PandorasBox Posted December 29, 2008 Posted December 29, 2008 Does anyone know anything about filing for chapter 13 when seperated? My friend is going through a seperation right now and was advised by her lawyer to file chapter 13 because of them being unable to pay bills etc. I have heard of chapter 11, is that like the same thing?
steveraves Posted December 29, 2008 Posted December 29, 2008 I think you may mean chapter 13 and chapter 7, chapter 11 is for business. Chapter 13 is used when you want to restructure debt and attempt to retain assets, chapter 7 is basically lremoving debt and paying nothing to your unsecured debt. In some cases you can keep your house, car if you meet certain criteria. I'll use Ohio as an ie for a car. In June I inquired about bankruptcy and own my car. The credit at that time was a $1000.00 and my car was valued at around $5000.00. In this instance the car could be taken and sold to payoff creditors. Who told your friend that they should file chapter 13? Divorce lawyer? If that's the case they really need to contact a bankruptcy lawyer on the best course of action. Most lawyers will give a free consultation. I'm going to be getting a divorce and bankruptcy unfortunately may be in my future. The bankruptcy lawyer advised me to get the divorce first and then bankruptcy as the divorce could affect the bankruptcy. I'm not sure how a separation would work.
Author PandorasBox Posted December 29, 2008 Author Posted December 29, 2008 Yes its a bankruptcy lawyer lawyer told them to file chapter 13. I do know she said something about them being able to keep their stuff and in 3 years time it will make everything including their credit better, kind of like wiping the slate clean I guess. I think its works for most things except the house, but not sure. I know the 7 year credit thing is for chapter 11, I think.
Gunny376 Posted December 29, 2008 Posted December 29, 2008 To file bankruptch you would have to meet a mean average income test. If your current income for the last six monts falls above the current average mean household income for your state for the previous six months you cannot file Chapter 7, and will be forced to file Chapter 13. In Chapter 13 your permitted to keep all or most of your belongings, but your set up on a debt repayment plan f ~or the next five (not three, I suspect the bankruptcy lawyer is telling you three because SC statue of limitations on the collection is debt is three years, in which you become judgement proof, and have the defense in court of absolute defense ~ but you would have that anyway without filing bankruptcy. That is to say, if you can ride it out for three years, most of your creditors cannot come after you for the money, {doesn't means they won't keep calling you and harrassing the hell out of you though) Most people don't need to file bankrptcy they just need to learn how to deal with their debt, their creditors, collections, and what their rights a.re. Which can be a nerve racking process if your not accustomed to it Iff you do qualify for Chapter 7 then all of your debts are set aside by the bankruptcy court. Afterwards you can "re-affirm" certain debts such as a house or car payment. Your allowed to keep certain property up to a certain dollar amount, such as clothing, personal affects, furniture. Anything of subsatial value will be sold at auction. I would not file bankruptcy except as an absolute last resort ~ and I do mean absolute last resort! First I recommend you get a book titled "Credit Repair For Dummies" Its an easy read and full of ideas, suggestions, solutions, and news you can use about how the credit system works, how to deal with creditors and collectors, and such. Even comes with a CD with more information and form letters you can use to send to creditors. Then I would contact one of the non-profit credit couselors. They free, non-profit, (those people that you owe money from is where they get the $$$ to operate) They will intervene for you on your behalf with your creditors, negotiate a reduced payment plan, and monthly payments, and even lower interest rate. They will also fine comb a monthly budget plan for you. The reason your creditors are willing to work with you, is they have a better change of getting the money you owe them than if you went into bankruptcy. The plan they set up is essentially going to be the same plan your going to be under a Chapter 13 bankruptcy plan. A bankruptcy will stay on your credit report for ten years, even though the actual accounts will come off in seven. If you owe any kind of taxes but especially to the IRS, a student loan, or back child support, you will still owe it even after filing Chapter 7 (and they will come after you and collect) If you go the credit couselor route, your FICO credit score will take less of a hit, and will recover much more quickly than if you had filed bankruptcy, (because if you stick to the debt re-payment plan within two to three years you will have paid on time, and have reduced your income/ to debt ratio (30% of your score)
Author PandorasBox Posted December 29, 2008 Author Posted December 29, 2008 Thanks Gunny thats great info. I'll show her this. All I know is, its a pretty bad situation and chapter 13 was what they were told to do in their best interest right now.
Gunny376 Posted December 29, 2008 Posted December 29, 2008 Bankruptcy lawyers IMHO are bottom dwellers. I filed bankruptcy 18 years ago, had every credit card you could imagine. Was skipping along just fine and dandy, all was right with the world! The BAM!Right between the eyes with a Loiville Slugger. As soon as she gets to a credit couselor and work out a debt repayment plan and budget, (Its going to be a tight one for a good long while ~ but so will the Chapter 13 re-payment bankruptcy ~ the creditors will get off her back and quit calling in so long as she sticks to the debt repayment plan. Mary Hunt wrote a book title "DebtProofe Living" Mary was a CA housewife, who along with her BANKER over the course of time, acquired a heafty California mortgage, to auto (f)lease payments, and over $100,000 in credit card debt. He was about to lose his job because they were bouncing checks at their bank where he worked. They paid the CC debt off within 12 years. She has a website by the same name which gives full details, and also has a fourmn about people all over the world and how they are managing to scrape by, get by, manage their debt, deal with bill collectors, and other day-to-day financial issues of daily living ~ such as auto-transportation, putting food on the table, recipies, clothing, celebrating holidays when money is tight, you name it. To get full access you will have to subscribe to it, ($26 a year) but if your having tough times and want the benifift of a wealth of common sense and real life experieces ~ and your cash strap I cannot recommend this site enough. She and the STBXH can go to CCC (Consumer Credit Counselors) and work out a individual post divorce budget and re-payment plan, or they can work with her alone. If she goes the CCC route instread of the Bankruptcy route she'll bettter off in the long run. She could have good positive credit re-established within two to three years, albiet at a higher interest rate, but she'll be better off in the long run. If she goes the Bankruptcy route their going to put her on the same program as the CCC will. (The mathematical formula is viritually the same ~ each individual debt divided by total gross debt = %, of which that % of net dispoasable income is applied to for FIVE year not three. Either way there won't be any money left over for any extras.
johnsteed Posted January 15, 2009 Posted January 15, 2009 Chapter 13 bankruptcy is personal bankruptcy for wage earners because in a Chapter 13 bankruptcy, the bankrupt debtor will have to pay the creditors in some form of repayment plans. With a Chapter 13 bankruptcy, the person filing bankruptcy turns over all disposable income to the bankruptcy trustee for a set period of time.
Gunny376 Posted January 15, 2009 Posted January 15, 2009 Just found out the XHEX is filing bankruptcy for the second time since she left me for current DHX3! Ahhhhhhh Karma!
Nozz Posted January 15, 2009 Posted January 15, 2009 My lawyer recommended that we file bankrupcy first to disolve the married debt before divorce. I would do this instead of afterwards. Because when you do it afterwards the will go after who didn't file first. Plus a divorce is made easier when splitting the debt. Are they filling together or seperate? Also, it is a last resort but some people like me have it so bad credit consoling would do nothing.
Recommended Posts