Our CH13 was dismissed after 1 yr - what to do now?

[tn_girl]

My husband and I had to file CH 13 a year ago. Well, technically we had a choice between 7 and 13. Our lawyer felt 13 would "look better" to future creditors so we opted for that. Anyway, we made our payments and the plan was "recommended for dismissal" about 3x due to things like the fact that my husband pays child support and it hadn't been included in the declaration of debts (we were told we couldn't do that so we didn't) and then finally a 4th time it was recommended for dismissal and was dismissed due to the fact that my husband had found a better paying job and I had gone back to work. At least that's what we understand to have happened due to the lawyer's correspondence. Since then we've paid off one credit card and he is paying off a hospital bill. We still have a few cards, one more hospital bill and a repo-ed vehicle to pay for. I have a few questions. One being that the vehicle carries a debt of around $4000 but I know that our credit card company accepted $200 less than the original debt when we agreed to pay it off. I know the van was auctioned but don't know that they've applied that to the debt (I don't think they have unless they auctioned it for less than a couple of hundred) and I was wondering if we should try to negotiate a lower pay off. Also, we have a chance to refinance our house which is owned by my mother and we are "leasing to own". We have talked about having the amount for the $ we owe creditors added onto the new mortgage (there is a good chunk of equity in the house so it is possible) and paying off everything at once. Would that be a good idea? Would it help our credit score, etc? Also, due to the repo and Dh's car dying we are down to 1 vehicle. He has to use it to get to and from the airport where he flies for work and that leaves me w/o a vehicle during the work week. That is hard to cope with as we have 3 kids and I have to get them to school/me to work and we don't have public transportation available. We desperately need another car. Would we get "screwed" to pay off everything we owe via a redo on the mortgage and then finance a vehicle (only option as we don't have enough to buy outright) or should we try to get enough out of refinancing our mortgage to buy another car? I kind of feel like the second option is best b/c then it makes for 1 payment at a lower interest rate vs. 2 with the auto at a possibly very high interest rate. I don't know much about it though and I would like opinions. What should we do? About the pay offs and the auto? As the BK was dismissed is it still on our credit record? Help!

[B12]

You cannot refinance a home that someone else owns.

Did you mother actually sell you the house and holding the paper on it, or are you just "leasing to own?"

If you do not own the house and your mom refinances it and gives you the money, she will be out the money if you cannot qualify for a mortgage to buy the house from her.

How would your mom get paid back? or does she not care.

[tn_girl]

I'm sorry - I should clarify. My mother was already thinking of refinancing the home. The way it works is that my mother bought the house and we are making the payments on it. When it is paid off she will switch the title from her name to ours. So we are not actually securing a loan ourselves. There is about $65000 of equity in the home at this point. So if she/we refinance then we'd ask for the amount owed + some of the equity in the loan. If that makes sense, sorry not sure how to explain it. And, in a sense, no she isn't getting "paid back". The down payment was done from money set aside for me and the loan is in her name but she isn't "out" any actual money unless we didn't pay the payments in which case she would simply sell the home.

[lrprn]

If you informed your lawyer about the child support, then it sounds like you don't have the brightest bulb for a lawyer if he/she left child support off your expenses. Oh my. No wonder your plan failed.

Would we get "screwed" to pay off everything we owe via a redo on the mortgage and then finance a vehicle (only option as we don't have enough to buy outright) or should we try to get enough out of refinancing our mortgage to buy another car?

If I understand your situation right, then refinancing or selling the house that your mom owns and using the equity to pay off your debts and buy a car rather than filing bankruptcy in the first place would have been far better to do since your mom is willing. But that's water under the bridge....can't go back now.

Whether your mom should refinance the house or sell it to pay off your debts depends on the current housing market and your mom's current appeal to the lenders in your mom's area.

As the BK was dismissed is it still on our credit record?

Since your Ch 13 was dismissed by the court, the filing will remain on both your credit records for 10 years from the date of filing. You filed - that's the reality. You can't just pick up your marbles and go home like nothing happened - that isn't how this works.

