BK question?

[JACOBLANE]

I purchased home in 04 for 280k, really was more than we could afford, could make payment if no unexpected things came up, however they did! since last October we have been on numerous 6mo repayment plans, have never caught up 1st mortgage. Regular payment is 1900, 2nd is 600, we been paying anywhere from 2200-2800 per month on different plans. Lender called last week, said our account just went to foreclosure because we missed Aug repayment agreement, However she said will call back this week see if we qualify for modification. Our debts include 220k first mortage, 55k 2nd, car lease, car pymt, about 50k credit card debt. Income is 100k a year, if we include all debt, we are about 600 negative a month. My income is going up, should be 120k next year,I truly feel if we could get our mortgage past due caught up, we would be o.k. However if my lender doesn't cooperate, what are my options. We are about 4500 behind. Would we qualify for a ch7?, would it wipe the slate clean? It seems to me if you are going thru all the pain and shame of a bk, why go chp 13, where you still have to pay everone. It may be just as easy to keep dodging and negotiating with creditors on your own, than file chp 13. Any help would be appreciated!

[HHM]

With that income, unless you are a HUGE family, odds are you above the median income for your state and thus couldn't file chapter 7 anyway. Moreover, if your goal is to SAVE the house, then you can't go chapter 7 because there is no mechanism in a chapter 7 to get caught up with payments. If you go into a chapter 7 behind on your mortgage, the bank simply forecloses. Thus, in any event, sounds like that chapter 13 would be your only option. And frankly, chapter 13 is not a BAD option...sure, a chapter 7 would be nice, but the law is not written to allow anyone to file chapter 13.

Based on your income and your implied goal to save the home, you cannot file chapter 7.

[CityGirl]

In a chapter 13, you will pay less to your unsecured creditors in most cases then you do now and you really don't have any other choice. Call an atty and see if you can talk to him about options. The sooner, the better!

[JACOBLANE]

Does it sound like we will qualify for a loan modification? My income is going up, however my paycheck stubs right now of course are still a bit less than needed. Should I be negotiating with foreclosure dept or someone else in mortgage co. If I could get first mortgage pymt back down under 2k I wil try to road it out. I would be so embarrassed if I filed BK, I would probably move out of my home anyway, what would the neighbors think, lol! Seriously, I'm gonna try like heck to keep my house, but if I go B.K., I will try to downsize as much as possible. With my income, and few debts, could build quite a nest egg renting for a while. One lesson hard earned, I will never borrow again except a traditional mortgage, and will never be a slave to credit card companies ever again. I hope to go the Dave Ramsey(financial writer) way from here on out! Credit card companies are horrible. Anyone who will make collection calls on x-mass eve is ruthless. I will have no sympathy for the credit ard companies if i go b.k. I crack up when people want to go out and get a credit card right after b.k.. wow! I have had enough pain! If I do go b.k., never again will I own a credit card! ! The borrower is truly slave to the lender. Thanks for the help!

[CityGirl]

What will you tell your neighbors? I bet 1/2 your neighbors filed or know someone who has...and who has to tell them. You just move because you don't need a big house....or several other reasons. Filing BK is relief....think of it that way and you'll live and breathe much easier...

[sickandtired8]

Does it sound like we will qualify for a loan modification? My income is going up, however my paycheck stubs right now of course are still a bit less than needed. Should I be negotiating with foreclosure dept or someone else in mortgage co. If I could get first mortgage pymt back down under 2k I wil try to road it out. I would be so embarrassed if I filed BK, I would probably move out of my home anyway, what would the neighbors think, lol! Seriously, I'm gonna try like heck to keep my house, but if I go B.K., I will try to downsize as much as possible. With my income, and few debts, could build quite a nest egg renting for a while. One lesson hard earned, I will never borrow again except a traditional mortgage, and will never be a slave to credit card companies ever again. I hope to go the Dave Ramsey(financial writer) way from here on out! Credit card companies are horrible. Anyone who will make collection calls on x-mass eve is ruthless. I will have no sympathy for the credit ard companies if i go b.k. I crack up when people want to go out and get a credit card right after b.k.. wow! I have had enough pain! If I do go b.k., never again will I own a credit card! ! The borrower is truly slave to the lender. Thanks for the help!

Who cares what your neighbors think? How will they know anyway. I would not only walk away from a house with that size payment, I would run. Why be a slave to a house. Get something you can comfortably make payments. I am sure it doesnt have to be a mansion. People out there with alot less have done it. S&T

[JACOBLANE]

posting b.k.

Actually in my town, they post b.k.'s in the newspaper. It's easy to say who cares what neighbors think, however I think it's human nature to care, how will kids treat your kids if they know, people are pretty fickle. I'm more worried about how it will affect my family than myself. Anyway thanks for the advice!

[JRScott]

You wouldn't qualify for a chapter 7 based on the information you've given the best you could hope for is a Chapter 13.

I cannot be sure how the company will look at refinancing.

I see your a fan of Dave Ramsey's. I enjoy his programs and wish I"d stumbled upon them as a younger man. (I was graduating high school when Dave filed for bankruptcy).

First it sounds like you've had a problem prioritizing in the past. Have you been paying visa and mastercard before the house payment? Given 50k Credit card debt that's around 1500 minimum in just Credit Card payments, so if you are under 600 a month after paying everything that tells me your using the cards to rob Peter to pay Paul.

Okay so I'm thinking that means after meeting necessities you have around 900 dollars left, which is obviously not enough to pay all your credit card bills each month.

