keep the home?

[jenbes27]

Hello to everyone. I have been a lurker and am finally able to ask my questions.... Here is my story

370K mortgage (no equity)
19,000 401k loans
2,000 school loan
12,000 income taxes due this year
11,000 car loans (2 cars)
128,000 in unsecured loans and credit cards

We built our dream home last year, which turned into a nightmare with the builder. Dragging out the process 6 months longer than expected. we ended up settling all the problems with the builder and got to move in December. (accounts for about 1\3 of the unsecured debt)

Also during this time we accumulated about 2\3rds of the above unsecured debt in what seemed like a good investment in stocks (dividends). We also had about 35k of savings in this stock. Well the stock tanked and now we have nothing and cannot make the unsecured debt payments. (yes - this was incredibly stupid and risky, but seemed like a good idea at the time)

I can (barely) afford to pay all of the secured debt monthly payments, including some sort of payment plan with the taxes.

If I take the means test, we actually do pass because of the amount of the secured debt, primary debt, and our 3 kids and daycare expenses.

Question is, can they force you to sell your home so that you can fund a CH13 plan?
I talked to an attorney who said no one is interested in my home.
The attorney has not run a means test yet, I am hoping we would be allowed into a 7 because it seems the 13 does set people up for failure - five years is a long time.

I am worrying so much right now, I can't imagining worrying for 5+ years!

Thanks!

[BKTango]

First question... can you afford your home without paying on the unsecureds? The taxes, student loans and such are of course non-dischargable so if just the unsecureds are out of the picture can you still afford that home? If not, or if you even remotely think it will be tight, you might want to rethink your living priorities. I am by no means trying to be rude, just practical. On that note, in a chapter 7 in order to keep your home/car/secured item you must be current with the payments AND it has to fall under the exemptions allowed. You did not mention the state in which you live, if you give that info someone on here can help a little bit better. Depending on which state you live in and if you have to use state's exemptions or if you have a choice of state or federal will play a big part of you being allowed to keep your home.

[jenbes27]

Re

No offense taken...

Yes, I can afford the house, and the secured debt. Although it would be tight for the next couple of years. I cannot afford the unsecured debt payments.
I am current on everything except this month we stopped paying the unsecured debt.

We live in Ohio, however there is little if no equity in the home (last appraisal was for 390 and was probably inflated anyway as we were trying to get a heloc to consolidate this debt). The housing market stinks right now, doubt we could even sell it for what we paid for it.

I also would not like to move as we have already moved twice in the last year. It has been extremely stressful and I would like to just settle down. We were planning on staying in this home for the next 10 years or longer. We just made an incredibly stupid financial move in the middle of a very stressful time in which we were juggling too many responsibilities at one time.

I am worried that they would say the house payment is too high and we would have to move so that we could pay more to the unsecured. Where would we move too? We couldn't get approved for another mortgage now and who rents to people in bankruptcy and for what price? I do worry a lot.

[SamanthaJones]

Keep your house at all costs if you can.

You built it, and things are getting worse financially for everyone. Gas will be 3 bucks, the stock market, jobs declining, etc. You simply must have a haven from the madness of the world (Consider even briefly all of the money it actually cost you to get into that house- if you leave it's a total loss, with no certainty that you will ever be able to obtain another?) Anyway- the costs to sell your house would be minimum $40,000- if you have no equity, it'd be a total loss for anyone to try to take it from you.

[keepmine]

The primary goal of bk is a fresh start. Don't encumber that fresh start by hanging on to a house with negative equity. A $370K mortgage will eat you up in a declining real estate market.

[Minnymouth]

If the home you are trying to keep is financially draining you down and more than you can really afford, you are doing yourself an injustice by trying to hang on to it........

Think positive - you want a "fresh start" - and that doesn't mean hanging onto something that now you cannot afford........

Minny

[inseriousdebt]

Means test in this situation...

How does the means test work in this type of situation....I am curious if you give up the house, is that amount still included on the means test to see if you can file chapter 7? If not, how does this work if you don't even know how much it's going to cost you in the future to rent or buy a new home?

I am so lost on what they do on the means test with this. We are kind of in the same situation, and our mortgage is going to turn into an ARM come this next December.

[SinkingFast]

How does the means test work in this type of situation....I am curious if you give up the house, is that amount still included on the means test to see if you can file chapter 7? If not, how does this work if you don't even know how much it's going to cost you in the future to rent or buy a new home?

I am so lost on what they do on the means test with this. We are kind of in the same situation, and our mortgage is going to turn into an ARM come this next December.

You can actually amortize forward, contractually liable debt, over the next 60 months when you complete the Means Test even tho you surrender the underlying property. That was an Opinion/Decision that was rendered quite some time ago.

I have to agree with Keep on this one. The purpose of BK is a fresh start. If you're thinking you're gonna be tight for the next couple of years based on raises you anticipate coming,................. Then don't do it.

Your company, or your spouse's, may go into a wage freeze at any time. Hubby was due for a raise the beginning of December and it did not come. An across the board wage and hiring freeze.

Either one, or both of you may be laid off. Been thru that too.

I know moving is a pain. We moved 600 miles in Aug '05 and moved again, across town, in June '06. You do what you've gotta do to live within your means.

PLUS,............ If you file BK now without officially reaffirming the mortgage and have to let the house go at a later date, you'll have 2 negative events on your Credit. Letting the house go now, during BK, will be viewed as 1 negative event to prospective Creditors in the future.