Another forclosure question???

[tylerann]

My husband filed chapter 13 in 2004 with the intent to keep his house. He pays his house pymt seperate from his bankruptcy. It is an ARM and he thought that he would be able to get refinanced. So far he has had no luck although he is in talks right now with one company. Our last hope. He has even tried to talk to his mortgage company to work something out. Of course they won't budge.

So if he doesn't get refinanced can we file chapter 7 at that time or if not can we walk away from the house and what happens if we do?

[lrprn]

So if he doesn't get refinanced can we file chapter 7 at that time or if not can we walk away from the house and what happens if we do?

Whether you can file Ch 7 still depends on how your combined gross income for the last six months before filing compares with your state's median income for your family size.

(By the way, your husband's Ch 13 trustee knows about the refinancing attempts and gave permission to do it, right?)

Before walking away from your house, first let your husband's Ch 13 lawyer know that you can no longer make the house payments due to the increasing ARM. If you don't qualify for Ch 7, it's possible for his lawyer to file an amended Ch 13 plan to accommodate the increased mortgage payment and keep you from having his Ch 13 dismissed - something to avoid if at all possible.

[tylerann]

I did take the median test and it said we did qualify for chapter 7, of course I know this is all up to the trustee, lawyers, courts, etc. But we were well under the guidelines for our state on that site anyway.

I am not sure if his trustee is aware but we have talked to his lawyer. She is the one who gave us the name of the company we are working with. I guess that normally they don't allow refinancing without a complete buyout of your chapter 13 but with all the problems that have been going on with adjustable rate mortgages they have been approving them in the courts. The finance company told us that they see if we are approved and then go to the lawyer who takes it to the courts for approval. After that you still have the appraisal and all that good stuff.

What does it mean to get your chapter 13 dismissed?

[lrprn]

Sounds like everything your husband has done so far around refinancing is fine - good to know!

What does it mean to get your chapter 13 dismissed?

The goal of bankruptcy is to have your case discharged and closed. That means you have successfully met all the requirements of filing your bankruptcy chapter and all the debts that can be wiped out are wiped out.

In this case, if you stop paying the trustee because you can't afford the payments any longer after your mortgage increases, the trustee will ask the court to dismiss your husband's bankruptcy case. Dismissal is bad because it returns your husband back to owing all the debt he filed on again and also removes the automatic stay that keeps creditors from contacting you to get what you owe. Creditors then come roaring back to pile on late fees for all the time they were held off by Ch 13, so the total debt he had when he filed could now be signficantly larger.

Luckily, depending on the circumstances and reasons for dismissal, a dismissed case can sometimes be filed again after a few months. But repeat filers can be looked at more closely than first-time filers and there are some extra hoops to jump through when you file more than once on the same debts in a short time.

[tylerann]

Definately don't want to be dismissed then. Especially since we only have about 7 months left IF we turn over our vehicle.