Disposable Income in Chp 13

[Fearful13]

I am considering filing a chapter 13 (would be me only not my husband). I have about 40K in credit card debt and a subrpime loan (my home cost 282K). I've just fallen behind for the first time on my MTG loan (been paying for almost 3 years now). My housing costs with HOAs and escrow total 3K a month and while my husband and I have good salaries, we struggle to make this payment every month. We are at the point where we cannot do anything other than pay all these bills. We are stressed every single day of our lives. I fell behind in all my credit card payments and am being sued by 2 credit companies (Discover & Providian). This is why I'm considering filing BK and including the home as part of it. I've spoken to a BK attorney and paid her a retainer of $200. My questions are: 1. How much of my disposable income will I be forced to give during this 5 yr program? I am married, have one child, and my mother is also a dependent,she lives with us. My husband and I make 150K combined. 2. How long will this process (chapter 13 including surrendering home) take? 3. Should I just address the creditors on my own instead of filing the BK and foreclose on my home?

[Fearful13]

>I also want to add to the above post--- what happens if I am in the second year of the chapter 13 program and all of a sudden I win the lottery or my shares become vested at work and I all of a sudden gain 30K overnight? Thanks.

[granny031350]

chapter 13 has a lot of variables and your attorney should help you answer some of these questions.

1.  All of YOUR disposable income will go towards the plan.  They will take your HOUSEHOLD income and then subtract out the expenses and your husbands and mother's bills.  And of course, your expenses as well. What is left will go to the trustee.

2. Creditors file claims in a chapter 13 to be paid.  If they do not file a claim then their debt is discharged at the end of your plan.  (you must complete it to be discharged) 

3. Your attorney and you will draft a payment plan and a percentage paid to all unsecured creditors.  Priority debt (taxes) and secured debt (cars and mortgages) will be paid at 100 percent.  However once you file, no more interest and penalties and fees can be added.

If you win the lottery, it will become property of the bk estate and you wll have to give it to the trustee to distribute to your creditors, unless you can exempt it.

there are a lot more ins and outs to a chapter 13 and I haven't even scratched the surface here.  Google it and learn as much as you can.  Then ask your attorney on the specifics of your plan.

[Anonymous]

Hi. I am currently in a Ch.13 and wanted to share some advice or input. It is tough. Be prepared if you decide to file for a very challenging experience, emotionally and mentally. You will be forced by way of the strict conditions of living on limited income to acclimate yourself and family to not having a lot of things or commom comforts of just daily, weekly living that you are now accustomed. I tell you this because you may want to not do this - it is a tough row to hoe so to speak. If you can find a way to adjust your budget and find some hidden money that is currently going somewhere else and divert that, then do it. Filing for BK is a long-term decision and solution that forces discipline over an extended period of time. If that doesn't sound like something you can stick with, then this is not the right solution for you. You will have very little disposable income; much less than you have now. At least, you now choose where your money goes - that goes out the window once you file even if you get more money during the BK. If you make good money now, get with a financial planner and look at where you can cut costs. The stress you experience now will only increase under a BK because you will feel as though you never have any money and this is for the entire five years you're in the plan. If your past accounts aren't with a collection agency, call the creditors and work out a plan. If they are with collection agencies, negotiate to pay a lump sum at the least. Work with your mortgage company and try refinancing at a later date, but stay current. This is not a case, IMO, that calls for a drastic measure with long-term consequences such as filing for bankruptcy. Hope this helps.

[Anonymous]

In my case i think that filing BK would help.

I don't see any other way out.

I have 2 rental props and 1 personal home.

Upside down on all and stressful as heck.

Arms are  ready to adjust.

I'm thinking that sometimes we have to face our mistakes and just take the loss for a while.

If I don't file BK I'd have liens, judgements, all kinds of possibilities haunting me forever.

[SmallTownGirl]

Hopefully, you have a great lawyer (as I did) who will make the whole process a little less scary. If you see no other workable alternative, then Chapter 13 can be a solution. Of course, you already know it's not an easy fix.

ALL of your disposable income does go for creditors, attorney fees, and the trustee. However, it is important to make sure you account for ALL of your legitimate expenses. You are going to be in Chapter 13 for at least 3 years, so you have to have enough to meet your needs. My attorney helped with that, but he included in my expenses things like car repairs, taxes, clothing, etc. It's fine to say you are cutting back and living on a budget, but you have to have some money to do stuff like that during the years you are living in Ch. 13.

The day I signed my bankruptcy papers was very scary. The budgeted expenses and my required payments left me with a $300 deficit each month. I just want you to know that there is a light at the end of the tunnel. Hope things work out well for you!

[Fearful13]

Thank you all for replying. The attorney I've hired is pretty good, although at times I feel like I am pestering her with all my questions. I'm now waiting for a packet to come in which will have lots of paperwork to fill out. I'd like to know how my husband's income and credit will play a part in all of this. We are not filing jointly and I want to make sure his credit is not tarnished in any way. How can I determine what my disposable income is, and how much I will be required to pay monthly? We are in the foreclosure process so at this point, I have no idea how much we will end up paying for our next home which will be a rental. I may be able to work out a deal with the home loan and get it reduced by doing an FHA loan, etc... if that is the case, I may not do the BK, I may opt to go a different route and try to work something out with the creditors, at this point, there are two who have threatened legal action. I feel like we're in a big waiting game right now...not sure which way this will end up.