foreclosure proceedings again if I were to dismiss the bankruptcy? If I get this promotion, I will contact my attorney but wanted to know if anyone has done this...

[Anonymous]

Whether or not your mortgage company works with you after a dismissed CH13 bankruptcy likely depends on the status of your mortgage after the dismissal. The best way to find that out would be to discuss with them. If it is their best interest to create a workout plan with you, they are not likely to pursue a foreclosure without first exploring other options. 

However, if you are so very deliquent, a payment plan isn't realistic, and there is significant equity in the property, a foreclosure may make sense for the lender.

[krielly]

There would be no reason to "dismiss" your BK. If you have filed, it is already on your credit report. It won't help your credit at all to dismiss it, rather than to have your payment amount increase, and to successfully complete it.

A dismissed Chapter 13 will stay on your credit for 10 years, rather than the 7 years for a discharged one. 

Why are you considered "dismissing"?

[sparkle1908]

It's just a hypothetical question at this point...

But the reason would be to pay things off quicker on my own since I'd have a bigger paycheck(as opposed to 5 years under bankruptcy)...

[Tuscani]

I know you have already filed.. but generally If you can avoid the BK by settling the debt given your additional income, then do it. I see no reason to be locked into a 5 yr CH13 if you can get yourself out from underneath in a fraction of that time. 

Also keep in mind, if you do debt settlement you would most likely have to pay taxes on the forgiven amount.

Meet with a few experienced bankruptcy attorneys and at least one reputable CCCS.

If you go with CCCS: 

Can you or the the CCCS get reductions in interest rates or balances so that you can have everything paid off in 60 months or less? Make sure you understand exactly how the program works. How much of your monthly payment will go to pay creditors and how much to pay the CCCS? Will they negotiate payment plans with each creditor and then distribute money monthly? Or will the CCCS accumulate your payment to first pay their fee and then settle with creditor's one by one, with late fees and interest charges continuing to accrue on the CCs in the mean time? I have heard both nightmares and success stories from people who used a CCCS. 

What do attorneys estimate as your monthly payment in a CH13? Multiply that by 60 and add any attorney fees that wouldn't be included in the plan. How does that compare to the total actual cost to become debt free using a CCCS or on your own? You can get some idea of what your CH13 plan payment might be by running an online means test. 

But, don't make a decision based on the online calculator alone. It is not a substitute for the advise of an experienced lawyer.

[pizza1]

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@krielly wrote:

There would be no reason to "dismiss" your BK. If you have filed, it is already on your credit report. It won't help your credit at all to dismiss it, rather than to have your payment amount increase, and to successfully complete it.

A dismissed Chapter 13 will stay on your credit for 10 years, rather than the 7 years for a discharged one. 

Why are you considered "dismissing"?

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@krielly , actually thats incorrect.  A dismissed BK13 still follows the same rule as if it were discharged. So, it will drop 7 years from the file date regardless if Discharged or Dismissed.