Advice on filing a chpt 7

[nathan005]

Hi everyone, I've been reading the forum for the past month or so now and decided to post my story and see if I could get opinions. It all started when I stupidly bought a house we couldn't afford in 2006. The monthly payments totaled $5400 on a 80/20 loan balance of 779k, while i was only pulling in $3500 every month since my wife wasn't working (had to take care of the kids). Needless to say I had empty the 401k and live off credit cards to stay afloat the past couple of years. We should have sold the house when we knew we couldn't afford it.

Fast forward to today we are 105k in CC debt, 4 months behind on the first and 2 months behind on the 2nd, owe 779k on a house that's worth 599,000 per the new tax valuation. We have upped our income (my wife works now) and now can afford to pay the at least the 1st loan and cover our daily expense (car pymts, utility, food, daycare etc)

My questions if anybody can offer opinions

Is it possible to just get current w/ the first mortgage and let the 2nd loan charge off and then file BK chpt 7 to get rid of the CC debt and unsecured 2nd loan.

Can I qualify for chpt 7 since our income is approx 140k this year, however since our mortgage payment is so huge we dont' have any disposable income left.

[soleprop]

i guess a lot depends on the federal allowable expense for housing in your area...? the income shouldn't be much of an issue if you can prove legitimate expenses that leave you with a disposable income around $100/month or less (though it sounds like some districts allow up to $150/month). my question is if a trustee in your district would think your mortgage payment is extravagant by local standards.

it's awful that you emptied the 401K as it was exempt/protected assets. you're not the only one on this forum to do it, obviously, or we wouldn't know to smack our foreheads about it

i'll be curious to read the development of this thread.

[justbroke]

I'll be curious too to see if you qualify (pass the means test) for Chapter 7. In a Chapter 7, your expenses (Form J) are going to be looked at more. Do you have expensive automobiles too?