Looking for advice, wanting to avoid Ch 13

[blucat13]

Ok, I have posted a few things here already, but it looks like I am going to have trouble with Ch 7 and passing means test so...

My debt:
CC $12,000
Car $15,500 (reaffirming, I can afford pmt)
House $143,000

I want to surrender the house and get rid of CC, but it doesn't look good for Ch 7 means test (lawyer still playing with numbers). I really don't want to do Ch 13, because it's my understanding they calculate whatever you have leftover after allowed expenses and take ALL of it for your payment plan, AND it costs more than a Ch 7. If the house was out of the picture, I could pay the CC off in a year and a half easily myself.

What I am really wanting is to get rid of the house, but I cannot sell it for what I owe. If I could sell it at all in my current market, I would be about $20,000 further in debt.

So, my Plan B is to let the house go into foreclosure and let them take it. I've already talked to the lender about deed-in-lieu and they are not interested. I would keep paying on the credit cards and car, and if they end up suing me for deficiency after the foreclosure, then I could file for BK.

Any thoughts on this situation? I am also aware that my CC rates could go up once the foreclosure and late payments begin affecting my credit, and this is something else that may force me into BK, Ch 13 or not.

Just looking for insight....

T.

[HHM]

Well, the issue is your ability to assume risk.

The problem I see with Plan B is that the deficiency is a certainty in a foreclosure and will most likely not be forgiven, thus, it will remain in collections. And if your income situation doesn't change, you would still be filing a chapter 13...so you are probably only prolonging the inevitable

On the other hand, you credit card debt is manageable. I am at a loss for a specific recommendation as your only real problem is the house. Have you looked into some of the newer programs that help homeowners?

Ask this question. Can you afford the payment on your house? If yes, file a chapter 13 to cure the arrears, pay whatever would be paid off during the plan and get back on track. Don't look at a 13 as a bad thing, look at it as a tool to get you back in control. In essence, a 13 is a court mandated debt consolidation program which would probably benefit you.

[blucat13]

I just want to be rid of the house, I know there are things I can do to stay in it, but I have already moved out. I've also looked into renting it out, but that would end up costing me more money in the end, especially as I cannot rent it and cover the entire monthly mortgage, and I would have to spend money on it to make it rentable. I'd also be concerned about the quality of renters I could get in my area.

Nothing is selling in my neighborhood, not even at 10-15,000 less than I owe on the house. There are three houses that have been on the market between 6-8 months and have not sold. I've wanted out of the neighborhood for some time, as it is not a safe place to live anymore, but there was an incident between my seven year old and some older teenagers last summer that scared the poo out of me and got me motivated to leave. The neighborhood has gone downhill since we bought the house six years ago.

I feel like I am just stuck. I have ALWAYS had good credit and never been late on anything, and my debt is stuff I have been responsibly plowing away at for the last ten years. It just seems like every time I get close to seeing a light at the end of the tunnel, something happens and things never get completely paid off.

I just want to be free of the house.

[HHM]

Yeah, that is tough.

You need to look at the Mortgage Forgiveness thing to see if it helps you with the deficiency. If not, you have two choices, file now and wrap everything up...or play the waiting game, let the house foreclose and see what happens. The wait and see approach is more risky.

[njguy1972]

I am in a similar situation where my budget just about works out with about $325 left over at the end of the month, not including credit cards.

My credit card debt is over 50k. My salary puts me in the Ch 13 range.A schedule J will show that my expenses are high. Live in the NJ area and commuting on public transportation to work is over $400. Part of it is because there is no available parking at the train station ($309 a month) and I have to pay a private guy $60 a month. Add in the subway to get to work from the main train station and it is over $400.

My housing expenses (incl utilities and maintenance) is more than 50% of my take home pay. If I were to sell now I would owe the mortgage company 35k.

Unfortunately, I think I am headed for chapter 13 because the trustee will figure in my tax refund (about 6k) and any bonus I may get this year (possibly 3k).

I do have a car with 2 years left of payments that I can afford and a furniture loan with about 1.5 years left of loans on. If I can keep my tax refund I would pay off the furniture right away and then pre-pay the car a little but that is doubtful.

[evilxs]

I was in the same situation as you and I decided to file. My house has been on the market for 9 months with no offers. I would have to cut the price 20 or 30k and I cannot afford to pay to do that. It is worth less than what I owe. I have great credit (scores below), and have never been late on anything. I am just in way over my head trying to pay for two households upside down in a house that cannot sell.

I got a good lawyer on the 3rd try and he has taken on the task of fighting for a chapter 7 filing for me.

You might want to get several opinions, hey it is free for most of them! I give up, I am filing to dump my house. I too have very little cc debt (less than 20k), but cannot pay on anything dragging this second house.