Should I File Chapter 13 Bankruptcy Now and Then Chapter 7 Later? – Deb

“Dear Steve,

I was long-term unemployed for 3 years, last one with no UI as it ran out. Finally got a part-time job in February this year. During the 3 years I got 2 judgments against me by Capital One and Chase for credit card debt. Since they could not garnishee my UI they got nothing. Now only 2 months after starting this job I get sent a letter from the attorneys for CO giving me 15 days to respond or my income will be garnisheed. It’s been over a month now, I did not respond, but consulted an attorney who is advising ch 13 bankruptcy. (I can do ch 7 if I hold it off until Feb. 2013). I owe almost 30K, including back rent and loans to family and friends after all of this. Meanwhile I live in fear of the judgment order garnisheeing my wages, seizing my bank account (paycheck only), or sending the sheriff out to my rental property to seize personal belongings. In addition, I have to come up with $1300 to pay the attorney before they will file BK for me. Timing of all of this stinks! I wanted to be able to pay back personal loans and the rent and utilities, but feel that ch. 13 will put me in a straight jacket of a budget for 5 years after I just came out of 3 years of financial hell. Also, the attorney advised me to try to find a better car before the filing and amazingly I did get financed for a newer used car as I was driving a “gift” beater that was nickle and diming me to death with repairs (I drive for my job all day).

I am inclined to wait until end of January and go for the ch. 7 rather than face the 5 year “constraints” of a ch. 13 and take my chances with the judgment order. That is, let them garnishee my wages if it comes to that. (I tried to see if they would do a payment plan with me and they refused to talk to me, saying I had retained an attorney when I went for a consult, which I told them.) I am afraid of them seizing my bank account as I could not do my job or survive if that happens and I might lose my job. I am afraid of them seizing my property (only thing I own of any value is a 2 year old 125cc Yamaha scooter) as I don’t want to lose that. What would be the best avenue to protect me overall? A chapter 13 now then convert to a ch 7 next year OR hold off and do the chap 7 next year and ride it out with possible garnishment now?

See also  Chapter 13 Bankruptcy Pros and Cons


Dear Deb,

Congratulations on getting the new job. That’s wonderful news.

I’m assuming the reason you can’t go for a chapter 7 bankruptcy now is you filed a chapter 7 bankruptcy before and need to wait for the eight years to expire.

While filing the chapter 13 bankruptcy now is an additional cost it will prevent those nasty potential consequences you might otherwise face.

If you wanted to get the maximum protection the chapter 13 bankruptcy now and convert to a chapter 7 bankruptcy when you can is the most comprehensive solution.

Waiting and rolling the dice is always an option but certainly one without any guarantees. If you were months away that’s one thing but you would be gambling that at some point in the next nine months they would not sue you, win a judgment, garnish your wages, or levy your accounts.

For me, I’m not that much of a gambler.

Enjoy your scooter. I love to ride as well.

Please post your responses and follow-up messages to me on this in the comments section below.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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