Attorney Batting Practice�One, Two, Three�Opinions Please!

[HakunaMatata]

Liz and HHM-

Thank you for offering questions I have completely missed!! I've been so consumed with explaining my circumstances and gaining insight, I've neglected to project into the actual process. I plan on contacting attorney #3 to inquire.

THANK YOU!!

[OhioFiler]

#2 seems like a good choice to me. $1,000 less than #3 and you were comfortable with #2 except for the assumption she wasn't comfortable with a quick filing.

What I am curious about is why you believe a $26/week pay increase will affect your C7. I would assume at least 30% of that raise will go to taxes which is a legitimate deduction. This leaves you with a net raise of about $80 per month. What is your current DMI per Schedules I & J? Unless you are already reporting a positive $100 that increase will have no real effect.

[HakunaMatata]

OF-

Thanks for touching on this! Presently, I'm approximately $300 below the median. The ridiculously low salary increase places me over the median by a seemingly insignificant amount. I've yet to complete schedules I & J and I'm sure these will offer a better picture.

Coupled with the salary increase, my expiring ARM actually reduced my mortgage payment by $100/month (of course, this is subject to change in 12 months). I've lived ultra-frugally and my cost of living is significantly less than Federal exemptions permitted in Michigan (ex/ actual auto expenses are less than half). Thus far, I don't really know how all these numbers come into play. From what I was told by the two attorneys willing to plug numbers, my situation is a tight fit for a C7. Due to imminent necessary home repairs, attorney #3 claimed these would be included (obviously not total costs, instead factored as a monthly expense). While this makes sense, I have no intentions of keeping my property or sinking thousands of dollars into a sinking house. I've already stopped paying my mortgage (I'm almost to the second month). In fact, the sole propelling BK factor is a foreclosure -fear of a deficiency judgment (my lender, HSBC, currently has a moratorium in effect until April 2010) and the ability to more readily obtain a mortgage in the future.

Do you recommend I attempt to explore the schedules on my own prior to retaining an attorney?

Regarding attorney selection...

My thinking may be inaccurate; although, I'm more concerned with confidence than cost. I don't feel like I'm truly insolvent since I've ceased mortgage payments and I have available funds. Of course, when rent comes into play, my finances will become more strained (especially since it will cost more for me to rent, not factoring in home repairs).

Gosh, I feel like I'm completely backward in all of this!!!! Why does BK positively trump foreclosure? If I were to pursue foreclosure exclusively, I would be able to pay off my $20k credit card debt provided this phase doesn't end with a deficiency judgment (a DJ would confidently place me in an insolvent state). And...why oh why must I "screw" (word choice borrowed by attorney #1 ) ALL of my creditors in order to free myself from one? Sure, a clean slate is enticing; although, I will have the means to satisfy my existing debt if I live "rent free" during the foreclosure process.

[OhioFiler]

The problem with paying off your unsecured creditors to avoid BK leaves you exposed to the deficiency judgment after foreclosure and possibly being forced into a BK after paying off those debts.

I would be careful using home repair expenses on Schedule J if you are surrendering the home in the BK.

I would not be in any hurry to file BK if I were you. With the lender holding foreclosure proceedings in abeyance you have no need to rush through the process.

For sure you should complete the Schedules I and J using ACTUAL CURRENT expenses and see what happens. You may find you need to live less frugal for a few months to increase your monthly expenses.

[bkmaggster]

Maybe I am missing something, but if I understand you correctly you will be surrendering your house in bankruptcy, yes?

If so, your house will still be foreclosed on. You will have a bankruptcy and a foreclosure on your credit report. I don't understand how the bankruptcy is somehow "better." Everything I've read on the subject says they are equally damaging to your credit, and the reason to do them at the same time is to take the hit all at once, instead of say - foreclosing and then filing bankruptcy 2 years later.

I'd imagine some of this depends on what your personal financial goals are in the next few years.

If you can pay off your creditors while living mortgage free and avoid all this other mess, it's worthwhile to research further. It appears that Michigan is a non-recourse state, so a deficiency judgement may not be an issue.

[HakunaMatata]

OF-

The problem with paying off your unsecured creditors to avoid BK leaves you exposed to the deficiency judgment after foreclosure and possibly being forced into a BK after paying off those debts.

Yes, this is what I've been told. In fact, someone here referred to me as "BK meat" in such a scenario. I really wish she was referring to Burger King!

I would be careful using home repair expenses on Schedule J if you are surrendering the home in the BK.

Definitely makes sense. My ceased mortgage payments make it obvious I have no intentions of further investing in a losing investment. Previously, I resented having to have a plumber visit every 30-60 days to the tune of $120. I guess this may not be a bad thing after all, eh?

I would not be in any hurry to file BK if I were you. With the lender holding foreclosure proceedings in abeyance you have no need to rush through the process.

I may be misunderstanding this. The lender has placed a moratorium on issuing deficiency judgments. Shouldn't I expect the standard (while possibly lengthened due to the enormous amount) foreclosure process? If I delay BK and I'm post-foreclosure, how do I account for mortgage expenses? Does the cost of rent become a factor?

