Considering BK, have some questions

[Rudolph]

First, let me say, I'm glad I found this site. I've been reading it for the last 5 hours or so, and tried to go to sleep, but I have these questions that I hope someone can answer. I searched, but couldn't find anything like my situation, exactly. First, here is my situation. I make about 45k a year, I have 32k in credit card debt. I'm 2 to 4 months behind on all the cc's. I have 2 vehicle loans, one for a Ford Explorer, that my daughter pays and she drives the car, but it's all in my name. The other is a Honda ST1300 motorcycle. The payments are 336 and 250. I owe more than either one is worth. I also have a 1425 mortgage payment. I owe 187000, est value according to Zillow is 213000. Here's my dilema. I know I need to file BK, but I still want to keep the house. I didn't make Dec payment, and Jan payment might not happen, but should make payment in Feb for sure. Did not make Dec payment on bike or car, but was planning on making payment Jan 2. This will make me current on car and bike. Here's the questions: 1. Is a motorcycle considered an auto, and could I keep the motorcycle? I would like to, it is much more practical than the truck. 2. My daughter wants to get her own car, with her own financing, she tried to trade in the truck, but it's too upside down. Would it be correct to voluntarily give back the truck, then file BK and hope to charge off the difference in value? 3. I'm still fuzzy about how the homestead thing works, is the equity in your house all you are allowed to keep,or lose, or can you keep the house as long as you make payments? I am currently enrolled in a CCCS, but only made one payment, they are 850, I can't keep up. Also, I have a phone consultation tomorrow with a local atty (CA). Sorry this was so long, but I'm real scared about all this, I've never been in a situation like this. Thanks for any help or info.

[BKTango]

Hello Rudolph, I may not be able to answer all of your questions as I do not have vehicle payments and a large mortgage to deal with but I wanted to say welcome to the forum and do not be scared. All of us at one point on time have never been in nor anticipated ourselves being in this situation. So you are with good people here so feel free to always ask questions! It sounds like you would more than likely have to do a CH13 since you will be in arrears with your mortgage. So maybe some 13er's will chime in here, but I will say the best thing you could do is set up 2-3 more free consultations with other attorney's to get at least a second opinion on the first one you have.

[lrprn]

Welcome to BK Forum, Rudolph - glad you found us!

I make about 45k a year, I have 32k in credit card debt. I'm 2 to 4 months behind on all the cc's.

If you are in California, the median income for a single person filer is $43,107 (from http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm ). This puts you slightly above that level which makes knowing whether you will have to file Ch 7 or Ch 13 harder. In California you have to choose one of two exemption systems - see http://www.californiabankruptcy.info/exemptions.html - check out the homestead options in both. ) Be sure to discuss the median income and both exemption systems with your lawyer during your call.

I have 2 vehicle loans, one for a Ford Explorer, that my daughter pays and she drives the car, but it's all in my name. The other is a Honda ST1300 motorcycle. The payments are 336 and 250. I owe more than either one is worth.

Even if your daughter is making the payments, you are still the financially responsible owner of the car. Is your daughter your dependent? Are there other family members living with you?

I also have a 1425 mortgage payment. I owe 187000, est value according to Zillow is 213000. Here's my dilema. I know I need to file BK, but I still want to keep the house. I didn't make Dec payment, and Jan payment might not happen, but should make payment in Feb for sure.

*If* you can file Chapter 7, you MUST be current on your mortgage payments to hope to keep the house. If you file Ch 13, then the mortgage arrears can be included in your payback plan and you will be able to keep the house. You have $26K of equity - talk with a lawyer about which exemption system will help you most. Do keep in mind that the major mortgage lenders often start foreclosure proceedings after two consecutive missed months of payments. Filing bankruptcy will stop foreclosure actions though.

Without more details, it's hard to provide reliable answers to your other questions, Rudolph.

Also, I have a phone consultation tomorrow with a local atty (CA).

Excellent! Don't stop there either. Make appointments to speak with at least 2-3 more bankruptcy attorneys in your area as well. Most give free half hour to hour consultations. The more lawyers you speak with, the better you will understand all your options. Keep us posted on what you find out, ok?

[Grace]

The mortgage payment is pretty steep given your income. Can you afford it if you have no other debt? Can you afford it if you have a bike payment as well?

[Rudolph]

got a lawyer

I went ahead and hired an atty. It is going to cost me 2000, 100 up front, and the rest over up to 6 months. I am hoping to pay him off earlier to start filing earlier. He told me I qualify for Chapter 7, he says it is routine, should be no problem. He seemed real confident but also real busy. Went through Price Law Group. So now, I have to get current on the house payment. This might be hard, should I call them and let them know what I am doing?
Also, I think as long as I don't get any more CC's, I can handle the house and bike payments. It's just me, no more kids or anything. I hope I did the right thing, Also, he told me to stop paying everything except the house and bike, and to turn in the car.