And although I know this is very hard to hear, please realize that out of love, your mom is enabling you to not make the tough changes in your lives required to prevent this from happening again. Instead of saving the equity in this house for her own retirement, she's willing to spend it paying off your debts instead. Please do everything possible to get your financial lives together and learn to live within what you and your spouse make. It's the best gift you could give your mom in the world!

Hang in there and Keep posting questions - we'll help you sort things out as much as we can.

[tn_girl]

If I understand your situation right, then refinancing or selling the house that your mom owns and using the equity to pay off your debts and buy a car rather than filing bankruptcy in the first place would have been far better to do since your mom is willing. But that's water under the bridge....can't go back now.

Whether your mom should refinance the house or sell it to pay off your debts depends on the current housing market and your mom's current appeal to the lenders in your mom's area.

There is no question of selling the house. What we are wondering is whether we would do better to refinance and only include our debts from the BK *OR* should we do the debts *AND* the cost of a new vehicle. I guess what I'm asking is what happens to our credit report now if we pay everyone back.

And although I know this is very hard to hear, please realize that out of love, your mom is enabling you to not make the tough changes in your lives required to prevent this from happening again. Instead of saving the equity in this house for her own retirement, she's willing to spend it paying off your debts instead. Please do everything possible to get your financial lives together and learn to live within what you and your spouse make. It's the best gift you could give your mom in the world!

Hang in there and Keep posting questions - we'll help you sort things out as much as we can.

While I can appreciate your position you are not reading my post right. The down payment (hence the equity) never belonged to my mom and was never her "retirement" to begin with. It was my share of a profit from family land that was sold. We asked my mom to use it as a down payment on a house in her name as at that point we were having a problem w/ credit history which, BTW, had nothing to do w/ "overspending" but was instead due to medical bills and out of control court costs due to a custody case w/ my stepson. I'm not sure I appreciate the judgemental tone of the answers I've gotten. At the time we filed BK my husband was having a hard time obtaining and keeping a job due to the terrible job economy where we were forced to move due to this issue w/ my stepchild and I couldn't work as I had 2 under school age and the daycare costs far outstripped what I would earn. However, now we both work full time and make decent money. We have to have another vehicle, no choice there and we have to and WANT to pay back the debts but I'm only asking advice on what to include in the refinance NOT how to pay or whatever.

Everyone is focusing on the house/mortgage and it has nothing to do with what I'm asking other than that is where I am getting the money to pay everything at once. FWIW I *do* have a monthly budget and we live under that. I'm not a moron, sh*t happens - even to good people - it happened to us and now we are trying to rectify it and get back on track.

[SinkingFast]

For a "normal" person,........... Paying off unsecureds would substantially boost their credit rating. Then, a non BK person would be offered the best rates when financing a car.

You've got a dismissed BK on your Credit. Even if you can do the refi on the house, you're most likely gonna be offered a horrible interest rate.

The only thing about the refi plan that makes it even semi palatable is,........... If you get a mortgage offer you can live with for a year or 2, until your credit begins to heal.

[tn_girl]

For a "normal" person,........... Paying off unsecureds would substantially boost their credit rating. Then, a non BK person would be offered the best rates when financing a car.

You've got a dismissed BK on your Credit. Even if you can do the refi on the house, you're most likely gonna be offered a horrible interest rate.

The only thing about the refi plan that makes it even semi palatable is,........... If you get a mortgage offer you can live with for a year or 2, until your credit begins to heal.

Thank you - that was the information I was looking for.

[TiredandWeary]

Hang in there TN girl! I understand your situation and I am sorry that it does seem that some questions being asked by new members on this forum seem to get some judgemental-sounding responses. It happened to me too, when I posted my first question on here. You are right, stuff happens, and I would venture to say that this holds true for a majority of the folks on this forum. It's a shame that we all can't approach each other in a friendlier, more accepting tone from the beginning. After all, we're virtually all in the same boat, for one reason or another. I think we all could benefit from the courtesy, especially when a new person is sharing their questions or concerns and no one even fully understands their situation or all of the facts at first.

Hang in there! You've got a friend here!