For sure you should complete the Schedules I and J using ACTUAL CURRENT expenses and see what happens. You may find you need to live less frugal for a few months to increase your monthly expenses.

This is exactly what I've been told; although, if I file in the immediate future I won't be able to make such changes. How do I increase my expenses without surrounding myself with red flags?

[HakunaMatata]

Maybe I am missing something, but if I understand you correctly you will be surrendering your house in bankruptcy, yes?

If so, your house will still be foreclosed on. You will have a bankruptcy and a foreclosure on your credit report. I don't understand how the bankruptcy is somehow "better." Everything I've read on the subject says they are equally damaging to your credit, and the reason to do them at the same time is to take the hit all at once, instead of say - foreclosing and then filing bankruptcy 2 years later.

I'd imagine some of this depends on what your personal financial goals are in the next few years.

If you can pay off your creditors while living mortgage free and avoid all this other mess, it's worthwhile to research further. It appears that Michigan is a non-recourse state, so a deficiency judgement may not be an issue.

BKmaggster-

Thank you so much for your input!!

Yes, I intend to surrender my house. I've fought the Money Pit battle for years and I'm waving the white flag.

From what I've read/been told, BK has some type of overriding effect. While I will still go through the phases of foreclosure, having a BK is advantageous in terms of future mortgage lending options. One consult attorney explained "if you're going to take the hit, get rid of all the debt, and begin anew".

My existing mortgage is a refi (cash pulled out in an effort to battle the Money Pit). I haven't reviewed my documents with a fine-tooth comb; although, Michigan refis are recourse and it's doubtful HSBC neglected to include such.

[bkmaggster]

OK, I also just surrendered my house as part of my bankruptcy filing. I had ~100k in unsecured debt, though. Foreclosure and BK were both inevitable for me. I don't think the BK is inevitable for you, but it may be a wise business decision, you will have to determine that.

I think you are hearing the advice correctly of "if you're going to take the hit why not take the whole hit" - but what is not correct is that BK somehow makes the foreclosure better or overrides the foreclosure. You will still have a foreclosure on your report next to that BK.

I agree with Ohio Filer that you should wait longer. I think you need to do more research into how bankruptcy will specifically effect you - not working from fear (which is how I was reacting at first) but as a business decision. You've got some time.

[HakunaMatata]

Bkmaggster-

You have given me much to ponder...thank you (although, I'm tired of my head spinning )!!

I'm utterly frustrated trying to make this business decision. I resolved the former morality issues and recognize fully...this IS business. You're correct, BK isn't inevitable for me. I, thankfully, will have the means to satisfy my creditors if I coast along the foreclosure path and maintain employment. The potential deficiency judgment is the aspect that's causing the greatest difficulty in assessing my financial future. I need to get out from under the house as soon as possible. I initiated this process only to find I will need to wait to see if there is a deficiency. The DJ moratorium seems almost illegal. Why are lenders (many of whom we don't even chose as they are sold our loans) permitted to do this?! Not a pretty waiting game. If I decide to ride out foreclosure, pay off debts, and get hit with a DJ, I'm straight to BK and the foreclosure and BK will have time separation. Ugh.

I'm going to create a pros and cons list maintaining a business emphasis; although, eliminating fear from this is a bit challenging. I've accepted my credit will blow in coming years (and I also look forward to the rebuilding challenge...I love a challenge!). Taking a "hit" is inevitable and a clean slate is tempting. Do I take one hit or two (with the second blow having slight impact when occurring at the same speed at hit one)? One of my fears is should something medically go astray in the future and I've been granted a BK, I won't have the means to provide for myself (I'm in my 30s and I have four friends battling breast cancer and three battling brain cancer. I've never been health fearing; although, these are realities for so many. No, I don't live in a toxic dump -at least, I don't think...with the Motor City one can only guess! I'd like to think that my large social circle is the reason for this seemingly dramatic display).

I really appreciate you and OF demonstrating I have time. I've been lead to believe otherwise. I intend to take advantage of this especially during this early phase of a pending foreclosure.

You are all invaluable! Many, many thanks!

[OhioFiler]

Bkmaggster-

You have given me much to ponder...thank you (although, I'm tired of my head spinning )!!

I'm utterly frustrated trying to make this business decision. I resolved the former morality issues and recognize fully...this IS business. You're correct, BK isn't inevitable for me. I, thankfully, will have the means to satisfy my creditors if I coast along the foreclosure path and maintain employment. The potential deficiency judgment is the aspect that's causing the greatest difficulty in assessing my financial future. I need to get out from under the house as soon as possible. I initiated this process only to find I will need to wait to see if there is a deficiency. The DJ moratorium seems almost illegal. Why are lenders (many of whom we don't even chose as they are sold our loans) permitted to do this?! Not a pretty waiting game. If I decide to ride out foreclosure, pay off debts, and get hit with a DJ, I'm straight to BK and the foreclosure and BK will have time separation. Ugh.

