Worried and not sure what to do now!

[Wantmypeace]

I'm off work permanently, so we're down to just my husband's income. That's a net of 6800/mo, which isn't bad, BUT our mortgage is 3200/mo, so we are down to pennies in our budget with no room to wiggle. I was planning to skip a couple of payments in order to be able to replace the car that we'll give up when we file BK, but I read on here that if we don't make our mortgage payments, the trustee will throw our case out because we need our mortgage in order to pass the means test. So, what I'm wondering is if we miss payments on our 3rd, would he do that, as well? Our house is worth 185K, and we owe 145 (1st), 175 (2nd), and 45 (3rd). If we stop paying on the 3rd, will the trustee throw it out? Would the lender likely foreclose knowing that the 1st and 2nd get theirs first, and they wouldn't get anything out of it? We have to find a way to come up with the cash to pay the attorney and buy a replacement car. HELP!!!

[debee]

Have you looked into other ways of passing the means test besides the giant mortgage? For instance, two new cars instead of one (that gives you two ownership exemptions and two operating expenses), do you both have term life insurance? Any health issues make life insurance very expensive. That can help on the means test. Insurance costs go up with two brand new cars with maximum coverage amounts, and low deductibles, and you'd be upside down in equity the second you drove them off the lot. I don't know all your details, but maybe there is an alternative to relying on the mortgage amount to get through the means test.

[AngelinaCatHub]

Have you looked into other ways of passing the means test besides the giant mortgage? For instance, two new cars instead of one (that gives you two ownership exemptions and two operating expenses), do you both have term life insurance? Any health issues make life insurance very expensive. That can help on the means test. Insurance costs go up with two brand new cars with maximum coverage amounts, and low deductibles, and you'd be upside down in equity the second you drove them off the lot. I don't know all your details, but maybe there is an alternative to relying on the mortgage amount to get through the means test.

debee: looking at both posts above me, I see what the OP is saying and in all due respect I understand you are trying to help them. However, in giving the "tips" you are, this is a constructive bankruptcy and is tantamount to fraud. I know you don't mean it this way, but you cannot invent things to do to become poverty stricken in bk. You are either there when started or you are not. These folks make good money. The house will not be foreclosed upon unless the major mortgage is not paid. The third mortgage has to buy out the second and the first to own the house. They could go 13 and pull off a plan to get by.

Don't misunderstand as I see good intentions here, but hiding assets or inflating poverty with exempt things with the intent to defeat the system will cause our OP more harm than good. 'Hub

[debee]

They're not planning to keep their house though, 'Hub. At least not according to the other posts that I've read. So what they're planning to do right now is actually fraud. What I'm recommending is not.

Adjusting expenses that will work in the best interest of the family - like new cars while credit is still good - isn't fraud and is often recommended by lawyers. From what I recall from her other posts, they're giving up their one car so then they'll have no cars. They need to solve that problem.

I think, if I remember correctly, she is sick. If I'm not mistaken, she has lupus. That can become really expensive. None of us know what is in the future for this family. If they don't have life insurance, they should. That's just sound financial planning. If he dies and she's ill, what happens to her? If she dies and he's stuck holding the bag, what happens to him? Do they have kids? What about them?

Having a low deductible is smart if you're cash strapped which is what everyone is when they're on the verge of bankruptcy.

In our family we HAD totally raised all our deductibles, lowered the insurance so we just meet the legal standard and no more, got the cheapest health-care plan we could, no insurance on our only breadwinner, etc and on Sept 3rd we paid dearly for all of that. In fact, that is why I'm here. I advise everyone on this board to get the best health insurance they can, lower their deductibles, increase their insurance coverage, because nobody thinks the unthinkable disaster will happen to them until it actually does.

As for hiding assets, I don't know what you mean since I haven't recommended that. In fact, if you look at all my posts from earlier today you will see clear evidence that I don't. And if you saw one of my posts and jumped to conclusions, it's only because you jumped to conclusions. You have to read all my posts to see why I was asking the questions and to know that I was trying to talk someone out of doing something stupid and risky.

