Is Chapter 13 really that bad?

[CreditGuy03]

Here in Texas most lawyers want to do a 7. Not even a CH7 with means test offsets, but a straight 7. Like if your income and family size is under the county limit then and only then will they take your case. 

I dont know why. Maybe lazyness. Who knows.

Unfortunatley I make over the amount even with offsets. So I have to look at a 13. I was told it would be better to do debt settlment but that still leave me wide open for lawsuits which doesnt seem smart to me.

So is a 13 really that bad? I know things change over 5 years. I mean I can look at my prior 5 years in life and noticed the change but it seems that a 13 is all I have to get some sort of relief from my mistakes. 

I just want to know from those that have done it what advice do you have? What would you have done differently?

[Anonymous]

How tough a chapter 13 is depends on the state and jurisdiction, and also the trustee. I, along with others, had a lenient trustee who allowed me to get credit not to exceed $5000. Also I didn’t have any problem saving money but I only had about 25k worth of debt so it’s situational. Really wasn’t bad at all for me. Most creditors won’t touch you while in an active 13 though. And getting trustee approval for anything is tough.

[Shooting-For-800]

If you can do settlements, I would.

How much do you owe and how much can you pay each month?

[CreditGuy03]

---

@Shooting-For-800 wrote:

If you can do settlements, I would.

How much do you owe and how much can you pay each month?

---

Why do you say that?

Doesnt this open me up for more lawsuits? I have racked up over 140k in debt over the course of 20 years. Just snowball type debt. Started when I was 20 years old and could never recover now in my 40's.

[coreyb80]

Chapter 13 is not the greatest, but definitely not the worse either.  I'm going on 3 years now in 13 with only 2 years left.  Definitely a lesson well learned for me.  I would recommend 13 over settlement to avoid any judgments/lawsuits or anything of the sort.  

[Shooting-For-800]

---

@CreditGuy03 wrote:

---

@Shooting-For-800 wrote:

If you can do settlements, I would.

How much do you owe and how much can you pay each month?

---

Why do you say that?

Doesnt this open me up for more lawsuits? I have racked up over 140k in debt over the course of 20 years. Just snowball type debt. Started when I was 20 years old and could never recover now in my 40's.

---

Every case is different but Chapter 13 takes all your disposible income for 3-5 years and puts a BK on your record.

Your life for the next 3-5 is controlled by the trustee and they vary dramatically.  If you are lucky, you get a nice one who understands how difficult this is.  You get a strict one and your life is a living hell.  

Your hands are basically tied at the point.

If your income goes up, your payments can go up.

If you get an inheirantence, it can be taken and given to your creditors.

By settling one case at a time, you can negotiate the accounts that are most agressive first preventing or stopping lawsuits.

Some accounts will just not even try to collect and fall of your credit report.

By saving money and negotiating you can pay your debts as you choose.

Accounts more than a year old will generally settle for 20-60% of the balance.

There are CH13 cases where the ENTIRE debt gets paid off through the program.  

Other than stopping a foreclosure, there is no reason to be in a Ch 13 like that.

Chapter 7 is a different story - rip the bandaid and be done with it.

The lawyers who want to do 13s when you qualify for 7s are just lazy and greedy.

13s generally cost more in attorney fees.

Since we have no idea of your income or monthly expenses, no one can tell you what direction to go.  If you want to share than infomation, perhaps you can get some solid advise.

[Anonymous]

Obviously chapter 7 is better- but, there are bright sides to be found in a chapter 13. 

When we were looking at potentially doing a 13 because we were very borderline- the good thing is that we were going to be able to include our car payments in our 13 payment and finish the plan with no car payments. The other thing to keep in mind is that if crap hits the fan you can likely convert to a 7 down the road. That's why a lot of people don't finish their plans- life throws a nasty curveball and suddenly you do qualify for a 7. 

Honestly, you need a great attorney to end up in a livable 13  plan. Our attorney had even included things in our budget like getting our dogs groomed. If you end up with a crappy attorney, you don't have enough money to get your own hair cut or get an oil change. We ended up with a wonderful attorney, but, I spent a month checking into them. I don't know if it's possible to observe bankruptcy proceedings, but, the meeting of creditors is a great way to see which attorneys are good and which ones suck. Not sure if you are allowed to observe without a case- but, half the attorneys there were crap. They hadn't submitted important documentation, hadn't asked their customers the right questions, OR were blowhards that took phone calls right in front of the trustee. I was very happy with our attorney after sitting in the 341 meeting. We did not go with an attorney in our town, the attorney I picked was an hour and a half away and we probably passed 50+ offices on our way to his. I chose my attorney based on his web presence- you could tell that he definitely sided with his clients wholeheartedly. 

[Anonymous]

We finished our 5 year plan earlier this year.  It wasn't overly difficult as long as you commit to using a budget and working to get away from the spending behavior that lead you into bankruptcy to begin with.  At first it is HARD, but pay your trustee and any approved payments first.

Keep in mind, the reported failure rate for Ch13 is over 70% mainly because people fail to keep up with their agreed up payments.