Timing questions from a newbie.

[rs422a]

Boy where to start? First hello and I'm glad I found this board.

I've operated a home-based S-corp for 10 years and things were good until 08 but we hung on. Cashed out the SEP plan. 09 saw a little break, then in 2010 the bottom fell out. Started getting behind on CC's and mortgage, but would have a few good months and get caught up. Then back behind. The major CC's cut limits (immediately overcredit limit) raised interest rates and made minimum payments triple. Tried to work it out but no help there. Property values plummet. Tried to get a loan mod on mortgage and they wouldn't do it. 2011 was abysmal but we still clung to the raft hoping things would get better. They haven't. Income level is cut in half. Tried to find job last year (I'm 52) but no way. Tried to sell house: 6 months on the market and not one call.

Now we have no choice but to file chapter 7 to try and have some tranquility left in my now shortened lifespan. We're letting the house go we built - tough one. The biz income has stabilized at half of what it was, so we can still make it but we have to get out from under everything and start over. We're trying to have a positive attitude.

ANyway, we have a lawyer and starting the initial paperwork. What I am concerned about is timing. We are now two months behind in mortgage (Feb, Mar). Our main goal was to stay in the house until my 9th grader finishes school for this year. I don't know much about foreclosure process in Georgia but I do know if I am behind on my mortgage as soon as I file they will probably foreclose. Right? I don't see any way of catching up right now (2100 per month) and since we will need to find a house to rent soon, we need that money anyway.

My main stress right now is stemming from being able to stay in this house until June. Anybody have any suggestions?

[SMinGA2]

The foreclosure process CAN be fairly quick in GA compared to other states, but there are certain requirements that must be followed. The mortgage company has to file a notice in the paper of intent to foreclose, and that has to run for 4 consecutive weeks. Foreclosure sales ONLY happen the 1st Tuesday of a month. So the earliest possible that could happen for you is June 5th - meaning they'd advertise 4 weeks in May. (I'm guessing they are not that far along now, since you would know.) Even that in my opinion is unlikely if you're now only behind for Feb/Mar/Apr.

Once you do file bankruptcy - the mortgage company has to immediately stop any actions. They can't foreclose until a) they file for and are granted relief from the automatic stay or b) after discharge. If you want to stall for time, you could wait until they are almost ready for the foreclosure sale and then file just before.

[frogger]

Once you do file bankruptcy - the mortgage company has to immediately stop any actions. They can't foreclose until a) they file for and are granted relief from the automatic stay or b) after discharge. If you want to stall for time, you could wait until they are almost ready for the foreclosure sale and then file just before.

However, most of the GA trustees will grant relief at the 341 meeting.

[SMinGA2]

Wouldn't the mortgage company have to file for relief from the stay?

However, most of the GA trustees will grant relief at the 341 meeting.

Even if the process can continue after the 341, that still buys time. The GA requirements do not change. Once relief is granted, mortgage company could schedule the sale for the first Tue of a month AFTER advertising for 4 consecutive weeks.

rs422a should be able to stay in the home until June probably a few months more.

[btbeme]

Another stalling tactic is to ask for a HAMP loan modification - that can add another month or two, though it will halt upon filing Ch 7. Now, if you do the paperwork and actually qualify for the HAMP modification, you can refuse to pay the three "trial payments" and buy more time. Also, you could always ask the bank to do a short sale, which would again draw out the timeline. Same story - all action halts upon filing.

If you make an effort to work with the bank, the bank usually stalls the foreclosure process - they have received a LOT of bad press for continuing foreclosures while "trying" to do loan modifications and have lost a number or court battles in doing so.

So, you could try one or all of these strategies, starting with the HAMP mod, then filing BK, then asking for a short sale after discharge. that should get you enough time to get out on your terms. And, if the short sale is successful, you could qualify for up to a $3000 government relocation payout called a HAFA payment. Ask a realtor.

[rs422a]

Thank you all for the excellent suggestions.

[LadyInTheRed]

Wouldn't the mortgage company have to file for relief from the stay?

Yes. And it's the judge who grants the relief, not the trustee.

rs422a should be able to stay in the home until June probably a few months more.

I agree.

[MikeW]

It looks like we have a lot in common rs422a. S-corp of 10 years that is struggling but stabilized at half of what it used to be. Considering ch7, but want to stay in the house as long as possible. I'll be following this thread to see what happens.

I think the big question mark in both of our minds is "How long after the discharge do I have to get out?" Also, "By filing ch7, how much time is cut from the total?" One thing to consider is that by not paying a mortgage, you will probably start saving money. If you save too much money before filing ch7, you'll have to relinquish it. So that makes filing sooner an attractive option. But if you file now, then it's a faster track to foreclusre. It's difficult to find where the balance lies between these two factors. If I find any good examples, I'll post them here.

I think one thing we can be sure of is that attorneys will try to push the ch7 through as fast as possible. It doesn't benefit them to advise us to wait. That's what makes a great resource like BK Forums so important.

[SMinGA2]

Georgia allows filers to claim additional wild card exemption if you are NOT seeking to exempt home equity. That amounts to an extra $10k wild card for a married couple. I don't think FL is so 'generous' unfortunately.

If you save too much money before filing ch7, you'll have to relinquish it. So that makes filing sooner an attractive option.