I do believe that there is a sliding scale with asset protection on one end and fraud on the other. That idea originates with a bk lawyer(Cathy Moran) and is posted on her website. It's our right as debtors to do what is in our best interest within the law and to make smart business decisions.

[Wantmypeace]

I appreciate where both of you are coming from. I'm just a little confused. We're definitely not trying to commit fraud of any kind, nor are we trying to hide anything. I don't want to do anything that is not within the law. We don't know if we'll be able to keep the house or not. Here is the breakdown of our expenses:

Net Income: 6800
Mortgage(s): 3250
Groceries: 1000 (family of 5 and includes ALL household supplies)
Clothing: 200
PGE: 650 (yes, this sounds high, but we're on a level payment plan with them and have been paying this amount for years. Our house is not huge--1700 sf--but it is old.)
Tithe: 100
School Lunches: 50
Garbage: 35
Cell/DSL/Home: 200
Cable: 70 (on contract)
Gasoline: 600 (live in country and have to drive 20 mi/each way to work/town)
Auto Ins: 135
Life Ins: 65 (Thank God it was in place before diagnosis!)
Doctor Co-pays: 100
Prescriptions: 100
Gym: 60
Auto Maintenance (oil changes, etc.): 50
Savings for Auto Repair/Registration: 50
Savings for Household Repair: 50
School Expenses/Kids: 50

As you can see, this puts us just barely breaking even each month. Extra things like haircuts, etc. come out of the grocery fund. This is WITHOUT the 400/mo car payment on the car we're going to give up and the 1500/mo credit card payments. So, as you can see, we can make it theoretically. I'm just not sure how we're going to get the money together to purchase a second car to replace the one we'll be giving up. We'd really like to keep the house, and I am hoping that job raises and the possibility of me being able to work part-time as my condition improves with treatment will make that possible.

I was thinking that we could consider getting behind on the mortgage by a month or two, and then begin paying again and just stay 30 or 60 days past due until our financial situation gets better in order to save some money for the attorney and a second car. Now, I understand mortgage companies won't let you do this and require that you pay everything to get caught up, rather than just tracking you at 30/60 days late like CC's do. So, we're stuck. We've never missed a mortgage payment in 16 years, so we'll continue to make those on time. I don't want to chance having our bk thrown out because we got behind on the mortgage.

So, we are back to the original problem: how do we save up for a second car and the attorney's fees? I'm seriously considering Pro Se and making due with one car for the next year...except my husband's job requires that he have transportation accessible at any given time in the day, so I would be unable to take the kids to school, doctors, get groceries, etc. This is not doable...

[scorpion35]

I appreciate where both of you are coming from. I'm just a little confused. We're definitely not trying to commit fraud of any kind, nor are we trying to hide anything. I don't want to do anything that is not within the law. We don't know if we'll be able to keep the house or not. Here is the breakdown of our expenses:

Net Income: 6800
Mortgage(s): 3250
Groceries: 1000 (family of 5 and includes ALL household supplies)
Clothing: 200
PGE: 650 (yes, this sounds high, but we're on a level payment plan with them and have been paying this amount for years. Our house is not huge--1700 sf--but it is old.)
Tithe: 100
School Lunches: 50
Garbage: 35
Cell/DSL/Home: 200
Cable: 70 (on contract)
Gasoline: 600 (live in country and have to drive 20 mi/each way to work/town)
Auto Ins: 135
Life Ins: 65 (Thank God it was in place before diagnosis!)
Doctor Co-pays: 100
Prescriptions: 100
Gym: 60
Auto Maintenance (oil changes, etc.): 50
Savings for Auto Repair/Registration: 50
Savings for Household Repair: 50
School Expenses/Kids: 50

As you can see, this puts us just barely breaking even each month. Extra things like haircuts, etc. come out of the grocery fund. This is WITHOUT the 400/mo car payment on the car we're going to give up and the 1500/mo credit card payments. So, as you can see, we can make it theoretically. I'm just not sure how we're going to get the money together to purchase a second car to replace the one we'll be giving up. We'd really like to keep the house, and I am hoping that job raises and the possibility of me being able to work part-time as my condition improves with treatment will make that possible.

