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Bankruptcy Chapter 13 questions.. Can I let it get dismissed and file a chapter 7 instead?

Here's the deal: I am 3 months into a 3 year Chapter 13 bankruptcy. I want to convert to Chapter 7, but it is way too much for me to afford right now. If I fall behind on my Trustee payments (of 90.00 per month), and the Ch 13 is dismissed, will it still show up on my credit? I was given bad advice by a lawyer and he told me that I should file, but after talking with people who are in finance, they tell me it was the wrong thing to do! I am wanting to 1. let my case get dismissed, 2. go to a paralegal to file Chapter 7 or even go through Credit Repair, and 3. rebuild my credit. So my questions are: What should I do as far as steps go? I am very lost and my attorney has not been returning my calls, and I am scared about all this. Can I fire this stupid attorney? Which paralegals are good in TX? THANKS!

Public Comments

1. Im not sure why you can not pay $90 a month, since that was only about 5% of what the payments would have been. Since you are so close to being done with the 13, I would just continue on unless the payments are going to go up soon to a much higher number. Either way your credit will be a mess since it will still be on your credit. Also, depending upon your situation, you may not be able to file a Chapter 7 since they changed the laws last year. It affected abou 80% of the BK's out there. Go to www.communtyempower.com and read their FAQ on credit. It may help.
2. If you fall behind in chapt 13 payments you will be dismissed. Now all that you were trying to protect will no longer be protected. If you let your 13 get dismissed you won't be able to file for 7 for up to 8 years as the statute is tolled on your bankruptcy filing under the new rules. You'll wind up right back in 13. Plus it will show on your credit for 10 years either way. So the damage to your credit is done. If you qualify via the new means test you can change your 13 to a 7. You can also ask for a hardship discharge under your 13. Your attorney should be able to advise you. Don't fall for the predators who are trying to lend you more money who were the ones who put you in this situation to begin with. Stick with you plan discuss it with your lawyer. They are there to help. If he won't help you, you can fire him and get someone else. As far as paralegals go they aren't lawyers they aren't licensed to practice law before the court. They simply research and file papers. Don't fall for that trap you could be in serious trouble.
3. Once you file for Bankruptcy it is put on your credit report. If it is Dismissed the status will change on your report but it will still be listed there. If your Chapter 13 gets Dismissed(Not Discharged) you can file for a Chapter 7 right away as long as it was not dismissed for violation of a court order or fraud. In that case you have to wait 180 days. However, your total payments on the Chapter 13 bankruptcy is only $3240($90x36). Since the damage is done in the filing for bankruptcy you should just keep on the Chapter 13. It would cost you at least half of that to file for the Chapter 7. The Chapter 13 is only reported for 7 years, if you file for a Chapter 7 you will have not only the Chapter 13 listed but the Chapter 7 gets listed for 10 years. Also, it is much harder to qualify for a Chapter 7. You first must pass 2 means tests. The first is if your income is above average for the state you live in, the second is if you have enough disposable income to pay back a set amount up to 5 years. If so it does not mean you can't file, it just make it a LOT harder. This may be the reason your original lawyer put you in a Ch. 13 not a Ch. 7. If you did complete your Ch. 13 Bankruptcy and it was discharged, you would not be able to file for a Ch. 7 for 6 years after the discharge of the Ch. 13.
4. Something is awful wrong with this picture. As spiff points out, you are only paying $3240 into your bankrutpcy. Minus the attorney and trustee fees, just how much in debt were you? If you file for Chapter 7, you are going to be paying at least $2000 to cover the legal costs and filing fees. So money wise I don't see any benefit. If you get your 13 dismissed, it will still appear on your credit report as "dismissed". No help there. I would just stick with the Chapter 13 and ride it out...pay it off quicker if you can, and get on with it.