My question was if I refile, would I be penalized for the loans. You're saying NO, correct? I have NO PROBLEM paying off the loans. The scenario I was worried about is this. If you were to get a normal loan/credit card while in Bankruptcy, your case can be dismissed and you'd be subject to the debts you were trying to charge off in the first place.
A: First, I question your premise that obtaining new credit during the pendency of a Chapter 13 plan risks a dismissal. The issue is whether or not your actions prejudice prepetition creditors. The student loans are nondischargeable, while in school, you have no obligation to pay, so you cannot be prejudicing your creditors. Therefore, in my view, this issue is inapplicable to your stated facts.
However, I'm not going to sit here and guarantee that a creditor or the trustee
cannot find bad faith for your actions and manage to discharge your Chapter 13, rather than permit a conversion to Chapter 7. Since you're telling me this is not the case, I am going to refile. The only part I am now confused on is this:
This would leave you subject to your creditors claims until you refiled, which you could do immediately, but the automatic stay would terminate after 30 days
You're telling me my creditors in my Chapter 13 would be able to come after me?
A: Only if you refile, rather than convert. If you convert to Chapter 7, then you have no issue, because the automatic stay remains in place.
The way my lawyer explained it is this:
When I filed I had a car. It is now sitting in my garage, inoperable and too expensive to fix for over a year now. When it died, I had to pay out of pocket for a P.O.S to get me from point A to point B. The POS car has cost me over $2000 in repairs SO that is why I am converting my case. He asked me to do a budget (to include the fact I have become a mother since I filed and my expenses have gone up drastically) and then he would submit the paperwork to convert the case. It would take about 3-4 months and then I would be able to apply for a car loan to get a dependable car. That is my ultimate goal since my "once dependable" car is sitting in my garage, dead.
So if I file and do the budget, including the student loans...I will not be penalized?
A: If you convert to Chapter 7, your assets (which apparently are nonexistent), will be liquidated and your case discharged. The student loans will remain nondischargeable, the car will be forfeit to the lender, and that will be the end of the matter. I wouldn't include the loans in the budget, because you have no current payment obligation. If you put the loans into your budget, the court can see that you have taken on new debt which has prejudiced your existing creditors. You need to be unable to pay your Chapter 13, regardless
of the student loans. Otherwise, you may have a problem.
And...my prior creditors could not get to me?
A: If you convert, then yes.
Hope this helps.
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