[SinkingFast]

Hang in there TN girl! I understand your situation and I am sorry that it does seem that some questions being asked by new members on this forum seem to get some judgemental-sounding responses. It happened to me too, when I posted my first question on here. You are right, stuff happens, and I would venture to say that this holds true for a majority of the folks on this forum. It's a shame that we all can't approach each other in a friendlier, more accepting tone from the beginning. After all, we're virtually all in the same boat, for one reason or another. I think we all could benefit from the courtesy, especially when a new person is sharing their questions or concerns and no one even fully understands their situation or all of the facts at first.

Hang in there! You've got a friend here!

I wasn't being judgemental at all.

I live in a glass house and I most certainly won't throw stones.

My response may have been short and to the point, but certainly not rude.

We did a refi of our house years ago and paid off all our CC debt. Our scores went thru the roof. Getting rid of all that "dead" CC debt weight really boosted our scores. We hadn't filed BK so that's why I said a "normal" person's credit would see a boost.

BK is a big negative on anybody's Credit. That alone would result in higher than normal interest rates. A Dismissed BK is much worse to prospective Lenders.

Lenders won't know all the reasons the Plan wasn't completed. They'll just see "Dismissed" on the Credit Reports. That means all that debt still exists and the circumstances that pushed the applicants into BK probably are not resolved.

A Dismissed BK is much like a double negative. IF the OP can get mortgage financing, the interest rate will probably be horrendous. Possibly even with terrible terms as well.

[chpxiii]

I wasn't being judgemental at all.

I didn't think you were being judgemental, SinkingFast.

A Dismissed BK is much like a double negative. IF the OP can get mortgage financing, the interest rate will probably be horrendous. Possibly even with terrible terms as well.

SF, the OP has said that the mortgage is actually in her mother's name, even though the OP put the money down. So her mother will be the one refinancing the house, not the OP. Which is why she (the original poster) is considering this maneuver to pay off her debts, it wouldn't be the OP trying to refinance. And since the OP put the money down to buy the house and has been paying the mortgage, she would be the one getting the money out from the equity. i.e. her mother would be doing the refinancing (since the mortgage is in her name) and immediately and giving the money to tn_girl. (If I understood the original post correctly.)

tn_girl, if you can get all of the money in the refinance for a car as well, that would "probably" be your best bet because, as SinkingFast said, your interest rates would be rather high, even for a vehicle and you would end up paying more money over all. The only concern I have is that you will be turning unsecured credit into secured. Is it possible to go to a chapter 7? I *think* you could probably consider filing a chapter 7. I would suggest a good lawyer, however, not your last one. ;-)

Good luck in what you do. I know how it is not to have a vehicle.

[lrprn]

I'm not sure I appreciate the judgemental tone of the answers I've gotten. ... FWIW I *do* have a monthly budget and we live under that. I'm not a moron, sh*t happens - even to good people - it happened to us and now we are trying to rectify it and get back on track.

Tn_girl, it's hard to sort out exactly what's up with each individual's financial situation as we're getting to know you. I made an assumption from the way you posted your original question - my apologies for mis-understanding how you ended up in financial trouble. Sounds like you've had a rough ride and much of it was beyond your control. That's very tough and incredibly stressful to boot.

As you share more about your financial situation as you did here, we'll understand it better and be able to focus on your questions better as well.

A polite suggestion for future posts....try to break up your posts into short paragraphs of no more than 3-4 sentences each. It's tough to read through a large block of solid text. Thanks for considering!

Also please remember that although you know your situation inside and out, we're just learning it bit by bit as you share things with us. That makes it all too easy to ask you questions or make statements that may come across as judgmental when that is not our intent at all. Hang in there with us - we want to help you and your family as much as we can. Keep asking questions - that's why we're here!

