Hello, and a humble request for help - please?

[TatteredInTexas]

Hello everyone,

I am new to the forum, thus my first post.

First and foremost, gosh I'm glad I found this site Although my situation at present is bleak, it's nice to be able to communicate with individuals who have been, or are, where I am today.

That said... I wonder if I might ask a question of the group?

My wife and I are strongly considering BK, due to my job loss. The problem is that we own a home, which we are now 2 months behind on the mortgage payments. I know Chap 13 will stop a foreclosure (temporarily) but, once we are out... are all the back payments still due, or is it possible to start fresh with the payments? I just don't know how we could get caught up, at this point...especially given our current income.

Any insight would be very much appreciated!

With kind regards,
Ronnie
TatteredInTexas

[irastus]

Chapter 7 and 13 both stops foreclosure. The difference with a 13 is that it allows you to repay (cure) your arrearages over time through the plan. You must also stay current with your mortgage holder to avoid additional trouble.

However, you must demonstrate that your plan is feasible to the trustee - eg, you have some disposable income to pledge toward plan payments after all your living expenses are met. This may be a problem if you lost your job. Keep in mind that Oct 16th is the last day to file under the massively more lenient code. Please see an local bk attorney fast.

[TatteredInTexas]

Hello irastus,

Thank you for your kind reply.

I've spoke with a friend who just filed chapter 7. He reaffirmed his loan with the bank and was able to keep his house. However, he was current, at the time of filing, on all of his payments.

Right now, I am about 3 weeks away from a definite job, but in the meantime... that 3 weeks will put us over the 90 day limit - where foreclosure usually results.

If we could simply get a fresh start and erase, or tack on to the end of the note, the 2 late payments on the house... we should be fine. When I was working, we demonstrated 4 + years of never being late. We truly want to keep the house.

Yes, I've seen posts as to what the new laws will be... we will certainly jump in under the wire.

Thanks once again,

Kindest regards,
Ronnie
TatteredInTexas

[Lightning]

If you're "definitely" getting a job in about 3 weeks, and your late mortgage payments are your only debt, filing bankruptcy doesn't make sense.

Call the bank and tell them you will have a paycheck in a month and see if they'll work out a repayment plan.

[TatteredInTexas]

Thanks Lightning,

I wish that was all we had to be concerned with. We have 2 vehicle repos, which were sold at auction and left us owing around $15,000. We have massive amounts of health/hospital related bills - from my wife's health problems. And an $18,000 outstanding IRS tax bill. Not to mention a couple of thousand on credit cards.

If it was just the house... I would agree, but we are also trying to head off the judgements that are forthcoming from the auto repo's. As for the tax debt... I don't know if we can get around it or not. The taxes are for 2001 and 2002 (largest chunk).

Thanks again,
Ronnie
TatteredInTexas

[StaciMM]

Were the taxes filed on time? If so, the 2001 may be dischargeable. There are some other qualifiers, but being filed on time and 3 years old are 2 factors I think.

This is just an idea-I'd like someone else to comment if it seems feasible...

If he were to file as a 7 in the next few weeks, it would start the automatic stay and put off foreclosure. Starting the new job at about the same time might either a. allow him to get caught up on past due mortgage payments while waiting for the 341 & such or b. convert to a 13. (Depending of course on breakdown of debts & income-expenses.)

Thanks Lightning,


If it was just the house... I would agree, but we are also trying to head off the judgements that are forthcoming from the auto repo's. As for the tax debt... I don't know if we can get around it or not. The taxes are for 2001 and 2002 (largest chunk).

Thanks again,
Ronnie
TatteredInTexas

[Cmonlottery]

You definitely want to get something worked out with the mortgage company now. Once those papers reach a foreclosure attorney that will add at least $1000.00 to what you already are behind on. You might want to consider a chapter 13 if you know you have a job in 3 weeks. If you file the day your mortgage payment is due you can include that one in the plan.

[TatteredInTexas]

Thanks all,

We are setting up a consultation with a local attorney for the earliest possible date.

Much appreciation!
Ronnie
TatteredInTexas

[ducksinarow]

Hope it works out for you!

[Minnymouth]

Keep us posted on what your lawyer says.....also consult at least 2 attorneys (free) and see what they both say.

Let us know what they say....

Minny

[TatteredInTexas]

Thanks everyone!

I really appreciate your guidance.

