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Has anyone filed Chapter 13 BK in California?

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Anonymous
Not applicable

Has anyone filed Chapter 13 BK in California?

If so, can you tell me what your experience was? I really don't want to do this, but we need to get rid of cc debt and the second mortgage on our house.

What was your experience? Did your payment change during the five years or stay the same? Did they take your tax returns? I've heard terrible things about

Chapter 13 and want to hear from people who have gone through it.

 

Thanks!

Message 1 of 13
12 REPLIES 12
Creditaddict
Legendary Contributor

Re: Has anyone filed Chapter 13 BK in California?

Why would you do Ch 13 over ch 7?

Message 2 of 13
Anonymous
Not applicable

Re: Has anyone filed Chapter 13 BK in California?

Why would you do CH 13 or CH 7?

 

Your best best is to sit down and visit with a BK attorney.  You can't really choose 13 - you have to meet criteria.  It's probably the same for 7 - I'm just not familiar with CH 7.

 

Your first step is to sit down, make a budget, look at pulling in additional income i.e. a second job, look at debt snowballing.  Here's where a good non-profit credit counseling service may be a great help.

 

Remember CH 13 is restructuring payments - often you can do that on your own.  Check in with the credit counselor and the BK attorney and you'll have a better idea of what's appopriate for you.

 

CH 13 requires a pretty stringent budget - most folks do NOT complete CH 13 BK's.  Debt snowballing is pretty stringent, too, but it works.

CH 13 allows you to keep $1000 of your combined tax returns, useful for an "emergency" fund.  The remaining tax return goes to the trustee who will disperse it, ,rightfully, to your creditors.

 

ETA:  I believe all CH 13's require a minimum of 36 months and a maximum of 60 months for their payments plans.

Message 3 of 13
Anonymous
Not applicable

Re: Has anyone filed Chapter 13 BK in California?

I know we do qualify. The only reason we would do it and not a chapter 7 is to strip the second mortgage of 60K, plus our debt. I am trying to settle our second with our lender so we could do a Chapter 7. I have run a means test and we do qualify. I have just heard really bad things about 13, so I am hoping I can settle our second with our lender. Thanks so much for dropping me a note!

Message 4 of 13
Anonymous
Not applicable

Re: Has anyone filed Chapter 13 BK in California?


@Anonymous wrote:

I know we do qualify. The only reason we would do it and not a chapter 7 is to strip the second mortgage of 60K, plus our debt.


 

That's news to me. 

We paid our mortgage, and our second mortgage directly to our original lenders during our CH 13 BK. 

The arrearage on our mortgage was paid through the trustee.

Our second mortgage wasn't "stripped" - nor was our debt.  In Chapter 13 you have a restructuring plan where you don't lose your debt - you repay your debt through the trustee.

Chapter 7, which I'm not familiar with, is a totally different manimal.

 

Message 5 of 13
Creditaddict
Legendary Contributor

Re: Has anyone filed Chapter 13 BK in California?

 


@Anonymous wrote:

@Anonymous wrote:

I know we do qualify. The only reason we would do it and not a chapter 7 is to strip the second mortgage of 60K, plus our debt.


 

That's news to me. 

We paid our mortgage, and our second mortgage directly to our original lenders during our CH 13 BK. 

The arrearage on our mortgage was paid through the trustee.

Our second mortgage wasn't "stripped" - nor was our debt.  In Chapter 13 you have a restructuring plan where you don't lose your debt - you repay your debt through the trustee.

Chapter 7, which I'm not familiar with, is a totally different manimal.

 


That's not completely true, in chapter 13, you could qualify for a plan that repays as little as 20% of your debts... However I believe secured items like house and car, if you want to keep, you pay whole amount... in some instances I believe you can ask to have them evaluated if you are under water and some of that debt may be forgiven so your not under water any longer, but loosing the whole 2nd mortgage, probably not. and im not even totally sure on loosing any of your mortgages

 

Message 6 of 13
Anonymous
Not applicable

Re: Has anyone filed Chapter 13 BK in California?


@Creditaddict wrote:

However I believe secured items like house and car, if you want to keep, you pay whole amount... in some instances I believe you can ask to have them evaluated if you are under water and some of that debt may be forgiven so your not under water any longer, but loosing the whole 2nd mortgage, probably not. and im not even totally sure on loosing any of your mortgages

 


In our case, which is the only one I am qualified to speak for, all secured debt was scheduled and paid at 100%.

Our cars were paid through the trustee at 100%.

Mortgage and second mortgage were not paid through, nor adjusted through, the BK - although being late on or missing a payment on those accounts would create red flags with the trustee and potential dismissal of the BK.

Some unsecured debt could be adjusted depending on individual circumstances - that's what we saw when we went through the process.  But they are going to put you on a very tight budget before they're willing to pull the percentage of unsecured down.

 

That's our experience with mortgages, auto loans, and debt when filing CH 13.

Message 7 of 13
Creditaddict
Legendary Contributor

Re: Has anyone filed Chapter 13 BK in California?

I may have been wrong about reading this, but I would agree if you can't qualify for chapter 7, I would do everything in my power not to file ch 13, especially if you are going to be at a 100%, you can do that on your own.  I regret my ch 13 SO MUCH!

Message 8 of 13
Anonymous
Not applicable

Re: Has anyone filed Chapter 13 BK in California?

I think every state is different. I live in California. We have a first and second on our home. Our house is not even worth the first. If you file Chapeter 13 the second become unsecured and goes away at the end of the Chapter 13. When you have finished paying for 3 to 5 years the 2nd lien is stripped. In California your payment plan is based on your left over income every month after essentials. It is not 100% of what you owe. It can be as little as 200.00 a month.

Message 9 of 13
Anonymous
Not applicable

Re: Has anyone filed Chapter 13 BK in California?


@Anonymous wrote:

I think every state is different. I live in California. We have a first and second on our home. Our house is not even worth the first. If you file Chapeter 13 the second become unsecured and goes away at the end of the Chapter 13. When you have finished paying for 3 to 5 years the 2nd lien is stripped. In California your payment plan is based on your left over income every month after essentials. It is not 100% of what you owe. It can be as little as 200.00 a month.


I think that's universal - I believe filing BK is a federal court process.

So that's very helpful to know about the second becoming unsecured if the house is valued less than the first mortgage.  That's got to help quite a few folks!

 

I believe secured debts are paid at 100%, and the flex is available on the unsecured portion.  They will assign a very tight budget. 

I'm a big fan of Ch 13 - it allows folks to repay most if not all of what they owe creditors.  It's a tough ride - but totally worth it.

 

Best wishes to you!

Message 10 of 13
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