[SinkingFast]

SF, the OP has said that the mortgage is actually in her mother's name, even though the OP put the money down. So her mother will be the one refinancing the house, not the OP. Which is why she (the original poster) is considering this maneuver to pay off her debts, it wouldn't be the OP trying to refinance. And since the OP put the money down to buy the house and has been paying the mortgage, she would be the one getting the money out from the equity. i.e. her mother would be doing the refinancing (since the mortgage is in her name) and immediately and giving the money to tn_girl. (If I understood the original post correctly.)

tn_girl, if you can get all of the money in the refinance for a car as well, that would "probably" be your best bet because, as SinkingFast said, your interest rates would be rather high, even for a vehicle and you would end up paying more money over all. The only concern I have is that you will be turning unsecured credit into secured. Is it possible to go to a chapter 7? I *think* you could probably consider filing a chapter 7. I would suggest a good lawyer, however, not your last one. ;-)

Good luck in what you do. I know how it is not to have a vehicle.

Thanks for the clarification there, CHP.

I went back and reread and it sounds like your interpretation is pretty much spot on.

TN_Girl,.............

We went thru job loss too. And moving for a new job. So I understand where you're coming from.

If your Mom can refi the house to get you money for a car, that sounds like a good plan.

Also, I agree with CHP on the financing Unsecureds against a Secured Asset is not a good idea. That was the beginning of the down fall for many of us. That's when we were really in trouble and just would not admit it 10 years ago. We just staved off the inevitable.

On the other hand,........... Paying off the Creditors in full,......... You won't have any 1099 income to deal with. And you'll get your balances all wiped clean in one fell swoop. No hassling with Creditors on payment plans you may not be able to afford anyway.

Then you can work on cleaning up your Credit Reports and re-establishing yourself. Get a couple CC's reporting OK's for you every month. Then in 2, maybe 3 years time, you'd be able to refi the house in your own name.

A compromise thought for you,............. Possibly refi the house for enough to purchase a car and bring you current with your Creditors. Then continue to pay your Creditors without tapping more equity than you absolutely have to.

[woeisme]

The one thing I would add here is that if you re-do your morgage to buy a car, you will be paying on the car over 30 years (or 15, depending on the morgage you take out) and it could end up in the long run costing a lot more, even at a decent interest rate, than just buying a car at a worse rate and paying it off over 4 or 5 years that a typical car loan would last.

For example, let's say you took out 20,000 worth of equity to buy a new car. You got a 30 year second morgage, at 6.25%, and your payments are $123.14 per month. Over that length of time, you will pay back $44,330.40 on that car.

Now say you got a 5 year car loan at 16.25%. you would have to pay $489.02 per month, but only a total of $29,341.20 on the car, and it's paid off after 5 years and even at 10% higher interest rate than the home equity loan, costs you almost 15 grand less.

Of course you know your financial situation best, and most people would see the much lower monthly payment and go that route, but you have to remember that you will be paying for this car for 20+ years beyond when it's stopped running, even if it's a brand new car to start. So if you do go the route of taking out home equity to pay off your debts and buy a car, my advice to your would be to make sure your loan allows for early payoff and throw whatever extra you have in your budget towards getting it paid off sooner rather than later.

Good luck!

[B12]

Sorry to disagree, and please do not take this as belligerence, but this is the LEAST judgemental place to be if you need help!

If and when a moderator makes an "off" statement, they are usually right on.

I think the problem here arose because you did not explain yourself fully. We only have the info you give us to go on.
So, no need to lash out at the posters and moderators who are spending their own time trying to offer help.

And ditto on the posting format...........it is very hard to read with no paragraph breaks.

[$$only4ever]

Please do not think that the moderators and posters on this board are judgemental. This board is and has been very supportative to many, many people. For me this board has been my lifeline to sanity since I filed bankruptcy.

Sometimes, however, we do not like to hear the truth. That's human nature. But that is the best part of this forum. You may not like the response, but at least you will be prepared for all of the bumps in the road as you weave your way through the bankruptcy adventure.

Also, everyone should keep in mind that the moderators spend alot of time on this forum. I have never seen someone who is really upset about the bankruptcy process wait too long to receive a response. I know when I filed in 2005 I was breathing in a paper bag and asked alot of stupid questions but my posts were alway answered in a very timely manner.

We are really very lucky to have the dedicated moderators that we have. It is a thankless job and they go above and beyond every day for strangers.