Which BK to choose 7 or 13?

[MomOf1]

Hi, I am hopeful that someone can answer my question about which BK is better if I want to keep my home. I am getting conflicting messages from different people.

I have hired a BK atty but we haven't filed yet and I want to make sure I am doing the right thing. With the recent interest rate increase in my 1st mortgage I am unable to pay that, my second and the credit card bills (not to mention just the day to day living expenses).

Which BK will allow me to keep my house? Can someone provide an answer?

Thank you

[Moe Bedard]

MomOf1,



Have you asked your bk attorney this question? They will be able to go over these options with you and let you know what each bk would entail and which one would be best for your situation.


The main purpose of a Chapter 13 Bankrupcty, as opposed to a Chapter 7 Bankrupcty, is to enable a debtor to retain certain assets that would otherwise be liquidated by a Chapter 7 Bankrupcty Trustee. In most cases, you can keep your home and your car under either plan (provided your equity does not exceed certain limits). However, under Chapter 7 Bankrupcty, you wouldn't be able to keep your rental properties, antique gun collections, etc.

The goal of most Chapter 7 bankruptcies is to discharge your existing debts and allow you a *fresh start* on your finances. In other words, once your discharge is granted, you no longer need to repay the debts that were incurred before you filed your bankruptcy.

Under a Chapter 13, however, you repay most or all of your debts before your slate, so to speak, is wiped clean. And because you repay your debts, you gain certain advantages over a Chapter 7 Bankruptcy.

[jhn_plsn]

Also, a ch 13 allows for you to strip the 2nd lien on your home if the ballance on your 1st lien is higher than the value of the home. There are also income and asset requirements. There is a question of abuse to if not carefull.

[MomOf1]

Thank you both for the information. Most helpful. I will sit down and chat with my attorney this week to discuss what is best solution for me. So far my modification with Litton has been a nightmare and there is still no end in sight.

Thanks again.

[nitag]

Momof1, I am meeting with a BR attorney next Friday to discuss options.. Have you started a trial mod with Litton yet?

[MomOf1]

Originally Posted by nitag

Momof1, I am meeting with a BR attorney next Friday to discuss options.. Have you started a trial mod with Litton yet?

Hi, I started a trial mod and then they declined the modifcation because they said I made too much money,(which was incorrect since they had typed some numbers in wrong) so I went back and asked them to reconsider my trial. I am hoping to hear from them next week.

I just finished the pre-bankruptcy credit counseling that you are required to complete before you file. I am currently looking at filing a Chap 7, as after going over my budget with the counselor I would not have any money to left to pay off my creditor's with a Chap 13. It is my understanding that either way I file I will be able to keep my home.

If the trial mod doesn't come through before I file I will wait until after the bankruptcy is complete and see if I can get a modification then. I am trying to get my loan to a 30 year fixed with a lower interest rate and if I could get my other debt out of the way I could afford the higher payment.

Hope that helps.