I'm going to create a pros and cons list maintaining a business emphasis; although, eliminating fear from this is a bit challenging. I've accepted my credit will blow in coming years (and I also look forward to the rebuilding challenge...I love a challenge!). Taking a "hit" is inevitable and a clean slate is tempting. Do I take one hit or two (with the second blow having slight impact when occurring at the same speed at hit one)? One of my fears is should something medically go astray in the future and I've been granted a BK, I won't have the means to provide for myself (I'm in my 30s and I have four friends battling breast cancer and three battling brain cancer. I've never been health fearing; although, these are realities for so many. No, I don't live in a toxic dump -at least, I don't think...with the Motor City one can only guess! I'd like to think that my large social circle is the reason for this seemingly dramatic display).

I really appreciate you and OF demonstrating I have time. I've been lead to believe otherwise. I intend to take advantage of this especially during this early phase of a pending foreclosure.

You are all invaluable! Many, many thanks!

Sales is often about creating urgency. If I were selling you my skills as an attorney I might want to create a sense of urgency!

[LuciluS]

Please take the time to Ponder all Options and agree with OhioFiler don't rush into BK unless you have no choice (i.e. Summons, Judgements, etc.).

We retained our BK Attorney late last September and I've been planning our Bankruptcy. However, we are fortunate to be current on our mortgage on a home we purchased 12/20/07. So we are not too far underwater..possibly above.

It's been quite an Eye Opener not using the Credit Cards, nor paying on them, forced us into what I would call 'Life after Bankruptcy'. The 1st couple of months were tough...especially at Christmastime and having 3 precious grandchildren.

I did not reduce our cable/satellite, telephone, or cell phone bills as I felt like we might need those deductions when we file. Umph, was I ever wrong LOL! We had our pre bankruptcy course last week and when the lady got through plugging in our numbers we are $1,200 a month in the negative. The Main reason is because we have astronomical medical and prescription bills. Yes, we both have health insurance, but's it's crappy (pardon my word usage).

I understand your head is spinning. Mine still spins sometimes too. I almost lost my husband this past April. He spent a week in the hospital and off work for almost the whole month of April. I had a Breast Biopsy in 2/09 & skin cancer surgery in 3/09 and now my twin sister has breast cancer. So, I know why you would be concerned about the what ifs in the medical part. I'm fortunate in that I have a Cancer policy and so does my hubby. However, it was an accumulation of 10 surgeries between the two of us since 5/1/05 that has lead us to filing BK on 9/30/09. I tell people we are Walking Medical Patients LOL!

Just make sure you have good health insurance and consider the possibility of short term/long term disability and a Cancer Policy. Our cancer policy is through my husband's work and is like $40 a month for both of us & is payroll deducted along with a $95,000 accidental death policy on my husband. We also took out a $500,000 accidental death policy on hubby for $23.57 and we both have it on our Mortgage. I wished we had pursued the short term/long term disability before we both were no longer able to purchase it due to our declining health.

Your idea of the Pros and Cons is an Excellent Idea. If you don't have to file BK immediately, spend the time researching all avenues available to you Now and possibly in the Future.

Good Luck

Luci

[Trybaby]

The advice you received from #3, is the same advice I received from my attorney (also in Michigan). I had to charge part of my house insurance weeks before filing, as I had no way to pay it and I could not allow the policy to lapse. So I charged it, and my attorney says I should not have to worry about it, as it was a necessary expense instead of a luxury item.

Based on what you have said, I would go with door #3!

I wish you the best.

No one every looked at my credit card statements or asked me what i had done in the previous 90 days. I did remember seeing something about cash advances while doing my own research. I did use the cards for items within 90 days of filing, no cash advances and no purchases over 825. I don't recall signing anything about that. I just signed saying I was truthful...which i was.
I didn't even know on 7/1 that i was filing 7/17...I hadn't even talked to the attorney yet. I had thought about it many times in the last 5 years or so but acted very quickly once i made my mind up. Is my attorney just lame or did he not think that was an issue?

[Crozier]

Needless to say, I am still looking for an attorney.

[kw1025]

the attorney issue is the most critical of all. i have been going thru this for 6 months. I have even considered hiring an attorney who happen to be a pt time chap 7 trustee. the guy i am going with won me becuase of his detail. he is not wishy washy, not very nutturing, and has yelled at me beacuse i forget to tell him things. he also has been concentrating on bk, all chapters for 20 years and is respected, but still, i like the comfort talk. i told him that if i want to pay $200 and hour for comfort talk, he better listen. what sold me is his knowledge of bk and the detail

[MSbklawyer]

I initiated this process only to find I will need to wait to see if there is a deficiency.

There will be. I assure you.

Even in normal times, by the time they subtract from whatever equity you had, the lawyer's fees, the interest fees, the title search fees, the cost of sale fees, the insurance fees, the broker's fees, the miscellaneous fees, the court cost fees, the 'because it's Tuesday' fees, -- there WILL BE a deficiency in a foreclosure. Nearly every single time.

In these times, what with the depressed real estate values, it's even more certain.