All the best,
Ronnie
TatteredInTexas

[TatteredInTexas]

Hello everyone,

Update: 09-14-05

We just returned from a consultation with B/K lawyer. He has told us he can get approximately $35,000 in medical and credit card debt discharged, as well as a discharge of the (approx 15K), that we owe fom two car repossessions. Some of the back IRS taxes may also be eligible for discharge (we're looking at the filing years to determine that).

Because our income is less than our monthy living expenses... we will be forced to file Chapter 7. The attorney wants $1609.00 + $160 in filing fees (upfront) before he will take our case. Well, after leaving the attorney's office... it was quite apparent, that if we had $1,770 - we could pay 1 1/2 payment towards the late payments on the house, and manage to save it. Luckily, I am legally savvy enough to file my own Chapter 7, so we don't need him.

We are going to talk to the mortgage company tomorrow and see if we can get them to work something out with us, as far as a repayment plan. However, we will have to offer them some kind of immediate "good faith" payment. We want to pay $500 next week, but have a car payment due and several utility bills that will eat up our income, leaving nothing for food, fuel, etc.

My question... if we go ahead and file CH/7 now... will the "stay" stop the utility companies (electric, water, gas) from cutting off services during the B/K period, (hopefully buying us time to raise additional cash and get caught up?)

Also, from file to finish... what is the approximate amount of time for the entire B/K process (trying to figure how much time the "stay" will affor us?)

Any thoughts would be very much appreciated.

Kindest regards,
Ronnie
TatteredInTexas

[irastus]

Thanks for the update. Be careful filing yourself. It's easy to discharge unsecured debt but there's tons of little pitfalls along the way.

The process is generally around 90 days. 30 days to your meeting of creditors and 60 days to discharge after that - if everything goes smoothly.

Utility companies wouldn't even be notified of your BK unless you are behind and list them as a creditor. If so, they generally have to back off during the process. Otherwise, you are staying direct and current on your own. You may want to contact them if payments will temporarily stop. Most will work with you through the BK process. However, some may require a deposit with new service.

[StaciMM]

Yes, when you file the automatic stay will prevent utilties (gas, electric, water) from turning you off for non-payment, but not services (cable, internet). I don't know which side of that line the phone falls on. The utilities may require you to pay a new deposit when it is all said & done. I am not sure when they can start charging you again. (But any charges owed at the time of filing could be included in the BK.)

Generally, your 341 meeting is scheduled for 30 days after you file, and discharge should come roughly 60 days after the 341. The mortgage company would be able to request that the automatic stay be lifted but there would be a hearing on it.

At the 341 the trustee will most likely ask if you expect your income/financial situation to improve. And, if you're back to work by then my guess is you'll be directed to change to chapter 13. That is also a hurdle you can deal with when you get to it.

[TatteredInTexas]

Hello again,

After a lengthy discussion with my wife, considering the cost (burden) of the mortgage, the fact that we owe $121,000 on it, and it only appraises for $115,800... + the payments are going up annually due to the A.R.M. we are under - we have finally come to the conclusion that it would be best to include the house in the Chapter 7 filing and only try to retain our vehicles, as necessary to get to and from work. Both vehicles are well worn and we owe much more than they are worth. That said, I don't think we will have any problem reaffirming the loans on either of them (also we are current on the payments).

Our plan is to ride the B/K "stay" until discharge, then vacate the house, sell off whatever we can and don't need, then move into a rental unit for six months to a year. Afterwards, we hope to locate another (much lower priced) property for purchase - if doable. If I understand correctly, often times a person's credit actually improves after bankruptcy as creditors see you as less of a risk.

At present, we are 50-60 miles north of the DF/W MetroPlex and any decent paying job that I could get (in order to keep the house) would be a horrible commute from where we currently live + added wear and tear on vehicles and cost of fuel. Hence, the decison to scale down and try to rebuild by living well within our means for the future.

Additionally, by taking this route, we can stay current with the utilities and hopefully avoid having to pay deposits for reconnects in the new dwelling.

I plan on using the "Form 7" software from www.form7.com to complete the paperwork. Having completed almost 2 years of paralegal studies... I feel fairly confident that I can ease my way through the process with minimal bumps.

Thanks once again to each and everyone of you for the kindness you've shown and the information that you have so willingly shared with us. I can't tell you how much easier you have made the entire ordeal and the final decison process for us. I am truly grateful!

I will keep everyone informed as to our progress and I hope, through our experiences, we can give back some assistance to those who will eventually follow in our footsteps.

All the best of success!
Ronnie
TatteredInTexas