Sign and See

[squeaks]

Here's the summary:Fell behind on mortgages(1st and 2nd) to the tune of about 13K due to loss of job after injury, incurred 60K in CC debt while trying to start insurance business but am now back to work along with the wifey and would be fine except for the hole we dug. We are just over the means test income but could probably show very little disposable after allowances.

My mortgage company is acting very strange. We got referred to Loan Modification and have made some payments but had our last one returned with a letter saying it didn't match a payment plan we never saw.

We are probably upside down on the house or very close to being that way. We have two cars and are making payments on them, the only reason I'm keeping one of them is because with my credit, it looks impossible to get another one with a smaller payment.

We have a sign and see meeting this weekend, this will be our 3rd meeting with the lawyer and I wanted to ask some good questions regarding our options.

My wife wants to keep our home because she is afraid of having to try to rent so I am trying to save it for her.

Given our disposable income, my guess is that our payment plan will cover no more than what we are behind on mortgages and taxes.

Should we file a 13 to save our home then convert to a 7 once our home is safe?

Or would it be best to just do a 13?

Possibly a 7 converted to a 13 if/when GMAC moves to foreclose?

It seems like they're hoping that bailout bill makes it through because we would be prime candidates for it.

I honestly feel sick about leaving so many creditors out in the cold but so many events out of my control stacked up and took away any light at the end of the tunnel.

Any input is greatly appreciated.

[rrockinggramma]

Your plan will depend on your circumstances but there are plans out there that do not pay anything to unsecured creditors. If you want to save your home and cram down your cars, then do so. GL with your attorney.

[lrprn]

My wife wants to keep our home because she is afraid of having to try to rent so I am trying to save it for her.

As difficult as this is, you need to make the decision to file bankruptcy and keep or surrender your house in a cold, emotionless way. It's all about what's going to work best financially for your entire family in the long run. It's easy to get caught up in emotion and make decisions impulsively that aren't really good ones in the long run. Rentals right now are at a premium since homeowners can't sell - there will NEVER be as good a time to rent as there will be for the next year or two.

Making these kinds of difficult decisions is exactly why setting up free or low-cost initial consultations with 3-4 experiened bankruptcy lawyers in your area is so important. They can evaluate your financial situation in detail and they know how your local court customs operate - that's very important, especially when your income is close to the median.

Should we file a 13 to save our home then convert to a 7 once our home is safe? Or would it be best to just do a 13? Possibly a 7 converted to a 13 if/when GMAC moves to foreclose?

Only an experienced bk lawyer can answer the first two questions for you. I can answer the last one - you can't voluntarily dismiss a filed Ch 7 to file Ch 13 without your trustee agreeing to go along. That's why you need to discuss your situation with several bankruptcy lawyers to get an objective opinion without emotion about what's going to be best in your unique situation.

It seems like they're hoping that bailout bill makes it through because we would be prime candidates for it.

I don't think Congress is going to do anything before the elections. Don't allow wishful thinking to stop you from doing what makes sense. If you can't pay your basic bills, then you are already in the downward spiral. At this point it's extremely hard without some windfall to pull yourself out of the financial hole as fast as Ch 13 would.

I honestly feel sick about leaving so many creditors out in the cold ...

Trust me when I say that those creditors you are feeling sorry for couldn't give you the time of day when you needed their understanding. There's one thing filing bk does - you realize that in many ways you were set up to take on far more debt than is wise so those creditors could maximize their profits as quickly as possible. Time to get your shields up - the creditors couldn't care less about you or your family - your 'drop in an ocean' debt that will be forgiven is just a tax write-off for them. Nothing more.