Expert: Terry Leeders - 8/5/2007

Question
I filed Chapter 13 Nov 2006.  I'm in sales, earning salary and commission.  I haven't received commissions regularly, and have missed several payments.  I used my tax refund to make several payments to the trustee, instead of sending the whole thing in.  Now, they have filed to dismiss the Ch 13 for the missing payments.  I have three secured items:  house, car, and car title loan.  I cannot refinance as my equity isn't enough to pay off the secured items.  I cannot meet my payment obligation each month, $3,382.00, and am considering converting to a Ch 7.  Would this be possible?  If so, what happens to my house and car (car is needed for work)?  I used an attorney for the Ch 13, but they've been less than forthcoming with information about converting or what to expect. If I don't have a lump sum payment of $8,342 to the trustee by Wednesday, they will proceed with the dismissal.  My salary brings in $425 net per week, barely enough for gas, utilities, and groceries.

Answer
Upon conversion to Chapter 7, you are subject to a new means test- 6 month budget analysis.  Also, if you have assets that were more valuable than your exemptions, then the Chapter 7 trustee can liquidate them on a conversion.  Talk with your attorney about setting up the best plan of attack.