Can't Make Payments -- Now what??

[Sunshine]

My husband and I filed ch 13 in May 2006. Started making our payments right away as instructed. We have been sending certified checks to the Trustee because the Order to withhold from my paycheck had the wrong address for my employer and my employer never received it. I told our attorney about this and he apparently didn't think it was a big deal because it was never corrected. So, I continued making payments on our own. Which actually turned out to be a good thing, I think, because 4 weeks ago my husband lost his job. I called our attorney and told him I can not make a payment again until my husband is working. He said to call him when my husband is working again. We have now skipped two payments (I get paid twice/month and always sent a check the same day as I got paid).

So my question is . . .how soon before we can expect to hear from the Trustee with a Motion to Dismiss our case? Are we going to have to make up the payments we missed? I don't see how we could possibly make them up. Our payment is $2650/month!!!! It is pretty much my entire income every month.

I am thinking we may have to convert to a Ch. 7 . . . but then we lose our house and have to find someplace else to live.

Has anything similar happened to anyone else?

I am freaking out over this . . . it was bad enough we had to file and now this headache.

[HHM]

Based on your fear of losing the house, am I safe to assume that you had mortgage arrears (back payments). First, how did that happen?

To answer your question of what to do now...what are your husbands job prospects? Will it be 1, 2, or 6+ months before he will find another job?

To answer some of your specific points, if your case goes as far as a trustee's Motion to Dismiss, no, you will not have to pay the missed payments to the trustee. You can expect to get the Motion to dismiss in 2 months, but it varies. Although your attorney seems a bit aloof, he may have taken care of it.

You can also amend your plan to lower your payment or extend the repayment time, if possible.

[Sunshine]

Thanks for the quick response.

Yes, we were in arrears on the house when we filed. Our mortgage payment is included in our plan. There is a long story about the house, which I won't go into, but suffice to say that my husband made some STUPID mistakes in purchasing the house and I STUPIDLY sat by while he did it because we were dealing with a health issue with our daughter at the time and I frankly was more consumed by that than buying the house. The end result was that we bought a house with a HUGE payment that we could not afford. So, now we are in BK because of it. (We had a lot of credit card debt before buying the house and had actually been considering filing several years ago but didn't).

When we filed 13, our attorney talked to us about potentially filing a 7 instead, which I thought we should do even though it meant losing the house. My husband refused to see the reality of what was happening and insisted we would get by and do what we have to do to keep the house. (A house, which, I now despise and wish we had never bought!!)

As for job prospects, I thought he would be working by now and we wouldn't even have much of an issue. I don't think he will be out of work for more than another month, but I really don't know anything for sure. He is looking and has resumes out all over the place so hopefully something will work out soon.

I am planning to call our attorney again because I want to be prepared for the possibilities. Like I said, he didn't seem overly concerned but then again, I told him I thought my husband would be working again fairly soon.

So four months into our plan, my anxieties and worries have only gotten worse!!!

[HHM]

Hmmm...tough call!

The simple reality is, if you can't afford the house, "you can't afford the house"! Thus, why decimate yourselves financially in the mean time?

If you have a lot of unsecured debt (i.e. credit cards), and you would now qualify for a chapter 7, convert your case to a Chapter 7, and move into a place you can afford, even if that means renting for 6 months to a year. Sounds like you don't have any equity in the house anyway, so you are not losing anything.

[Sunshine]

If only I could convince my husband of all of that. He thinks he knows everything and will never admit his mistakes. Oh, and he blames others for things that go wrong in his life. Is it any wonder we are where we are?

Thanks for your input. I much appreciate it.

[SinkingFast]

It's really tough when one person faces the truth of the situation while their partner lives in Lah Lah Land in their mind.

You have an uphill battle ahead of you. And I'm not talking BK either. You've got a child to care for and your husband to deal with. But Hubby really needs to face the reality of the situation.

I'd suggest you gather all the bills together with a tally sheet of what's supposed to be paid out each month and how much comes in each month.

Be calm and rational. Do not let the conversation degrade into an arguement or finger pointing match.

Show Hubby that even when he's working, you're not making any headway on your family's financial situation.

For what you pay in Ch 13 plan payments, you could rent while you save and have a huge downpayment on a very nice home in about a year. A home your income would support if you were free of the burdens of the other debts.

[Sunshine]

Thanks for that SinkingFast. It is a difficult situation for me. We have been married 5 years, together almost 10 and there have been financial issues from day one. We can't even discuss things without a huge argument. Lately I have been trying to remember why I married him. We probably need counseling but at this point, I'm not sure I even care anymore. I feel like we have ruined our lives financially and now, our daughter will be the one to suffer from our stupidity.

Anyway, I don't want to hash it all out in cyberworld, but wanted to acknowledge your response and thank you for taking the time to post it.

[Minnymouth]

ANYTIME you need to vent, come talk to us..............

Bankruptcy is hard on everyone and twice as hard on a marriage.......

We all do understand, we have been there and done it........

So feel free to VENT and relief some stress....... maybe we can help...

