Filing or Refinancing our Mortgage?

[jlasky]

We are married and live in MO.

Debts:
50k in car debt, (1 of 3 cars are owned)
60k primary mortgage
15k second mortgage
54k P2P loans (prosper, lending club, etc)
60k credit card debt
60k in student loan debt (doesn't count)
11k 401k loan

Our income combined is around 170k annually. So if we were to file it would have to be a chapter 13. We spoke to only one attorney and he said we would have to pay 100% toward all of our debts, since we make enough money. However I know some of the P2P loans may not file a claim on us (after reading certain posts, but who knows until or if we file) He also said we may have to get rid of one of our cars, because one of the cars is an luxury item. However my wife, son and I need to drive to our jobs.

Also my wife would have to let her work know she filed, because she works for a financial institution. Which is embarrassing and can it jeopardize her job? She isn't a banker, she works in backoffice (IT based job)

We are pre-qualified on refinancing our mortgage, our payments will go up about 60 dollars and it will be a 15 year mortgage. We can cash out about 30k and also eliminate our second mortgage.

So if we do refinance we would definitely pay Prosper that has an monthly payment of $1200 (23 months left). That is the big loan that is really hurting us. After refinancing I was thinking we should go through a consumer debt counseling company so we can reduce our interest on our credit cards and pay them off quicker.

However I am just looking at the big picture, if we refinance we would add about 9 years more to our mortgage. We still would have debt, but we could pay them off a little easier. Like any of us we want to pay off the debts and be free...

But if we file a chapter 13, our house would be close to being paid off. We would have no debt, except for the Student Loan and 5 years left on the second mortgage.

Anyone have any thoughts what would be best in this situation; file Ch13 or refinance? If we do file we will probably look around for other lawyers for a second opinion. I don't know if anyone can recommend any good Ch13 lawyers or if there a good site for lawyer reviews.

Again, I really would love opinions on this topic? I really appreciate the input!

Thanks!

[LadyInTheRed]

From what you say, a Chap 13 sounds like the best financial move. Definitely consult with more lawyers to make sure you find one who will fight for the best plan you can get instead of saying "your income is high so you should pay 100%".

If the luxury car is going to be a problem, sell it and buy a more reasonable vehicle before you file. If the car is not worth what you owe, get a replacement car and then stop paying on the current one and let it get repossessed.

I am pretty sure that an employer is not allowed to fire somebody for filing BK. That doesn't mean the employer won't find another reason to let her go, but in the years I've been a bkforum member, I have not heard of anybody losing a job because they filed BK. Your wife's employer may be more understanding than you expect.

[StuckinaRut]

My wife works at a financial institution also & she didn't tell them we filed. We did have the wage deduction order sent to them because I work for a small company. However, her employer has never processed the order, so we pay the trustee directly. We have been in a 100% plan for 12 months and haven't had any issues yet.

[jlasky]

Thanks for the responses! Actually we are refinancing, cash out 40k and 2nd mortgage will be paid off. We will pay the installment loans first. We will try to hang in there and pay off our debts. The 2nd mortgage would of been about 15k of interest still, it sucks though since our house was going to be paid off in about 4 to 5 years.

[LadyInTheRed]

I hope it works out for you. Good luck!