@donkort wrote:I get what you're saying.
How "smart" do you have to be to get 81% of your debt erased without tax liability? I guess this is where bankruptcy attorneys come in. I should research the "Wage Earners" entity which you mentioned.
Upon research: It does seem like, should you get approved for the reduced debt within your BK13, that you could apply with the IRS to render the "forgiven" debt nontaxable owing to the fact of the bankruptcy.
Both an anecdotal and research-based comparison between the credit file effects of BK13 and DMPs should be compiled. I am glad that you've had your success with your BK13.
MYFICO does have excellent resources for those who seek to obtain minimal negative effects, over all, from bankruptcy. All perfectly kosher.
This is my feeling----as a somewhat unsophisticated person in financial things:
I am under the strong impression that DMP's have a shorter, and lesser, negative effect upon your credit file, over all, than a BK13.
Moreover, should you complete the DMP, you could have your debt erased without having to say you've had a "bankruptcy" in the past when you're asked this while applying for anything.
To me, the benefits of a Chapter 13 over a DMP were enormous:
- I had my debt reduced by roughly 80%; it is unlikely my creditors would have agreed to that much of a reduction.
- After my Chapter 13 was discharged I had zero tax liability; had I done a DMP and been lucky enough to have a similar amount of debt reduction, I would have ended up owing taxes on nearly $200,000, and given my income grew substantially during the five years of my bankruptcy (meaning a higher marginal tax rate), I would have needed to pony up for at least $40,000 in taxes.
- When my Chapter 13 fell off my credit reports a little over a year ago all of my FICO scores shot up to at least 810; not sure if that would have been possible if I had done a DMP.
@donkort, yes, I will need to disclose the Chapter 13 if I'm asked. That said, it has literally been decades since I was asked if I have ever filed for bankruptcy, however, I have been asked if I have an active/open bankruptcy or if I've filed for bankruptcy within a certain number of years. Since my discharge three years ago I've taken a new high end job and applied for probably a dozen credit cards as well as a new car loan; not once was I asked about a previously discharged bankruptcy.
@donkort wrote:Bankruptcy seems tough-going within the course of it-----I wouldn't want to think about an upcoming 341 Meeting, even though they seem to last only 10-15 minutes or so-----but there is certainly hope that after this "tough-going," that everything is smooth sailing afterwards.
I don't think any Chapter 13 would ever qualify as "Smooth Sailing"; one needs to live within a certain budget and learn to cut corners wherever possible. One thing recommended to me by my attorney prior to filing, advice which I didn't fully appreciate and ultimately ignored, was to buy a new(er) car; I opted to enter my 5-year bankruptcy with a 14 year old Honda Accord with nearly 200,000 miles on it. Yeah, you guessed it, the car didn't survive the bankruptcy; while it was mechanically sound, corrosion had it's way with parts of the body, the brake lines, the fuel tank, the fuel lines, and the cooling system, pretty much all at the same time. Had I opted to repair it, the cost would have been north of $3,000 and I would still have had a 17 year old car with over 225,000 miles on the clock. Fortunately I had been frugal and was able to buy something newer which made it the rest of the way through.
Had I to do it all over again, I would have gone out and bought something like a new Corolla (with a full extended warranty and maintenance plan) and entered the bankruptcy with a secured asset; it would have been paid for out of my monthly payments to the Trustee and I would have exited the bankruptcy with a fully paid for saleable asset.