How much will we have to repay?

[concerned]

StaciMM

Thanks for all your help! You guys on this board have been amazing. I am at home now waiting patiently for the attorney to call.

We live in rural NY. Our home value is $239,000, but we owe $224,000. The problem is--it just won't sell in this area. One note: the appraised value was $182,500, which is probably more accurate. We found an appraisor that would appraise high because we were so strapped after we built the house, we had contractors, etc. we had to pay. Once we got it appraised, we did a 100% equity loan--stupid, I know!

I have another question. My husband and I have been making reduced payments on our student loans. Mine is interest only, and his is over a 15 year repayment. If we have to pay debtors, can we increase these to the maximum so at least these debts would go down during repayment? My balance isn't going down at all!

I checked out the means test. Separating first is definitely the way to go, and since we're technically not living together anyway, it's the honest thing to do. As I mentioned previously, it said I would be below the median income; and therefore, able to file a Ch. 7. My husband would still file a 13, with $1300 per month going to debtors. It said my available funds to go to debtors is $678 (Why would it ask what I can pay each month if i will be allowed to file 7 anyway?). When I calculated it as if we were still together, it was $2468 total. Plus, as you mentioned, he could get his own place and not live with his parents anymore, which may not be a bad thing for our marriage.

I am still anxious to hear what you learn about the 2nd mortgage and lease. This would make a world of difference. I guess I acted too quickly where the apartments concerned.

[StaciMM]

If the appraised value is $182,500, how much is the 1st mortgage? Stripping the 2nd when there is 0 equity in the 2nd is something you should discuss w/ the attorney. (If your 1st is more than $182,500...) I'm assuming you would have a little disposable income if you stayed in the house, didn't count the 2nd mortgage payment or unsecured debt payments in your budget. If so, contacting your student loans regarding regular payments might be a good idea-otherwise they'll never go down. (Outcome might be several hundred dollars for 36 months, to repay a portion of the stripped 2nd, the unsecured debt, and the apartment-they'll charge termination penalties, lack of notice, etc.)

But the questions to answer ASAP. Is this an option you'd be happy with? If the house were more affordable would you want to stay in it? Would removing some of the financial stress give you a chance to work on your marriage and is that what you want?

Keep in mind for the Means Test, it doesn't automatically adjust for student loan payments, medical insurance, etc. So the results you got aren't entirely complete. Also, the median income is just step 1-you can be below the median & still have available income for a 13. I think something may not be calculating right though-to say the 2 of you combined would have $2000ish available to pay to a 13 when your combined gross is $7250.

[concerned]

StaciMM

The appraisal we provided our attorney was the most recent, not the original. I never even thought we could get out of the 2nd. Do you think our chances are good? Would we have to have a new appraisal by someone more conservative? Should we discuss this with him?

Honestly, yes, I want to work on my marriage, but it's difficult for me to say if the money problems disappeared if things would be better. My husband has been very depressed. Our Counselor said that some of his depression stems from financial problems. During depression, you are not the same person. Maybe we will be happy without the financial stress so that we can focus and work on other things, but I can't be certain. He has just let a lot of areas of his life go due to his severe depression.

If we did stick it out for now and try to work on things, would we be prevented from trying to sell the house later? I think the house might sell at some point for $182,500, but it definitely won't sell for $224,000. Are you allowed to sell in a Ch. 13 if the marriage still fails?

In reference to the Means Test, no, I guess I need to do it again more accurately. I didn't include our medical insurance expense. I put in the student loan under allowed education expense because I didn't know where else to put it. I didn't factor in payroll deductions at all, and I wasn't sure what interest to use. We also have a flex account for day care and I didn't know how to count that either. Do you think that amount will be more or less?

[StaciMM]

For the means test link, I think you have to manually deduct those expenses. (Its a work in progress I understand, only set up to show the standard info right now. So other expenses would be counted at real values-such as day care, student loan payments, etc. and would lower the payment available for a 13.)

If the house is really only worth $182,500, then that explains 1. why you're having trouble selling and 2. why you're so strapped financially. WIth that info, ch. 13 makes a lot of since based on what I know & understand.

If you go into the 13, you would be able to petition for adjustments later on if your situation changed & you sold the house. I'm not sure what all that would involve, but if your finances change drastically you can adjust the 13.

Talk to your attorney ASAP-mention how the appraisal at $239 was overinflated to help you get the loan, and that the real value is less than the 1st mortgage. Ask about getting the 2nd stripped. You have 3 weeks, basically, if he files an emergency petition by next Friday, you'd have another 2 weeks or so to get all schedules, etc. in. I believe your 1st plan payment would need to be submitted within 30 days after filing the petition.

[concerned]

StaciMM

Attorney said it would be filed as a 7! Should I request something in writing from him? He also said things could change and I am scared that he will say ok, yeah 7 now and change later, but as long as he files before the 17th, isn't that the main thing?

Does it look bad to file Ch. 7 and then legally separate? Does a 7 look worse on your credit than a 13? Should this be a factor?

My attorney talks a lot and doesn't really give me much Q & A time, but we are supposed to meet with him next week. He said the home value falls below the limit in NY State & our budget is ok too. Should I still mention the home appraisal. We really do want out of the home and to just move on, but if we're forced into a Ch. 13 repayment, then I might as well try and keep the house.

He recommended that I take out a loan from retirement to give to trustee for our cars. Is this normal?