Hi Everyone,
I have been lurking here for several months and have done some research and followed stories, and thank you for all of the information. I know I need to file BK, but I'm not sure on a couple things...
I live in CT, family of 3, I am the sole wage-earner, and I am well under the median income on the Means Test. I've done the expense calculator in the Sticky (CA BK Attys) and my disposable income WITH my current mortgage is $140. I'm sure I could adjust a couple things to get it down more, because I'm estimating and leaning toward the lower end of the variables.
I own my home, fixed interest rate of 7.625 APR, approx $10,000 in equity based on neighborhood comps. That is a generous estimate - there may be less than $10k. I have no problem leaving the $10k behind if necessary.
I own two cars outright, one valued at around $1000 and one around $5000. I think I'll need to use Federal Exemptions instead of CT, since the CT car allowance is low (I think $2000 plus wildcard of $1000 or close to that). Homestead exemption though is $75k of equity - does anyone know if I can put unused homestead toward the cars?
I have about $35,000 in unsecured debt, the largest being an unsecured loan with Household Finance of $15,000. Does anyone know if there are any issues with getting that type of debt discharged, since it's not "credit card" type debt? I stopped paying unsecured debt out of necessity in September and haven't used cc's since then. I'm waiting to file until I know where I stand living on a cash-only basis.
Which leads me to my biggest question. I am still struggling each month to pay my bills, even without paying the unsecured minimum payments. It is clear to me that the mortgage payment is too high. I don't love my house, it's really too small for us, and after 7 years there I couldn't care less about staying. We have foolishly stripped all of the equity over the years in an effort to live the way we wanted, and now that the equity is gone we are facing the fact that we need to change our lifestyle. We don't live extravagantly, but we got in over our heads with this mortgage the last time I refinanced and now with the price of heating oil and gas, well you know the story.
Unfortunately, when I do the expenses I need the mortgage payment to stay within the requirements for disposable income. If I substitute the amount of rent that is allowable per IRS standards ($1250 or so) then it bumps up my disposable to $640 per month. So how do I file for Ch7 and surrender the house, and still meet the requirements to do a 7 instead of 13? Do I have to keep the mortgage current (it is now) until I file, and then stop paying once I've officially "qualified" or after the 341? I really want to stop paying now and save some money for the things I've never been able to afford (like an emergency fund and a retirement account). I would ideally like to stop paying the mortgage now, bank the money and live rent free, then file in a few months, (using some of the mortgage payments to pay an atty), and get a rent that's about $500 less than my current mortgage. Is that doable?
Also, if I do stop paying the mortgage now, are there any restrictions on how I spend that left over cash (like a vacation) before I file?
If I can't stop paying the mortgage because I need it to qualify to file Ch7, then how do I pay the attorney?
Any advice is greatly appreciated.
S.
I have been lurking here for several months and have done some research and followed stories, and thank you for all of the information. I know I need to file BK, but I'm not sure on a couple things...
I live in CT, family of 3, I am the sole wage-earner, and I am well under the median income on the Means Test. I've done the expense calculator in the Sticky (CA BK Attys) and my disposable income WITH my current mortgage is $140. I'm sure I could adjust a couple things to get it down more, because I'm estimating and leaning toward the lower end of the variables.
I own my home, fixed interest rate of 7.625 APR, approx $10,000 in equity based on neighborhood comps. That is a generous estimate - there may be less than $10k. I have no problem leaving the $10k behind if necessary.
I own two cars outright, one valued at around $1000 and one around $5000. I think I'll need to use Federal Exemptions instead of CT, since the CT car allowance is low (I think $2000 plus wildcard of $1000 or close to that). Homestead exemption though is $75k of equity - does anyone know if I can put unused homestead toward the cars?
I have about $35,000 in unsecured debt, the largest being an unsecured loan with Household Finance of $15,000. Does anyone know if there are any issues with getting that type of debt discharged, since it's not "credit card" type debt? I stopped paying unsecured debt out of necessity in September and haven't used cc's since then. I'm waiting to file until I know where I stand living on a cash-only basis.
Which leads me to my biggest question. I am still struggling each month to pay my bills, even without paying the unsecured minimum payments. It is clear to me that the mortgage payment is too high. I don't love my house, it's really too small for us, and after 7 years there I couldn't care less about staying. We have foolishly stripped all of the equity over the years in an effort to live the way we wanted, and now that the equity is gone we are facing the fact that we need to change our lifestyle. We don't live extravagantly, but we got in over our heads with this mortgage the last time I refinanced and now with the price of heating oil and gas, well you know the story.
Unfortunately, when I do the expenses I need the mortgage payment to stay within the requirements for disposable income. If I substitute the amount of rent that is allowable per IRS standards ($1250 or so) then it bumps up my disposable to $640 per month. So how do I file for Ch7 and surrender the house, and still meet the requirements to do a 7 instead of 13? Do I have to keep the mortgage current (it is now) until I file, and then stop paying once I've officially "qualified" or after the 341? I really want to stop paying now and save some money for the things I've never been able to afford (like an emergency fund and a retirement account). I would ideally like to stop paying the mortgage now, bank the money and live rent free, then file in a few months, (using some of the mortgage payments to pay an atty), and get a rent that's about $500 less than my current mortgage. Is that doable?
Also, if I do stop paying the mortgage now, are there any restrictions on how I spend that left over cash (like a vacation) before I file?
If I can't stop paying the mortgage because I need it to qualify to file Ch7, then how do I pay the attorney?
Any advice is greatly appreciated.
S.
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