I was thinking that we could consider getting behind on the mortgage by a month or two, and then begin paying again and just stay 30 or 60 days past due until our financial situation gets better in order to save some money for the attorney and a second car. Now, I understand mortgage companies won't let you do this and require that you pay everything to get caught up, rather than just tracking you at 30/60 days late like CC's do. So, we're stuck. We've never missed a mortgage payment in 16 years, so we'll continue to make those on time. I don't want to chance having our bk thrown out because we got behind on the mortgage.

So, we are back to the original problem: how do we save up for a second car and the attorney's fees? I'm seriously considering Pro Se and making due with one car for the next year...

stop paying your credit cards and save the $1500 u spend monthly to pay them

[Wantmypeace]

That budget DOES NOT include paying the credit cards. I had income to cover the credit cards and car payment until this month. As of Nov 1, the budget I've shown will be my new income and expenses. There is nothing left over because I've lost my income, and we will be living ONLY on my husband's income.

[debee]

I think your housing situation is going to give you problems. If I were in your shoes, I'd get a lawyer.

Bag lunches, cut out meat except for hot dogs once a week, or whatever you have to do. Get a lawyer and make sure you can pass the means test in a way that a trustee will accept.

Take your proposed budget with you into the lawyer's office along with the documentation you're going to need to back up your gas bill, pg&e bill, doctor copays (how many visits per month is that anyway? we have two people in our family with chronic life-threatening illnesses and we don't go in that often ...), and see what the lawyer says about your budget.

That's just what I would do if I were in your shoes.

[Wantmypeace]

That is what I want to do. My preference is to be able to hire a lawyer; I'll figure out a way. I was just hoping someone could give me answers on the mortgage issues and whether missing a few payments on the third would cause problems if I stayed current on the 1st and 2nd.

As far as the co-pays, my youngest son has Tourette's Syndrome and is bi-polar, so we have therapy copays at 30.00/pop, plus med checks every month. 100/mo is a low estimate, actually.

[LaurieM]

I appreciate where both of you are coming from. I'm just a little confused. We're definitely not trying to commit fraud of any kind, nor are we trying to hide anything. I don't want to do anything that is not within the law. We don't know if we'll be able to keep the house or not. Here is the breakdown of our expenses:

Net Income: 6800
Mortgage(s): 3250
Groceries: 1000 (family of 5 and includes ALL household supplies)
Clothing: 200
PGE: 650 (yes, this sounds high, but we're on a level payment plan with them and have been paying this amount for years. Our house is not huge--1700 sf--but it is old.)
Tithe: 100
School Lunches: 50
Garbage: 35
Cell/DSL/Home: 200
Cable: 70 (on contract)
Gasoline: 600 (live in country and have to drive 20 mi/each way to work/town)
Auto Ins: 135
Life Ins: 65 (Thank God it was in place before diagnosis!)
Doctor Co-pays: 100
Prescriptions: 100
Gym: 60
Auto Maintenance (oil changes, etc.): 50
Savings for Auto Repair/Registration: 50
Savings for Household Repair: 50
School Expenses/Kids: 50

As you can see, this puts us just barely breaking even each month. Extra things like haircuts, etc. come out of the grocery fund. This is WITHOUT the 400/mo car payment on the car we're going to give up and the 1500/mo credit card payments. So, as you can see, we can make it theoretically. I'm just not sure how we're going to get the money together to purchase a second car to replace the one we'll be giving up. We'd really like to keep the house, and I am hoping that job raises and the possibility of me being able to work part-time as my condition improves with treatment will make that possible.

I was thinking that we could consider getting behind on the mortgage by a month or two, and then begin paying again and just stay 30 or 60 days past due until our financial situation gets better in order to save some money for the attorney and a second car. Now, I understand mortgage companies won't let you do this and require that you pay everything to get caught up, rather than just tracking you at 30/60 days late like CC's do. So, we're stuck. We've never missed a mortgage payment in 16 years, so we'll continue to make those on time. I don't want to chance having our bk thrown out because we got behind on the mortgage.

