Conversion of Ch. 13 to Ch. 7 w/Mortgage Involved
Date: Wed, 09/12/2007 - 13:19
Ok..here's the deal...long post, sorry.
I am 13 months into a 3-year Chapter 13 repayment plan. As most of you know, I am a single parent. The drastic drop in my income due to my Ch. 13 payments coming out of my paycheck has made my life very difficult. I lost a large portion of my paycheck to this, and what's left after the Ch. 13 payment, taxes, and health/life insurance is barely enough to scrape by on. I receive child support, so when that comes in once a month, we scramble to pay bills, get as many groceries as we can, etc. The rest of the month, I scrape and scrimp by, but it's not easy at all, and I'm not looking forward to going through the winter with the higher heating bills in this condition. There's a whole lot of pb&j and oodle noodles going on at my house! And the darn gas prices don't help - I live 25 miles from where I work, and would love to move closer.
I am seriously considering converting to a Ch. 7 Bankruptcy. This will mean several things, good and bad:
BAD
-I will have to surrender my house
-I will have to find another place to live (obviously)
-My credit will suffer the effects of having TWO bankruptcies (Ch. 13 AND Ch. 7) AND a foreclosure on it. (Right? Someone help me out there.)
GOOD
-I will regain my entire paycheck
-My debts will be discharged, giving me a fresh start
-My credit will eventually recover. It may take years, but eventually, it will come back.
Can someone shed some light on the conversion idea - how it will affect my credit? Everything I've read and researched on this says my credit may end up showing both bankruptcies, though they will both show up as discharged. I know for a fact that the mortgage company will head straight for foreclosure if I convert to a Ch. 7 - my attorney has already asked them. They are not a true mortgage company, just a servicer - and one of the worst in the country, at that. (Go figure.) They will not work with me at all, no forebearance or anything like that.
I am waiting on a call from my attorney regarding the cost and length of time it will take to convert. I know I can do the conversion myself (as far as the paperwork is concerned), but I'm not sure how difficult that is, or if I want to tackle that.
Also, with a conversion to Ch. 7, I'm assuming I can add in any debt that wasn't included in the Ch. 13 at the time I filed?
Can the mortgage servicer come after me for the balance if they are unable to sell my house for the amount owed, or does the Ch. 7 wipe that out??
I know - lots of questions. But obviously, this is a HUGE decision for me to make, and I want to get as much info on it as possible before I do it. I have a phone call in to my attorney right now, and am waiting for a call back. My biggest concern is that with my mortgage being an ARM, it will be adjusting the whole time that I'm in the Ch. 13 plan, and I'll come out of the Ch. 13 in 2 years only to find that my $548 a month house payment is suddenly $800+, and I won't be able to refinance. I have already tried to refinance out of the Ch. 13, and due to the sudden clamp-down on lending requirments by the banks (due to the subprime mortgage mess, which is the very thing that put me in this situation to begin with), I cannot refinance right now, and probably won't be able to anytime soon.
So, if anyone wants to take a shot at my questions (especially Cajun, who has MUCHO knowledge on this stuff), please do. I'm getting info from my attorney too, but I just want to get as much info and input as I can.
Thanks.
I am 13 months into a 3-year Chapter 13 repayment plan. As most of you know, I am a single parent. The drastic drop in my income due to my Ch. 13 payments coming out of my paycheck has made my life very difficult. I lost a large portion of my paycheck to this, and what's left after the Ch. 13 payment, taxes, and health/life insurance is barely enough to scrape by on. I receive child support, so when that comes in once a month, we scramble to pay bills, get as many groceries as we can, etc. The rest of the month, I scrape and scrimp by, but it's not easy at all, and I'm not looking forward to going through the winter with the higher heating bills in this condition. There's a whole lot of pb&j and oodle noodles going on at my house! And the darn gas prices don't help - I live 25 miles from where I work, and would love to move closer.
I am seriously considering converting to a Ch. 7 Bankruptcy. This will mean several things, good and bad:
BAD
-I will have to surrender my house
-I will have to find another place to live (obviously)
-My credit will suffer the effects of having TWO bankruptcies (Ch. 13 AND Ch. 7) AND a foreclosure on it. (Right? Someone help me out there.)
GOOD
-I will regain my entire paycheck
-My debts will be discharged, giving me a fresh start
-My credit will eventually recover. It may take years, but eventually, it will come back.
Can someone shed some light on the conversion idea - how it will affect my credit? Everything I've read and researched on this says my credit may end up showing both bankruptcies, though they will both show up as discharged. I know for a fact that the mortgage company will head straight for foreclosure if I convert to a Ch. 7 - my attorney has already asked them. They are not a true mortgage company, just a servicer - and one of the worst in the country, at that. (Go figure.) They will not work with me at all, no forebearance or anything like that.
I am waiting on a call from my attorney regarding the cost and length of time it will take to convert. I know I can do the conversion myself (as far as the paperwork is concerned), but I'm not sure how difficult that is, or if I want to tackle that.
Also, with a conversion to Ch. 7, I'm assuming I can add in any debt that wasn't included in the Ch. 13 at the time I filed?
Can the mortgage servicer come after me for the balance if they are unable to sell my house for the amount owed, or does the Ch. 7 wipe that out??
I know - lots of questions. But obviously, this is a HUGE decision for me to make, and I want to get as much info on it as possible before I do it. I have a phone call in to my attorney right now, and am waiting for a call back. My biggest concern is that with my mortgage being an ARM, it will be adjusting the whole time that I'm in the Ch. 13 plan, and I'll come out of the Ch. 13 in 2 years only to find that my $548 a month house payment is suddenly $800+, and I won't be able to refinance. I have already tried to refinance out of the Ch. 13, and due to the sudden clamp-down on lending requirments by the banks (due to the subprime mortgage mess, which is the very thing that put me in this situation to begin with), I cannot refinance right now, and probably won't be able to anytime soon.
So, if anyone wants to take a shot at my questions (especially Cajun, who has MUCHO knowledge on this stuff), please do. I'm getting info from my attorney too, but I just want to get as much info and input as I can.
Thanks.
I know that when you convert to a chapter 7, the creditors canno
I know that when you convert to a chapter 7, the creditors cannot come after you for any balance left on the house after they sell it.
You can add new debts that have been incurred since the time you filed for the 13, so I would assume you can add debts that were older but not included in the 13.
In a chapter 7 you may be able to keep your house, depending on the amount of equity you have, and what the homestead exemption for your state is.
