Baby on the way

[nazstar]

We have a 6 month old daughter and we just found out there is another on the way in 7 months. We spoke to a lawyer about filing for Chapter 7, but our salaries were too high, so we are exploring Chapter 13. The question is this...when the second baby gets here, I was going to quit my job and become a stay at home mom. We have no family in the state to help out and don't want to use daycare. Can the court mandate that I work or refuse to set me up for Chapter 13 based on this? Will they take this new baby into account when determining our payments? it's not just a matter of me quitting to qualify for Chapter 7 - it's a life style choice we want to make. Right now, we both work flextime but that was only a 12 month arrangement.

[JollyGG]

If you wait until you are a family of four and only have one income can you qualify for a chapter 7. If you can do that I'd just wait and file then.

[wooisme]

It wouldn't surprise me at all if the trustee (as nasty as they are) will demand your baby to get a full time job and help pay the bankruptcy! sorry i just had to say that.

anyway, i think what happens is that they take into account the last 6 months and then if there is a change in your income then you do an amendment ...

If you can hold off with bankruptcy you may want to wait and do a 7 if you can ..if you cannot hold off at all then you probably should just do the 13 to get the protection and then at the time you have the baby you could either convert to a 7 or amend the plan.

[EveryDayAdam]

I agree with the previous two posters. It may be beneficial to quit your job now rather than wait for the baby to arrive. The sooner you quit your job, the sooner your old income falls off the 6 month radar.

So you will have less income, and you will be able to go for the median family income for the next level higher (with the new family member.) Quit your job as soon as you can, and file after you have the baby. It most likely will put you under median income, or you might be able to pass the means test then.

You haven't said much about your situation, but if you've got creditors filing suit against you, then you may need to do 13. If you haven't paid some of the creditors in a year, then you may need to think about 13, but if it's been 6 months or less, then I wouldn't worry about it. I didn't pay Amex for 2 years on $24k I owed them...and I was just starting to get calls from local attorney's when I filed. Everyone else was still with collection agencies.

Also: if you do get a suit filed against you, make sure you answer the court order and actually go to court. A default judgement will be entered against you a lot sooner than an actual hearing and judgement would come...If you file an answer, petition and do everything you can to get the court date pushed back...There is a post on this board describing how someone did it...I think he's still waiting for a judgement, and it's been almost a year after he 1st learned of the suit.

So, you shouldn't have any problem pushing back the serious collection efforts in time to get your income low enough and for the baby to arrive to file a chapter 7.

Also, make sure you talk to a good attorney that specializes in BK...they are DEFINITELY worth the extra money...My attorney, who charged about $2000, easily saved me over $40,000 over the life of my chapter 13 from the way I calculated my payment. Be sure to meet with at least 3 attorneys, and go through all the initial consultation paperwork and ask them what your options are, and if it's a 13, what your payment would likely be.

My attorney got my $200/mo for 15 months on my 13, instead of the $750/mo for 60 months that I calculated it at...So, definitely don't automatically go with the 1st attorney you meet with...some are definitely better than others.

[nazstar]

Thanks for the advice. I currently behind on my mortgage (1 month) and we want to include the house in the filing and get rid of it. It is the source of alot of this problem. As for the rest of the bills, I didn't pay November - nothing is with an attorney - just still with the banks. We bought this house and then found out the sellers lied on the disclosure about structural damage. 4 years and $100K in legal fees later, we were only able to settle for a fraction of what we were seeking.

Our debt is from a multitude of reasons: we both went through a divorce. My ex-husband left me $65K in the hole, his ex-wife left him $60K in the hole. Our house lawsuit sucked up $100K over 4 years, we lived beyond our means because we were assured we had a good case and would win (seeking $350K) - so we didn't worry about carrying a lot of debt - we were going to pay it back with the settlement. Also, we enjoyed the casino - which ceased when our daughter came along and the lawsuit died. All in all, it STARTED with circumstances out of our control, but we did nothing but add fuel to the fire over the course of time.

I'll have to look into quitting my job now. Being pregnant, the benefits come into play and I need to see what my husband's coverage is like before I make that decision. Plus, I get a bonus of about 50% of my yearly salary in February. I wanted to use that to do needed things like repair our car, get a crib for the new baby, and I need to pay back my brother some cash. After that, I guess quitting is feasible.

Also, I heard that payments to family can be considered preferential and if you make them 12 months prior to filing, they can be re-claimed by the court? Is this true? I really need to pay back my brother - he needs the cash and lent it to me with the understanding he would get it back in 6 months. If I get my bonus and withdraw it as cash and spend it, how does that affect my filing? I might need to draw on that over the 6 months we are pulling in one income.

[EveryDayAdam]

Nazstar,

You have PLENTY of time then. If you are only one month behind (barely that, if you didn't pay november), then you have MONTHS and MONTHS, maybe even a year or two, before anything really bad happens.

