Some questions

[squeaks]

Hello everyone. I had a few questions I was hoping someone here who has been through the process may be able to answer.

I tore my right acl in 2005 and lost my job because I could not recover from surgery fast enough. I was terminated in January of 2007 and plunged into debt as a result. I was scrambling to find work and using personal loans and credit cards to stay afloat in hopes that things would get better.

In October of 2007 we finally bottomed out and fell behind on everything but my wife and I now have jobs which will allow us to pay our basic living expenses including mortgage and auto loans as well as the taxes and insurance bills that come with owning these items.

We are so deep in debt that I just can't see any way out other than declaring bankruptcy. We fell behind on our mortgages by about 4 months and are in the process of trying to negotiate a plan to catch up over time but I know this will be incredibly difficult if we have to make payments on our unsecured debt.

We should pass the means test regarding the median income due to the fact that I did not make much before February of this year.

I really do want to keep our house and cars because it would be very hard with our credit to try and move.

Is it possible to go with a Chapter 7 and just try and negotiate with our mortgage and auto creditors outside of the bankruptcy? We are very close to being upside down on our house so I don't think the mortgage company is in any hurry to take the house, especially since I am able to make the payments now.

I met with one attorney who was extremely rude and said that our mortgage situation dictated a chapter 13 even though we would probably pass the means test. I asked about the possibility of me reaffirming my intentions with the mortgage company and he replied "You haven't done very well with that so far".

I'm meeting with a few others this week. Based on the information I've provided does it seem possible for us to do a chapter 7 and then continue our auto payments and work something out with our mortgage companies? We really would prefer a 7 just because the basic living expenses would not leave us with much left over if any.

Thanks in advance for any advice.

[lrprn]

Assuming you can file Ch 7, the big problem you have is that you are behind in your mortgage payments. That's why the lawyer you met with said Ch 13 was the only option. You MUST be current on mortgage payments to keep your home in Ch 7. There's no way around that. Same thing for your cars and any other secured assets you wish to keep after filing.

Also if you file bankruptcy, you have to list ALL your debts when you file. There's no working with one creditor like your mortgage company after you file. You can reaffirm your mortgage, although then that ties you to paying the full amount with no relief if you run into financial problems again after your bankruptcy is discharged and closed.

You could try to renegotiate your mortgage after your bankruptcy is over, but if you reaffirm, there's no reason for the mortgage lender to work with you. And no lender will work with you during bankruptcy, period.

If you can't catch up on your mortgage payments before you bottom out completely and you want to keep your home, then you need to start considering Ch 13 to pay off your mortgage arrears.

It is possible in some situations to use Ch 13 to pay off the arrears, then convert to Ch 7 to wipe out the unsecured debts. Ask the lawyers during your visits if this is a possibility in your case.

Keep reading threads here and learn as much as you can about bankruptcy. Take a list of written questions with you to the initial meetings and write down the answers. After talking with several, it's easy to forget what one said. Post questions as you think of them, and we'll help you sort things out as best we can.

[squeaks]

I spoke with an attorney today who felt a Chapter 7 was possible as long as I can negotiate a payment plan with my mortgage lender and keep good on the plan. We can now afford to make such an arrangement and it seems they are in no rush to go into foreclosure as we are upside down on the house. I don't see the logic in a mortgage company foreclosing on a house because of a temporary inability to make the payments. Its now a matter of us being able to become current over time. The bankruptcy is more for management of the unsecured debt incurred due to the job loss. I am heeding your words though and appreciate your input. By no means am I assuming everything will work out the way I would like it to.

[keepmine]

You need to work with the mortgage company on some sort of modification. For ex. will they tack on the 4 missed payments on the end of the mortgage? Be sure any agreement is in writing and discloses any aditional fees.

Your best bet is to stop paying unsecured debt and use that money to catch up.

[HHM]

Only problem with that plan, BK tends to void loan modifications, so be careful.

I don't see the logic in a mortgage company foreclosing on a house because of a temporary inability to make the payments

Common sense logic has nothing to do with it....ask your self this...are foreclosures at record levels because the banks stopped doing foreclosures? If you want to get a sense of how complex this issue is, realize that the Chairman of the federal reserve had to go to an all day seminar to understand how the back-end mortgage market works (i.e. the securitization of mortgage notes, etc).

[squeaks]

I know bankruptcies are at this level because so many people got into loans they knew the eventually would not be able to afford and there is no hope for them to make the payments. We on the other hand can make the payments now so that is why I thought it wouldn't be beneficial for anyone for our mortgage company to foreclose on us. It is the unsecured debt that has unfortunately reached the point where I can't see any way out. I've called each creditor and they just play games with me, one has gone so far as to try and turn my wife against me by questioning why she isn't going against my judgement and making payments behind my back.

We meet with our attorney this Saturday to begin the filing. I feel good about this while feeling tremendous guilt. A weird mix of emotions I tells ya.