Mortgage payment arrears

[hanginthere]

Hi all,
I've been reading through this forum, I wish I had found it BEFORE we filed!
Hoping maybe someone here has lived through this experience and can be more helpful than the attorney is. Hubby and I filed cp7 about a month ago, hearing is 3/28. We knew we were behind on mortgage payments, but citimortgage had not made any move to foreclose yet. However crap1 had served notice to put a lien on the house so we were advised to file before that could happen. We have made the current month mortgage payment and now have a source of $$ to bring the mortgage current (401k). Got notice today that citi filed for relief from stay, attorney tells me that it will be approved because of the arrears, but that doesn't mean that they will in fact foreclose, but not to make the arrears payment if they do foreclose. Very confused here! So, do I get the $$ (will take about 10 days) and make the arrears payment or do we wait? This is SO nerve racking!

[StartingOver08]

Well, you need to ask yourself some hard questions.

1) How much is the house worth in today's market?
2) How much do you owe?
3) Is the house upside down? By what percentage? 1%...10%...50% This will give you an idea if the house is worth saving or not.
4) If the house is worth saving, then how are you going to make the payment? Does your new budget (without the other debt in the CH 7) allow the house payment to be made reasonably? In other words, is your total mortgage payment less than 31% of your gross income? (some people say it should be no more than 25% of gross)...
5) Is the only source of "catch up funds" your 401k? Think long and hard about this one, because there are significant penalties when you take money out - both short term (high taxes) and long term (loss of investment).

[LuciluS]

Also, withdrawals from 401k are considered INCOME for Bankruptcy purposes.A one time hit will really jump up your income.

I received a large sum from my previous husband's 401k and began a 10 yr. (monthly) payout on it. When the stock market took the hit, they would not let me stop the monthly payments. It lasted me 7 yrs. I'm praying, because I became disabled in the same year I started the monthly payments, I will not be hit with a 10% penalty. They also took out federal withholding each month, but not state.

Thankfully, we are current on our house (bought 12/20/07) and it's not too upside down. We will be waiting until at the most 9/09 to file so I can let the last 401k pymt. (Feb) drop off and also was diagnosed with skin cancer and want to make sure I get a clean bill of health.

We stopped paying our credit cards in 9/08 and Attorney is paid in full. Creditor phone calls have started again. I just tell them I have skin cancer, like it or not.

Attorney said if a Creditor tries to file anything, he will file something to give us time to get through until at least 9/09.

Luci

[hanginthere]

All good questions to consider!
We are not upside down on the house, equity of about 5-10%. Without the cc, we will be able to make the mortgage payment. This all started because hubby (self-employed) lost his largest client a year ago and had another one go out of business still owing us a large amount of $$. He's been marketing like crazy, that's were a lot of the cc debt came from, and is now beginning to get at least part of that revenue going again. Due to changes in my job, my income will be going up by about $500/mo starting in June. We are basing our budget on my income only from now on, which is very stable and as close to secure as you can get these days. The mortgage payment(PITI) will be slightly less than 30% of my monthly gross. If there was some possibility the mortgage company would let us work this out we could cover the arrears over the next 3-4 months, but I just don't know if they will do that. Of course, because of the bk, they won't/can't talk to us.
Maybe I'm being foolish here, but my logic is that taking a hit of $3,000 to the 401k in order to save the house that we have $30,000 equity in is a reasonable trade off? I'm not exactly trusting my decision making skills these days.