[BKTango]

Rudolph you are now on your way. Your lawyer gave you sound advoce as far as not paying on anything other than the house and bike and of course your normal living exspenses such as utilities, etc. If you know for a fact this is the route you are needing to go and you will be filing there is no point on continuing to pay on the cc's, CCCS, or the vehicle. So start using that money to get current with your house. That is the most important thing you need to do as if you do not get current you cannot file CH7. Other than that, use that money to fund your bk and pay for the living exspenses you have been neglecting.
As far as calling the mortgage company I am not so sure you should do that, maybe that's a question for your attorney. I would just work hard and fast to get caught up with them.

[Rudolph]

checking in

ok, so, I only have three payments left with the lawyer, but I have a dilema still. I'm still behind on the house. I haven't made March payment yet, and won't even be able to until I get paid 1st of May. That makes me 60 days late, again. And no way I can double up in May, either. Would it be smart to just pay off the lawyer on May 1 and have him file? I would get rid of his payment, free up some money for the next month, and possibly stop any foreclosure attempts? I know I can catch up with the house once I get rid of the lawyer payment, but will take me a few months.

[bige1030]

Chapter 7 won't do much to help you keep your house. You'll probably need to become current within about 30 days after filing if you don't want foreclosure to start. They'll probably file a motion for relief from the automatic stay so that they can begin foreclosure, and they'll get it if you're behind on the house. Even if foreclosure starts, you may have redemption rights that will allow you to keep your house by becoming current on the loan.

Chapter 13 might be better if you want to avoid foreclosure and pay off the arrears on the house over time. You'll have 36 months (and up to 60 months if needed) to pay off your arrears. But - you have to make every monthly payment after filing Chapter 13, or else they can get relief from the automatic stay and start foreclosure. Another caveat is that you'll have to contribute all of your projected disposable income to the Chapter 13 plan for 36 months to pay your unsecured creditors.

[lrprn]

Chapter 13 might be better if you want to avoid foreclosure and pay off the arrears on the house over time.

Bige, if Rudolph is able to file Ch 7, it's doubtful he has enough disposable income to support a full-blown Ch 13 at this point. And although it's still possible to get a 36-month Ch 13 plan if a filer is very close to the median with very little more than the minimum $100-160/month disposable income, almost all Ch 13 plans these days are set up to run for 60 months.

One tactic that some bk lawyers try in this situation is to file Ch 7 which wipes out all the unsecured debt, then file a Ch 13 to keep the house from foreclosure soon after - a so-called "Chapter 20". Some jurisdictions do not allow debtors to pursue this option, so Rudolph, you need to ask your lawyer if your bk district allows this.

If it turns out that you could file "Ch 20", it's very important to remember that missing even one mortgage payment after filing the initial "Chapter 7" petition but before the Ch 13 filing may cost you your ability to save your home. Also, according to Cathy Moran, a well-respected CA bk lawyer, "this approach is limited by the provisions of the BAPCPA 2005 amendments which allow a discharge in a subsequent 13 only when specified time has passed." (See the last paragraph, http://www.moranlaw.net/chapter_13.htm ) Some bk judges see 'ch 20' as a scam, so be sure you and your lawyer are prepared to deal with the consequences if that happens. (See http://www.bankrate.com/brm/news/pf/20020614a.asp - scroll down to paragraph on Chapter 20.)

[spell]

I hope this doesn't sound harsh. I'd like this bk to truly help your situation. For that to work, it will have to address the real problem.

If you're no longer making payments to your unsecured debts.
And, as you posted, your daughter is responsible for her car.
And, you're still not able to stay current with your secured debts.
Your attempts at keeping the secured debts will only harm you after the bankruptcy is done.

I see about $3000 of after tax income per month.
Of that, $2000 is going right back out before you eat or turn on lights.
Consider this pre-filing time a glimpse as what bankruptcy can and cannot fix.

[keepmine]

I'd agree with Spell. If you aren't paying unsecured debt and your daughter is paying the car loan and you still can't swing the mortgage-well, you got problems bk can't fix.
You need to sit down and draw up a budget and see where your money is going and post bk, you need to take steps to raise your income. The status quo just won't work. Over time, plain ole inflation will do you in-never mind unexpected expenses.

[SinkingFast]

Thrittos!!

If you've gone several months of adjusting to a cash and carry lifestyle and you're still in arrears on the house, something is WRONG.

You have a problem BK won't fix.

The money has to be going somewhere. You've got to find out where.

Get one of those little memo pads that's spiral bound across the top. Pocket sized. Carry it with you everywhere you go. Write down EVERY PENNY you spend.

You buy a cup of coffee, write it down. You buy gasoline, write it down.

If carrying a memo pad doesn't work for you, save receipts. Save every receipt for everything you buy. When you get home, jot it all down in a log. Keep track of where your money is going.

Find a system that works for you.

You've got to find your spending leaks.

If you're 2 months in arrears on your house, there most definitely are spending leaks.