13 Or 7?

Question:
I called a lawyer for "free advice" today and he said I have too much equitity in my home and I probably will not qualify for Chpt 7, just 13. I am currently in CCCS and have been for 2 years. I cannot keep up with the payments as well as my other bills. How will 13 help if I can't handle CCCS? I have fairly good rates on these debts with the help of CCCS and can't imagine things getting much better. I feel cutting my payments by a few hundred will not halp much (I currently give CCCS $1290 a month, all but $10 goes out to creditors.) Will we just have further problems by filing 13? Should I just struggle with CCCS and get a 4th job?

Answer:
It depends on the details of your case. Often, not all creditors file Proofs of Claim, and they get nothing in a Chapter 13 case. Likewise, the amount of non-exempt equity you have in your house might end up resulting in a significantly lower payment to your creditors. How much equity is "too much equity"? Depending on which state you live in, you might be able to keep $15,000 in equity. So, let's say you have a little more equity than that -- say $20,000 -- then maybe you could stop paying the CCCS and stop paying the mortgage. Once your delinquent payments and interest bring you mortgage balance up to a point where you only have $15,000 equity left, then file a Chapter 7, discharge your unsecured debts, and keep your house. Then file a Chapter 7 to spread your mortgage "catch up" payments over 3 years. I think this is all legal, but I am not a lawyer. If you like reading about this stuff, you could buy the Nolo press book on How to File Bankruptcy ( http://www.nolo.com ). I has a lot in the earlier chapters about legal strategies and ways to appropriately plan for bankruptcy before you actually file.





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