The Decision & the Beginning

[Mom2Grlz]

Need some re-assurance.. Scared!!

So here is the story:

In 2002 we built a home for $116,000. In 2004 ish the Market increased with a value on our home of $219,000. We refinanced (stupidly) for $175,000 to take equity to upgrade things & payback $7,000 to Honda for voluntary repo...

We lived in the home, so wasn't a big deal.. After having a baby in 2005 and then again in 2007 we decided we may need a bigger home. We held off, but in 2009 the value of our home decreased so bad everyone started leaving their homes. In return the neighborhood got bad.. We didn't want our kids going to the school system there, we decided since the market was low to buy another house, with the intention of renting out the other one. We did, and moved in July 2009. We've been renting since for 1/2 of our mortgage payment of 1200/month. Thus paying into this mortgage each month.

After receiving our taxes, the market value this year has decreased to $58,000. With the balance on this mortgage now $169,000 ( upside down over $100K).

So here it is: for 6 months we've gone back/forth regarding letting the house go.. Since we have NEVER missed a payment on anything I was scared. We met with a lawyer talked about everything & decided. We had to do something, this house was draining us, physically * financially and we will never recover. Our renters lost their jobs, and can no longer payus rent, thus leaving us with two mortgage payements. So my husband & I decided to stop paying in December. In January I got the first collector call & I was sick to my stomach with the decision we made.

So we met with a BK attorney to get another opinion vs. the real estate attorney we seeked 1st. Confused and Scared, I was now told completely different outcomes. With two young kids, and cannot afford to play around with my finances. Or to take "just wait & see what happens" then proceed... I just cant do it.

So here I am: I have put together all areas of the questionaire, assets, liability etc. I am two days max, from copying it all out & mailing my attorney to await his response. I am scared & everyday I wonder "is this the right decision". I am stressing over what the payments could be, and how we would live on a strick budget. We are used to doing whatever we want.

Someone~ please give me your thoughts... I haven't even started the worst of it, and I already am having doubts again. Since we are now 3 months deliquent on the Rental Property, we know we have to just push ahead, but the other side is telling me.... "
What if this is the wrong decision"?

So Overwhelmed...

[momofthree]

I'm thinking you probably have a good chance of qualifying for a ch.7 bk. Dump the rental property and get a fresh start.

[Mom2Grlz]

I'm thinking you probably have a good chance of qualifying for a ch.7 bk. Dump the rental property and get a fresh start.

Since our income is above median- we only would qualify for 13

[ValleYum]

Your income can be over the median and you can still qualify for a Chapter 7 if you pass the Means Test!!! With children and expenses, it would seem as though it should be possible. We were above median and had no kids and still made it through a Chapter 7 filing.

There are several online versions of the Means Test you can run your figures through (just so you can breathe a little) and if you have the stuff ready to go to the attorney - just read and follow the instructions on how to fill in the blanks. Here is a link to one here: http://www.legalconsumer.com/bankruptcy/means-test/

There is lots of help to be had on here too!! Read, read, read and ask away!! I wish you so much good luck!!

[Mom2Grlz]

Thank You for the website... I quickly looked at it, and can't wait to look around further .... Our attorney, was the one who told us the 13 was the only option... I sure hope he was right. Or now I will be crazy questioning the qualifications of our attorney. We only got one consult, b/c his reviews were good.

Oh - this is going to be a long haul.

[puggymoo]

I disagree with the with and see and so did our attorney of 35 years. Protect yourself and surrender the home. Maybe your bank will agree to a DIL instead of waiting so long to foreclose. We were almost as bad in our house but paid 200k and now its worth 89k. We had 2 short sale offers but bank rejected them. If you can qualify for a 7 that is better. The stress and waiting for all the claims to come in on a 13 is horrible.

[Mom2Grlz]

When u say surrender, u are talking about going forward with BK vs. Just walking away correct. I have to protect my family, and I can't take the chance of foreclosure then the bank coming back with a deficiency judgement. Florida is a recourse state, and they can garnish wages etc....

The more and more I read I think BK is our best answer at.this point??? Just concerned with 13 since I was told we can't qualify for 7... I guess 5 yrs is better than 30 on a home worth nothing.

Thanks everyone - keep ur post coming! !! This site is great, so glad I found it.. and there are so many who are beginning, 1/2 way through and alley done. I am hoping for that light soon. ;)

[ValleYum]

For a family of 4 in your county in FL you would have to make more than $5,340 per month (gross) to be over the median. Annual income would have to be over $64,084 (gross).

Then, if you are over that amount, comes the Means Test.

There are deductions from sets of tables for housing, utilities, food, out-of-pocket medical, etc. These "set" deductions for your county are $3,024 per month.

Then you also deduct actual expenses like childcare/preschool, payroll taxes, union dues, mandatory retirement, medical insurance premiums, medical over the standards, etc.

Then comes the some info that has to be computed based on some specifics. Do you have a mortgage on the house you are living in - is it more than $859 per month with insurance and taxes? Do you have cars? 1 or 2 cars? Car payments? Are your cars newer (or older than 6 years) or do they have high miles (more than 75k) on them?

You have plenty of time on this 2nd house before they get a deficiency judgment. You just are 2 payments behind and in FL, I think it will be a bit longer before the bank issues your Notice of Default and even longer before they could get a deficiency judgment against you for any unpaid auction amounts. You could even file a bankruptcy then as opposed to now.

Do you have credit cards? If you do, they will all be canceled in a bankruptcy so paying the bills for them now is like throwing money away. Do you bank at a credit union? Wells Fargo? Wachovia? Did you get a tax refund? Have you spent it? Do you have a savings account? These are important things to know about/know what to do about before going into any BK.

Don't rush into a Chapter 13 - take a week and research your options online and maybe with another free consultation - many people are surprised. If you want to, go on and let the attorney have your numbers because it will take them some time to fill out forms, etc. but don't sign anything until you are 100% sure you can't qualify for a Chapter 7.

I am not a lawyer - but I am at the last bit of our journey through the process of BK itself - recovery comes after - and being over the median income and having no children at home we thought we would never qualify. But we did. Just make sure to take the time to make sure a 13 is your only BK option.

[Mom2Grlz]

WOW!!!! Thank you. Where did you find all that info... I might just need to seek another consultation with a different attorney!

[ValleYum]

WOW!!!! Thank you. Where did you find all that info... I might just need to seek another consultation with a different attorney!

From reading here and from the Means Test link I gave you earlier in the thread. I just entered a random zip code from your county in FL.

Lots of folks here to help. Read and learn. Take a few days for yourself to do this.

[Mom2Grlz]

Thanks again. I have my night planned out for me

[puggymoo]

Yes i'm saying surrender in chapter 13. There are alot of other people who say wait and see if they come after you. I'm a firm believer in Murphy's Law(whatever can go wrong will). We fired our first attorney because he had the same attitude and told us to let go of a 2 secured loan(fifth wheel and atv's). They immediately sold them and we owed 51k so we had to file. Now that same credit union did a charge off instead of filing a claim. Our house has until Sunday to file a unsecured claim. We surrendered in November and they did not object to the surrender or anything. Our paralegal said because they didn't object to the payment plan inwhich they were not going to get anything then they don't get anything.