Chap 13 + House

[davids]

I was talking to attory today, and he was talk to us about
putting our house in chap 13? our house and car payments are
caught up... its our debt that needs to be in chap 13....since
we do not qualify for chap 7... it also seems odd, he wants $1000
up front before he will tell us what our payment would be... what
if i do not like that payment or we can not afford it? it seems like
I would then be out of $1000, he already has all of our figures...

besides, the way he was talking, we could file the house and debt
under chap 13, and in 3 years, be done with it... what does that mean?
I can not see a mortg company letting a house go for pennies on the dollar...
does that mean we own the house in 3 years? it sure seems like that
was how he was explaining it....

[HHM]

There is no magical number for figuring out your payment, its what's left over after you pay your expenses (allowed expenses, anyway). There really is not much leeway in the payment...if you don't like the payment amount, its not like you can go to another attorney and get a better payment. If you don't like it, you are basically at where you are now. Since you are seriously considering a chapter 13 and have gone to the trouble to see an attorney, my guess is, what you are doing now is not sustainable; so no matter what the payment is, you would probably be better off in a chapter 13 than not, right? Chapter 13's are not designed to be easy...you have to devote ALL of your disposable income to the chapter 13 plan. When the plan is done, any remaining debts are discharged. Also, while in the plan, you are not accumulating interest and so on. It's generally a pretty good deal, but it's not easy.

You either need to file chapter 13 or don't. Unless you have some outragously over the top bills (i.e. leasing a Lexus for $900 per month), you will be able to "afford" the chapter 13, but realize, you will have very little left over at the end of each month.

However, there really is no need to have your mortgage or car payment paid through the chapter 13 plan if they are not behind.

[davids]

Chap 13

There is no magical number for figuring out your payment, its what's left over after you pay your expenses (allowed expenses, anyway). There really is not much leeway in the payment...if you don't like the payment amount, its not like you can go to another attorney and get a better payment. If you don't like it, you are basically at where you are now. Since you are seriously considering a chapter 13 and have gone to the trouble to see an attorney, my guess is, what you are doing now is not sustainable; so no matter what the payment is, you would probably be better off in a chapter 13 than not, right? Chapter 13's are not designed to be easy...you have to devote ALL of your disposable income to the chapter 13 plan. When the plan is done, any remaining debts are discharged. Also, while in the plan, you are not accumulating interest and so on. It's generally a pretty good deal, but it's not easy.

You either need to file chapter 13 or don't. Unless you have some outragously over the top bills (i.e. leasing a Lexus for $900 per month), you will be able to "afford" the chapter 13, but realize, you will have very little left over at the end of each month.

However, there really is no need to have your mortgage or car payment paid through the chapter 13 plan if they are not behind.

"you have to devote ALL of your disposable income to the chapter 13 plan"

the attorney said I had $500 in disposible income... so $500 a month would
go to chap 13? so basicly, $500 a month for 3 years will wipe
out $100k+ in debt.... is that correct?

what if wife got a higher paying job, does that need to be reported,
so trustee can take futher advantage of us?

Thanks

[HHM]

"you have to devote ALL of your disposable income to the chapter 13 plan"

the attorney said I had $500 in disposable income... so $500 a month would
go to chap 13? so basically, $500 a month for 3 years will wipe
out $100k+ in debt.... is that correct?

what if wife got a higher paying job, does that need to be reported,
so trustee can take further advantage of us?

Thanks

Yes, it will wipe out your "unsecured" debt. It looks like you edited your initial post since I posted...all the attorney is suggesting regarding the house is that you would pay your mortgage payment to the chapter 13 trustee, and the chapter 13 trustee would in turn, pay your mortgage to the bank. That is not necessary. At the end of the chapter 13, you would still need to make your mortgage payments and car payments (assuming neither will be paid off during that time).

My understanding is, your income is determined based on your last 6 months of income prior to your filing BK...as far as I know, there is no annual review to see if you are making more money later. Once the Chapter 13 plan is confirmed, that is THE plan for the length of your chapter 13 (generally, the only person who requests a modification are the debtors, when things go bad, i.e. if a spouse loses a job). Basically, your financial life is frozen at the time you file...anything that happens subsequent to your filing BK generally will not affect your BK (with some exceptions, of course, i.e tax refunds, if you can't exempt them, will go into the chapter 13 plan each year of the plan).

[davids]

chap 13

Yes, it will wipe out your "unsecured" debt. It looks like you edited your initial post since I posted...all the attorney is suggesting regarding the house is that you would pay your mortgage payment to the chapter 13 trustee, and the chapter 13 trustee would in turn, pay your mortgage to the bank. That is not necessary. At the end of the chapter 13, you would still need to make your mortgage payments and car payments (assuming neither will be paid off during that time).

My understanding is, your income is determined based on your last 6 months of income prior to your filing BK...as far as I know, there is no annual review to see if you are making more money later. Once the Chapter 13 plan is confirmed, that is THE plan for the length of your chapter 13 (generally, the only person who requests a modification are the debtors, when things go bad, i.e. if a spouse loses a job). Basically, your financial life is frozen at the time you file...anything that happens subsequent to your filing BK generally will not affect your BK (with some exceptions, of course, i.e tax refunds, if you can't exempt them, will go into the chapter 13 plan each year of the plan).

my only real concern is, with the house, it HAS to be refinanced
in about a year, otherwise, ballon payment, etc.... since finance
compaines will see we are in Chap 13, do you think there would
be a problem on getting the house refinanced though a lender?
its like having bad credit and asking for a loan...i cant see it happening
but the house has to be refianced....

[HHM]

If you need to refinance, your best bet is to try and do it before you file. Although its possible to get a refi while in a chapter 13, its not likely. However, if you have $100,000 in unsecured debt, getting refi will be hard enough anyway. You should contact a mortgage broker and see what your options are.

[davids]

Bk

If you need to refinance, your best bet is to try and do it before you file. Although its possible to get a refi while in a chapter 13, its not likely. However, if you have $100,000 in unsecured debt, getting refi will be hard enough anyway. You should contact a mortgage broker and see what your options are.

my lender agrees, filing before BK 13 would be much easier as creditors no longer will look at you for credit options while you are in a BK...that leaves us with a catch 22, my credit score is only in the 550 range... so it seems that I am damned if i do, or damned if i dont.

[HHM]

my lender agrees, filing before BK 13 would be much easier as creditors no longer will look at you for credit options while you are in a BK...that leaves us with a catch 22, my credit score is only in the 550 range... so it seems that I am damned if i do, or damned if i dont.

Yep, unfortunately.

Have you considered selling the house. After all, you are facing serious financial difficulties, perhaps you should sell the house, rent for one year in a cheaper place, then go back in the market to buy after you've been in the chapter 13 plan for a year or so.

[davids]

Bk.

Yep, unfortunately.

Have you considered selling the house. After all, you are facing serious financial difficulties, perhaps you should sell the house, rent for one year in a cheaper place, then go back in the market to buy after you've been in the chapter 13 plan for a year or so.

my wife will not do that...I wouldnt mind myself, but my wife feels that she
has worked hard to get the house, and thats that.... If I sold it, I would be looking at $10,000 in bad equity...

if it comes right down to it, I would probably rent it out, and let the renter
pay my morgtage...that way I would not loose the house in forclosesure or a bad equity loss deal.... but I do not see that in the future either...

and to be honest with you, unless you plan on living in a crapper apartment, those payments can run just as high as our house payment.

another option would not to do anything at all...