curious about underwater mortgage and little debt

[maiabon]

a little background...I am married with two small kids and a husband who is in school and a stay at home dad. I am the only one working with a pretty secure job making a little less than 100k.

We bought our home at the end of the bubble only to find out that the home we purchased is on the outskirts of a bombing range. To make a long story short...we owe 305000 and the house is worth 232000. We are ineligible for a class-action suit and pretty much have been denied representation from most local attorney bc the non-disclosure case is too hard to prove. We want outta of this hell hole immediatley and are thinking of walking away.

I have met with two attorneys about filing. One told us we would have to do a 13 while the other told us we fall in the gray area for a 7. We have two cars which my husband cosigned with me totaling about 24000. No other debt.... I would like to keep making my payments so that he will not be affected. We also have a joint savings with I am guessing will be taken if we file anytime soon.

This is all very new and overwhelming to us but seems to be our only way out of this house without being sought after for a deficiency judgement, we live in Florida. Any advice or input is much appreciated.

Oh, I was also wondering if they take your household items (tvs, appliances etc) when you file?

[lrprn]

I have met with two attorneys about filing. One told us we would have to do a 13 while the other told us we fall in the gray area for a 7.

Since you will be above the median income for every state, no matter where you live your case is going to be examined closely if you file Ch 7.

You need to meet with at least two more experienced bk attorneys in your area who file a number of both Ch 13s and Ch 7s. It's certainly possible to file Ch 7 even with a high income - it depends on the state you live in and the local customs and legal interpretations of your local bk court.

You say you live in Florida. We have multiple FL members posting currently - hopefully they will step in here and provide their insights on your situation.

We have two cars which my husband cosigned with me totaling about 24000. No other debt.... I would like to keep making my payments so that he will not be affected. We also have a joint savings with I am guessing will be taken if we file anytime soon.

How much do you owe right now on each car compared to the loan amounts you owe on each? Also did you purchase either car more than 910 days ago?

How much do you two have in savings right now? You *may* be able to protect most or all of it with your Florida bk exemptions. This is a great question to ask during your free initial consultations with the bk lawyers you interview.

If the amount is too much to protect with FL exemptions, then most bk lawyers will recommend that you spend the savings down to what can be protected before filing. You need to be very careful what you spend the money on - the lawyer you retain can advise you about what's safe to spend on if you do need to reduce down to what you can keep.

Oh, I was also wondering if they take your household items (tvs, appliances etc) when you file?

Florida's bk exemptions should protect all your household items. They will be valued at their current worth - not what you paid for them originally. Most lawyers recommend valueing your household belongings at garage sale or eBay values.

Keep in mind that if you have valuable jewelry, art, furs, antiques, and other luxury items may make keeping those items more difficult under your Florida exemptions. Add this question to your interviews list to get the lawyers' insights here. If you don't have any of these items, then the chances of losing any regular household items is very, very small. Used household items have little to no resale value even if your trustee was to take any of them because they can't be protected with exemptions.

[maiabon]

Thanks for your insight. We owe 9000 in which we originally financed 21000. On the second we owe 15000 and the loan balance is about 15795. We have no valuable items that I can think of. If we filed a Chapter13 and we surrender the house, would we just keep making payments as usual on the car until it is paid off...then the whole process would be over since there is no more debt?

[lrprn]

Thanks for your insight. We owe 9000 in which we originally financed 21000. On the second we owe 15000 and the loan balance is about 15795.

If your cars have no equity (it's hard to tell about the first one from the way you explained it), they should be safe. What are the monthly payments for each? Are the payments typical for your area of FL?

If we filed a Chapter13 and we surrender the house, would we just keep making payments as usual on the car until it is paid off...then the whole process would be over since there is no more debt?

The key whether Florida allows you to surrender the house after filing but still keep the mortgage payment on the Means Test and Schedule J. It's best to ask the lawyers you are interviewing about this.

If there's one thing we've all learned during each of our bankruptcy filings, never assume anything! Always clarify questions with your lawyer and get sound legal advice before and after filing before doing anything, especially if you are filing soon.

[BCA2009]

I am certainly not the most knowledgable on this forum, but I'll give you my thoughts anyway.

If you make close to 100K, it's going to be hard to pass the means test, unless you have "unusal expenses", like high recurring medical expenses.
You need to complete the means test to find out how close you are to passing.

Assuming you don't pass, I'm not sure if a Chap 13 is the way to go. At least not at first. Since the goal is to get out of the house, the only debt you are trying to get out of is the deficiency. Most us have alot of consumer debt that we also need to shed and we unload the upside down equity in our homes while we're at it.

I would consider quitting making payments on your home and start building up savings. If you aren't making payments on your home, could you stand to live there a little longer or do you just want out immediately no matter what?

Either way, it could be along time (if ever) before your bank sued you for a deficiency judgement. And when/if they do, then file for Chap 13 or try to settle (if you have saved up some money by not making payments.


From what you have told us I don't see any benefit to filing Chap 13 right now.

Maybe someone else with a similar situation will chime in and give more advice.

Good Luck!

[maiabon]

I thought about that as well...but then I though okay if I am going to foreclose, then I may as well file for bk seeing as my credit will be shot anyway. And then in addition to that I have to wait for like 5 years hoping that they will never file suit. When I do the online means test it says that I can file a 7, but I am not sure I am filling in everything right. The car part really confuses me. I have two cars but it asks about operating expenses or something like that. I just chose two for both categories since i have to cars. !??! this is allsoooo confusing to me.

[sofarsogood2]

Gotta run, but will come back to this thread. What part of FL? I ha a great attny. Your case sounds somewhat similar to ours. I'll get back to you soon.