[SinkingFast]

ANYTIME you need to vent, come talk to us..............

Bankruptcy is hard on everyone and twice as hard on a marriage.......

We all do understand, we have been there and done it........

So feel free to VENT and relief some stress....... maybe we can help...

Ditto's!!

That's part of the support of this Forum!!

Any time you need to vent, feel free to come here and bend an ear!!

[Sunshine]

Thank you for your kind words Minny and SinkingFast.

My husband insists that in the next few months he will be able to refinance the house (assuming he has a job soon). He has apparently talked to some mortgage people about this possibility and they told him that after several months in the Ch 13 plan and making consistent payments, we can refinance and take the house out of the plan. I have my doubts about whether this is a good idea and if in fact, it can even be done. I fear what unknown consequences will result if I let him make any more decisions about our finances (or lack thereof!). We have no equity in the house and one reason the payment is so high is that we have PMI of around $500/month.

Does this sound like a possibility or is my husband as delusional as usual?

[HHM]

Sorry about your situation...it is tough! Since I don't know anything about you, this may or may not be sound advice, but have you considered "Legal Separation" (assuming your State allows it). What LS allows you to do is legally separate your financial life from your Husbands. It's not an ideal solution to all your financial problems, but at the very least, it would act as a wake-up call to your spouse; that your not going to put up with his poor decision making. LS is hard to explain, its not Divorce, but its not quite marriage either. LS dissolve the financial legal entity that is the Married Couple (when you get married, the Couple become one legal entity vis-a-vis the rest of the world). LS allows you stay married, but resurrects your individual legal standing.

I have known a few people who have tried it...it generally works best if you do the legal separation before filing BK, and the most financially troubled spouse will file BK individually.

It sounds like you have some bad financing in place already, I can't imagine there would be any financing you would get after filing BK that would be better (Mortgage people are only looking for commissions, if you did refinance a few months into a chapter 13, you may be a victim of predatory lending).

[CAB_44]

Welcome Sunshine~
I'm sorry to hear about your situation~ BK is stressing enough, let alone having to worry about a child and husband issues~
This forum is awesome~ the people here are great!! You've hit on the right spot for support and info!!
Keep your chin up~ keeping your focus as positive as possible~ it can be wrenching but this forum helps SO much!
CAB

[jane taylor]

Hi Sunshine!

Welcome to our forum family ! I am so very sorry that you are going through this, too. My husband and I just filed in February and have already had to get a suspension of payments due to his surgery two months ago. We are paying our mortgage in our Plan as well.

If the truth be known, we really should have sold our home and moved into something less expensive a year or so ago. We may still end up doing it. Neither of us have ever been great money managers and we've had three job losses, and MAJOR medical expense on top of everything else. We started our married life in debt (student loans) and then I got pregnant with my first child after being told I would never have children. (What a wonderful blessing that baby is!! )

Begin fiscally responsible is a skill that is learned just like anything else. It does sound like your husband needs a wake-up call. Hopefully this is it.

This process, although SO painful, is an experience from which to learn and grow. We all need support, some days more than others.

Hang in there and ALWAYS feel free to lean on us. We are here for you and wish you all the very best!

Peace,
jane

[Minnymouth]

Your husband keeps talking "refinancing" in Chapter 13, if you are already in arrears and now can't make the payments - THAT'S NOT GOING TO HAPPEN..... you have to have a good repayment plan before anyone will even talk to you about refinancing..... unless you have a great deal of equity in the home.... and even then probably not......

Whatever it takes for your husband to see the "light", you need to do before you find yourself in a position where you can't "do anything"..... not even file BK....

Sounds like its time to find a home that is more reasonable and inline with your finances at this time.....

Keep us posted.

[SinkingFast]

I don't imagine refinancing is an option for you at this time. Probably not anywhere in the near future either.

We were told, with Ch 13, you can only incur 2 types of new debt. For a car loan and a home loan. And at that, with both, you need to be in the plan for a year, with timely payments, and you'll need to get the approval of the Trustee in advance. We didn't have any mortgage arrears that we would be including. You may or may not be caught up on your house payments at this point.

As HHM said, if you are able to find a Lender to work with you, it will probably be a predatory Lender. High interest rate on the loan. High fees to get the loan. We're talking thousands, if not $10K in fees. Been there, done that. Our last loan, we paid in excess of $9K to get. An 80/20 combo based on a super inflated appraisal.

Maybe your Hubby just doesn't listen to you. Maybe he would listen to someone else if they point out the financial issues. Check the DOJ list of approved Credit Counselors. See if you have a local office that you can visit live and in person. Take your financials with you and have a sit down with them.

http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm

We know a couple, the guy is like your Hubby. Thinks his money will go way further than it does. Was blaming his wife for not paying their bills. When they sat down with a Credit Counselor, during the review, they saw the source of the problem. As a couple they'd been doing well up to a specific point in '05. Then there was a surge in their debt. The guy asked what caused that, and his wife said, "Remember the rock climbing vacation you took alone??". At that point, the guy realized that he was the one creating the debts.