Given your large amount of debt and the fact you are behind it is going to be a hard sale to get a refinance. It is not impossible. Depends on the housing market in your area. If there are a lot of houses sitting not sold on the market then they might be more willing to work with you. If you could convince them through market research they are better off refinancing you for less payments and perhaps extended years than putting it on the market you'd have a chance.

When the money comes in though pay food, housing, utilities, transportation costs first, then if money is left over pay mc and visa after you build a 1000 dollar emergency fund. Stop using the cards if you haven't already.

If you are a fan of Dave Ramsey I would strongly recommend attending a Financial Peace University class in your area. In addition see about getting his books Financial Peace and Total Money Makeover. The forms and ideas in their might be able to keep you out of bankruptcy.

If you do go to bankruptcy and want to save your home then only a Chapter 13 is possible. Your income is to high for a Chapter 7.

Something Dave always suggests too if you have to and you are physically and mentally able get another job, even if its just delivering newspapers. The extra income can help you.

PS: I hope you don't take this as me being mean. But if you are dead set against filing bankruptcy then the only hope you have is to reorder your priority of spending and to increase your income. The other options would be to sell your home if you could before it forecloses and get another home, and sell your vehicles and get cheaper beat up cars that don't have a lease or payment option. This is if you intend to avoid a bankruptcy.

[Lindsay]

Actually in my town, they post b.k.'s in the newspaper. It's easy to say who cares what neighbors think, however I think it's human nature to care, how will kids treat your kids if they know, people are pretty fickle. I'm more worried about how it will affect my family than myself. Anyway thanks for the advice!

I worry about this. They publish BK's in our newspaper too. Most of my neighbors are probably financially secure except for a few that I know have money problems as we talk amonst ourselves sometimes. There is a guy who lives across the street from me who is some financial investor so I'm sure he's not going to be pleased! His house is perfectly landscaped and mine is not, so I always think he's looking with disgust over here. I am usually up late and I'd notice that someone would drive up to his house and throw something on his lawn at 3am each night. I was curious so once night I went to see what it was and it was The Wall Street Journal. I'm not sure what his career is, but its definitely white collar. He probably has lots of credit card stocks! I keep thinking that I'm going to get to the 341 meeting and he's going to be the trustee! I know, probably a one in a million chance, LOL, but I'm not very lucky.

As far as the my three children, they know the situation with the bankruptcy and don't seem upset. I've tried to be upbeat about it with them (I hide in the bathroom when I cry) and tell them it was just something (the debts) that happened and we're trying to fix it now. There is a voice robot guy from Discover named R.E. who calls everyday and leaves a message and my youngest son says that RE stands for "Robotic Enforcer."

I've been pretty open with everyone in my own family, my mother, sister, father, even my 12 year old nephew knows. My mother acts like she'd be embarrassed if any of her friends find out. She has this one friend who filed bankruptcy twice (once in 1981 and then 2003) and she tells me not to tell him we're filing BK.

[kiddles]

The only way to really know if Chap 7 would even be possible is to complete the means test, then schedules I and J. Based solely on your income, you really may not be, but the only way to be sure is to go through the paperwork.

[cathywhite4495]

I have to chime in on the neighbor and family issues. I also don't want people to know that I've had to take this step. However, it's better than the constant worry of creditors calling at work or the threat of garnishment - which was just days away from happening at the time I filed. My kids know I filed and I have been stressed out about it but probably no more than I have been for the last 5 years trying to avoid BK. I've been told that eventually the bankruptcy actually gets discharged and you don't have to think about it every day ) About the neighbors - I've decided to say too bad if anybody is going to look down on me. There are a small number of people whose opinions matter to me and I know that they won't look at me negatively.
As always, JR has some good advice. You have some options and just have to figure out what set of pros and cons to go for.

[JACOBLANE]

Thanks

I had a long conversation with my lender today, the lady was very nice, unlike some others I've encountered. They agreed to a repayment plan, and gave me to the end of the month to make a partial payment. If I put credit cards on hold for a while, I may just hang on until my income goes up at the end of the year. I'm gonna try like hell anyway. Thanks for everyone's advice very much. Good luck to all!

[HHM]

I had a long conversation with my lender today, the lady was very nice, unlike some others I've encountered. They agreed to a repayment plan, and gave me to the end of the month to make a partial payment. If I put credit cards on hold for a while, I may just hang on until my income goes up at the end of the year. I'm gonna try like hell anyway. Thanks for everyone's advice very much. Good luck to all!

Not to be pessimistic, but that is an old story and I suspect we will see you back in the forum in a few months asking about how to file BK. Keep in mind, if you don't get the raise, and if you miss so much as one more payment on the house, you will be out of options. Because you have already defaulted on the mortgage, a refi is out of the question, by letting the credit cards go, that is just another shot in the foot of your credit. From my experience, this situation usually ends up in BK eventually (sorry to say).

I know chapter 13 is not as good as a chapter 7, but a chapter 13 is better than what you are doing now. Go see some lawyers and find out what they can do for you. Better to do it now than later ('cus I can almost guarantee you will be visiting lawyers in 6 months).

[CoCoChanel]

Actually in my town, they post b.k.'s in the newspaper. It's easy to say who cares what neighbors think, however I think it's human nature to care, how will kids treat your kids if they know, people are pretty fickle. I'm more worried about how it will affect my family than myself. Anyway thanks for the advice!

You would be surprised with all this technology we have who is checking information on who. I have discovered ways of getting information about just about anybody who filed bankruptcy, last addresses, how many times they filed and all that. Pacer is not the only way you can get this information and as the other person said about towns who post bankruptcy information in the paper, well imagine if that were you. What would you say?

[CityGirl]

wow, they don't post it in papers here. It would take up too much space and the newspaper won't spend the money. Ya'll must live in small towns huh?