QUESTION
Will I get a full payback in my chapter 13 bankruptcy?
Asked on Mar 15th, 2012 on Bankruptcy - Michigan
More details to this question:
Recently I went to a bankruptcy attorney and was advised that a Chapter 13 was a good option for my wife and I. We purchased a new home and afterwards could not find a renter for our old home. We are going to let the old home foreclose since we a 150K underwater. We have a substantial amount of unsecured credit card debt. Because of our income he said we would have to pay back about $1500.00 a month for 60 months. As a result, we would be paying the entire amount of unsecured debt back, but without interest.We are able to pay off the credit card debt over the next five years without filing a BK, but were worried that if we don’t file, we could eventually face some tax liability from the old house, plus run the risk of being sued by the bank/PMI company for the 150K we were underwater.Is it smart to file a Chapter 13 and payback 100% of the money or do it on our own and run the risk of being sued eventually?
7 ANSWERS
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Do not assume that you will not sued for the 150K. File your chapter 13.
Answered on Mar 19th, 2012 at 12:39 PM
Glen Edward Ashman
The lawyer who actually saw your numbers would be best qualified to answer. Any answer we give would be a guess. Remember you'd also pay interest on the unsecured debt outside bankruptcy.
Answered on Mar 16th, 2012 at 9:09 PM
Daniel James Wilson
If you can come up with $1500/month you can negotiate settlements with credit cards. Settle for 50% or less. Mortgage holder will eventually sue you.
Answered on Mar 16th, 2012 at 3:42 PM
Bankruptcy Attorney serving Hayward, CA
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Carballo Law Offices
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It is impossible to tell without knowing all the figures. Plans where you pay 100% of the debt are rare. Also, maybe not all creditors will file claims and it might turn out to be a less than 100% plan. Some very sophisticated calculations are required to make a decision in your case. I hope you hire a very experienced attorney and not just one of those cheap ones because it needs to be done right, including the Chapter 13 disposable income calculation (sometimes also called the means test although that terms applies in Chapter 7).
Answered on Mar 16th, 2012 at 2:37 PM
Samuel Lee Tucker
Depends on your other assets. Tax consequences should be the same in or out of BK. I would consider saving the house and paying less to unsecured creditors through a ch 13 at least you would have something in the end. The housing market may improve in 4-5 years. Also to be considered is your desire to move from the home, not counting being underwater on it.
Answered on Mar 16th, 2012 at 2:22 PM
Your analysis is correct. In your situation, Chapter 13 would appear to be your best option to be out of debt in five years with no further unsecured liability.
Answered on Mar 16th, 2012 at 1:55 PM
Business Bankruptcy Attorney serving Raleigh, NC
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J.M. Cook, P.A.
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You are vulnerable to being sued for any deficiency and for have taxable income as a result of foreclosure. Many times a good accountant can show offsetting losses to minimize the tax obligation but the deficiency judgment is still a strong possibility. I would consider a Chapter 7 bankruptcy as you are simply keeping your home and I would ask why that isn't a better result with no repayment to unsecureds.
Answered on Mar 16th, 2012 at 1:55 PM