Looking for some guidance and useful opinions.......chapter 13

[kchap311]

Hi I am looking to file a chapter 13 soon and wanted to explain my situation and get some opinions from others. Before my wife and i married, I bought a condo in 2005 and then i borrowed against it in 2006 to put the 20% down on a second place, and then again borrowed against it in 2007 to, again, put 20% down on a THIRD condo. So on the first place i have a 114k mortgage and a 106k HELOC totaling 220,000. Fast forward to today's market and here is how things have played out:
1st condo value 90k, 1st and 2nd mortgage total 220k so upside down @ 130k
2nd condo value 120k, 1st mortgage total 209k so upside down @ 90k
3rd condo value 70k, 1st mortgage total 195k so upside down @ 125k

I am considering a ch 13 because we want to keep the condo we currently live in and our savings account and vehicles.

So i am sitting at 345,000 upside down in my condos and that's what is pushing me towards filing a chapter 13. All of these condos were initially slated as primary residences and therefore nonconsumer chapter 7 is basically out of the question. All of the condos are in my name only and the attorney i chatted with said this is a good thing as her credit and accounts with her name only cannot be touched or investigated. We both work and have stable income and therefore it seems chapter 13 is the route we will need to pursue. I have several questions as i have never been through something of this magnitude. Also we have no credit card debt, my wife has no other condos or debt in her name and the condos mentioned above are the only debt that i am carrying.
The attorney i talked with mentioned that our savings account, which is the only equity we currently have, is what our payback schedule will based upon. She also mentioned that only half of that account would be eligible for the assessment as half of it belongs to my wife because we are married and therefore can not be considered. One of my questions is: before i file a chapter 13 should i begin to shuffle funds to the account bearing only her name to keep them safe from this payback assessment? I am basically trying to get "my house in order" before i file, so i have many questions. Thanks for the patience. I made these choices in a booming housing market and i was single and thought i was bullet proof and i was fearless. Now i have a wife and a daughter and need to make better business choices for the future of my family.

[lolly78]

A friend of mine went through a similar situation. He originally filed chapter 13 to keep the properties however decided to surrender them, so his plan was modified to surrender both properties and because he had no other debt all he had to pay was the attorney and the trustee so he was done within a few months. In your case, you could probably do a 13, surrender the properties and do a lien strip on the first property. I would stop paying the 2nd mortgage on the property you are keeping if you are sure you will file, plus I would stop paying all the other notes on the properties you are surrendering as well (you can continue to collect rent until discharge).

I was able to get a free comparative market analysist from a realtor to determine the value of my home, some folks get appraisals but they are expensive. In my case the bank that held my second mortgage never even filed a claim, so they are not getting any money back. Since this will be the only debt in your plan, if they don't file a claim all you will have to pay is the attorney and trustee.

Also, don't shift any cash around, it may look suspicious to the trustee. While the amount of cash is taken into consideration, your payment is based on your disposable income. If your savings is more than $130K the attorney has a point, but if it's not I don't see an issue.

You can try to do things to reduce your disposable income, like buying new cars that will last through a chapter 13 for 5 years.

I'm no expert here though, just my observations after going through my own chapter 13 over the last year!

Good luck to you!

[kchap311]

I'm not necessarily "shuffling" money to her account, we are just separating our income. She currently has her check direct deposited into our joint account. Soon we will be opening an account with just her on it and she wants her check deposited to that account. All of our bills will be coming from our joint account, and therefore solely from my check. We are doing this to lower our disposable income. Does it make sense to go about it this way?

[lolly78]

Even if your wife doesn't file with you her income is still factored in when calculating your DMI. If she wants to have her income go to a separate account that's fine, and it's kind of what my husband and I do. His check pays the majority of the household expenses and the mortgage. My income covers the chapter 13 payment and my car note.

[kchap311]

We were also told by this attorney that when the trustee is determining what our payments would be that only half of our savings could be considered as equity because half of it belongs to my wife seeing as we are married and her name is not on the debt that is being considered for chapter 13. Is this correct? Lolly could this differ between states? I am in Colorado.

[lolly78]

Well the trustee doesn't determine your payment. You will sit down with your attorney and provide all your income and expenses and come up with your DMI and submit your plan to the trustee. They may come back with changes, but it shouldn't be far off from what you propose. If the trustee agrees with your plan, most likely the judge will confirm it. The part about only half of savings being considered as equity does sound right. I would check with a few more attorneys though for free consults. They will be the most familiar with your local rules. So your wife's name is not on any of the properties, not even any of the second mortgages?

[kchap311]

I made all of these moves prior to us dating and then eventually being married. So no, her name is not on any of them at all.