So, we are back to the original problem: how do we save up for a second car and the attorney's fees? I'm seriously considering Pro Se and making due with one car for the next year...except my husband's job requires that he have transportation accessible at any given time in the day, so I would be unable to take the kids to school, doctors, get groceries, etc. This is not doable...

Looking at your expenses, the biggest concern that I'd have is that your mortage is almost 50% of your income. Even if you discharge all the unsecured debt, with housing costs that high, it won't take long before you're right back to where you started before filing. For life to be better post-filing, you need to get to the root of the problem... right now that's housing cost for you. Only two things change financial situations - decrease in expenses or an increase in income. What will change for you (in terms of the expenses you have in this schedule) after you file?

[Wantmypeace]

That's a good question, and I don't know. If I get better, income will increase. If not, I *could* get disability, but that *could* take years and is not reliable. Objectively, it looks as though we need to let the house go.

BUT, we need the mortgage payment to qualify for the means test. Without it, I don't think we have a chance.

So, my "punt" is to TRY to keep up, and AT LEAST get through the bk, and then re-evaluate whether we should keep the house or not. In 6-10 months, we'll have a better idea of whether our income will improve. If it doesn't look like it will, then we could walk away from the house at that point, couldn't we? At least, then, we will have TRIED to keep the house and be completely on the up-and-up with our trustee about keeping the mortgages.

[Poorhouse64]

"wantmypeace's" looks very similar to mine prior to filing BK. Living in the country and the price of gasoline is a BIG expense. Family of 5.....AND a house payment 50% of monthly income. I completely agree with LaurieM......the house payment is too big. We are living this problem now too after BK discharge. The house is too expensive and it always was..... and we're just as broke as we were before. We chose to "stay and pay" and not re-affirm the mortgage ONLY because we have 3 kids....in school...doing well. Where would we go? Find a rental? We're afraid of ending up homeless, so we "stay and pay" but we CANNOT afford it. We can't help our kids with college tuition (so one of them doesn't go to college anymore) we can't help the kids with buying a vehicle (so I drive them to work, to high school, to the local college...... living in the country everything (school, groceries, etc) is a 45-60 mile round trip every day)...... I hate this house but I'm afraid to leave it. And with all the driving I have to do....I have no life. I wish my husband would let us walk away from this house, but says he's already "lost" all that he intends to lose financially....... ha ha this house is never going to worth what we paid for it in 2007..... in the meantime, I'm a taxi, guilty-feeling Mom and flat broke..... God Bless the American Dream...... phhht

[Wantmypeace]

Poorhouse64, THANK YOU for reminding me that I'm not the only one in this particular situation! My husband is very hesitant to walk away from the house, also, and I get it, I'm just not sure how we'll manage.

Did you file pro se, or did you use a lawyer? Any problems with the expenses you had to claim because of living in the country, etc.? I really appreciate your help!

[Pandora]

Here is the breakdown of our expenses:

Net Income: 6800
Mortgage(s): 3250
Groceries: 1000 (family of 5 and includes ALL household supplies)
Clothing: 200
PGE: 650 (yes, this sounds high, but we're on a level payment plan with them and have been paying this amount for years. Our house is not huge--1700 sf--but it is old.)
Tithe: 100
School Lunches: 50
Garbage: 35
Cell/DSL/Home: 200
Cable: 70 (on contract)
Gasoline: 600 (live in country and have to drive 20 mi/each way to work/town)
Auto Ins: 135
Life Ins: 65 (Thank God it was in place before diagnosis!)
Doctor Co-pays: 100
Prescriptions: 100
Gym: 60
Auto Maintenance (oil changes, etc.): 50
Savings for Auto Repair/Registration: 50
Savings for Household Repair: 50
School Expenses/Kids: 50

As you can see, this puts us just barely breaking even each month. Extra things like haircuts, etc. come out of the grocery fund. This is WITHOUT the 400/mo car payment on the car we're going to give up and the 1500/mo credit card payments. So, as you can see, we can make it theoretically. .

Hi Wantmypeace -

Just want to touch base on your schedules / budget amounts.

Income: $6800 - does that include your health insurance taken out?

Mortgage: I think there's going to be a huge issue with your mortgage given its nearly 50% of your income.

Gas: your amount of $600 per month for driving 40 miles daily is HUGE - especially if you only have 1 vehicle (since you are giving the other one up) - but even if you kept it - $600 is going to be questioned I think. My husband drove 130 miles round trip to work every day and we were allowed no more than $400 in gas a month between 3 vehicles; however our budget only supported $245, given I dont work, all the gas money pretty much went to him. We also live in the middle of nowhere - and its about 17 miles one way to the nearest store, so I understand.

Medical: you have at $200 a month for copays and medications. Does this include any deductibles you have to pay a year for either, if applicable? If not, you need to add those in.

Electric: $650 a month - Ouch. Thats a budget amount? Holy crap! Have you had your meter checked to ensure its running properly? I would definately look into sealing up all cracks, plastic on windows if necessary, and using humidifiers in your home during the winter in order to cut back on the heat (it warms the house up by adding moisture).

Car: Where is your other car? Is there a payment or do you own it outright?

Groceries: $1,000 a month for a family of 5 seems okay, but if you have pets - you need to really look at how much they cost. Vet care should be separate. So should personal care (haircuts, drycleaning, etc)

School lunches: $50 a month - for how many children? We pay $2.15 for lunch for 1 child here in VA - so basically $45 a month covers lunch if purchased every day. I pack my sons lunch one week, then he buys one week - however the cost of packing add's up as well and was worked into the grocery bill. Make sure you account for that.

Clothing: $200 seems reasonable enough.

Car Insurance: Have you accounted for your rates possibly going up once you file? I dont know if CA is a credit profiling state or not, but something to think about. You also say you're giving up a car, however you want to replace it with another one - so you need to factor in the year/make/model of car. Insurance does go up based on that as well.

House Maintenance: I think $50 is too low - realistically $100 a month is pretty standard - we claim $70 or 75 (cant recall at the moment) think if your washer breaks down or freezer - just to get a repair person out is about $40 an hour - if you have to replace it... ouch.

Car maint: I think $50 is a bit low - I'd raise it to $70-75. Oil change and tire rotation every 3K miles for us runs about $55-70 depending on which vehicle. (our hybrid and F250 cost more).

Do you have AAA or any newspapers you subscribe to?

Think about everything you purchase / pay for in a years time - go back through your check book and ensure you account for everything.


I think in your particular situation given you owe more to your 2nd than your 1st - you really need to talk with a lawyer to find out what exactly can happen and what your best options are at this point. I noticed you were talking about doing this Pro-se. I would not do that in this instance. Your 2nd can foreclose if you dont pay them, your 1st can foreclose if you dont pay them - so you're in a tough spot, especially since nearly 50% of your income is going to a house that is upside down by huge amounts. Factor in your electric costs of $650 a month on the budget cycle and - you're in nearly 4K in a mortgage! I'm sure you can rent a house for much cheaper - and even be able to save some money in the long term.

Also remember that the lookback period is 6 months of income - so even though you just quit working, your income will be included in everything.

[AngelinaCatHub]

Well now that I've blown my post away with this silly touch pad, let me try to repost my thoughts.

First an apology to "debee" for my post #3. Now that I see the whole picture of our host, it is clearer to me.

My opinion is that "WantMyPeace" should jump in and file ASAP as well as get a lawyer first no matter what bill has to be dropped. Things are not going to heal without action and we were blessed with a kind Trustee with all the mistake we had made, and got through this. It would be better to get this over. If it were me I would let the house go for sure, far too much money for that payment. Stay in it as long as possible as the trend is slowing for foreclosures as there are a glut of empty places. there must be 50 empty houses within a five mile radius of us. For sale signs look like forests in our County.

It is a buyers market for houses and the OP could possibly buy 'contract for deed' after having to leave the current house. I've done this and it does not obligate you to a mortgage, but once paid off, a warranty deed is presented.

This applies to 'poorhouse64' as well.

Just my take on what Pandora's outline looks like. 'Hub