I'd suggest stop paying all the debts...since you don't plan on keeping the house, don't pay that either...no point in throwing good money after bad. Save that money and put it towards a good lawyer and a deposit on a rental, or a new house...You'll probably have to rent for a couple of years tho. Get ready for a lots of phone calls. I'd suggest searching this forum in the collection problems forum for advise on how to deal with the debt collectors...however, for the first 3-6 months you'll be dealing with internal collections, who aren't so bad..."just letting you know that you forgot your payment".

Once they get to an outside collector, that's when you get to write cease & desist (C&D) letters, etc. They aren't so bad to deal with...find a good template C&D letter, and send that off to any collection agencies who call you or write you letters. That should keep things quiet on the home front. Save the template that you use, because you'll be getting calls from several collectors...just fill in the blanks on the template and send it off...be sure to send it certified with return receipt...Be sure to keep a copy of the letter you send them, and save the return receipt.

When you get calls from outside collectors: Do not promise to send them any money. Do not give them any information about you, or your situation. They don't care that you quit your job, have a baby on the way, had bad luck, etc...The only thing they care about is their money, and anything you tell them can be used against you in an effort to collect it. Don't tell them where you work, what you do for a living, how much money you make, where you keep your bank accounts, or ANY personal information about yourself. They will press you hard and try to trick you in to answering those questions. DON'T TELL THEM ANYTHING AT ALL. All you should simply say is "I can not pay." and nothing else. If they ask you why simply tell them "I can not pay and that is all you need to know." you are not obligated in any way to talk to them or give them any information, so DON'T. Don't try to outsmart them, negotiate, or otherwise have a conversation with them...you can't win. They've been doing this day in & day out for a long time, and they are better at it than you are.

What you should ask them when they call:

1) What is your name?
2) What is your company's name, address, and telephone number?
3) Who owned the original debt and how much is the debt for?

Be sure to document their answers to the above questions, write down the date & time that they called. Thank them for their time and hang up the phone. If they ask you about making a payment say to them "i'll see what I can do" or "I can not pay at this time" and hang up the phone on them.

They may try to call you at work but this is simple to deal with: Ask them the same information as above. When you have finished: before hanging up, inform them that they have called you at work and that they are not permitted to call you at work any longer as your employer does not approve of personal calls at work. Give them your home phone number and hang up. Document the same information as above as well as that they called you at work and that you informed them that they are not allowed to call you at work. Send them a C&D letter, and be sure to mention not calling you at work in it...send it certified with return receipt and save a copy and the return receipt.

If you follow the above advice, you should pretty much minimize the number of calls you get...might get one a week or so, instead of the 15 a day that you would get otherwise.

Some other good tips: Be sure to put your full name on your outgoing message on your answering machine or home voice mail. This will let the collection agencies know that they have the right number, and they won't call neighbors, relatives, etc.

You should also screen your calls. It's best to not talk to them on the phone at all...and just simply reply back to their collection letters with the C&D letter. They will almost always call with an 800 number or no caller ID information will be sent...so you know pretty well ahead of time who is a collection agency...Some of them are now calling from regular looking phone numbers, however. Just make sure you stick to your script and you'll be fine.

Now, in regards to your home, there have been some people on this board who say that they've been able to stay in their home rent free for a year before they were forced to move out because of not paying their mortgage. I'd suggest trying to stay as long as possible, but you should be ready to move on a moments notice. Since your credit hasn't been wrecked yet, it's probably best to find a place to rent as fast as you can...I'd say within the next 60-90 days you should find a place. No rush to move in though.

Now all you should do is save as much money as you can to pay lawyers and the cost to move and any rental deposits you might need

[nazstar]

THanks for all the good advice. We didn't know how fast the foreclosure would move and we secured a rental - we are moving this weekend. That was a source of stress for me with an infant...as long as we had a roof over our head. We got a deal via a friend - we were honest about our situation, but she said she knew us and knew we wouldn't stick her with the rental so I didn't have to undergo a credit check.

[nazstar]

Nazstar,

You have PLENTY of time then. If you are only one month behind (barely that, if you didn't pay november), then you have MONTHS and MONTHS, maybe even a year or two, before anything really bad happens.

Typically, how long does it take a bank to move to foreclose? If they foreclose, how long from that point to get a judgement against me for the deficit? I'm trying to get some repayments to family and friends out of the way but I don't want to violate the preferential payment 12 month rule. If I pay all family and friends back in February, wait 12 months to file, then go ahead with the bankruptcy, that would be ideal. I don't think I'll be taken to court by a credit card agency within 11 months... It would first have to leave the debt management company, go back to the credit card company, then through their collections, then through outside collections. That's gotta buy me at least 6-10 months right there!

[SinkingFast]

In a good market,............ Foreclosure could go quick.

In this market,.......... There are people who are at 5-6 months of no payments and their Lenders haven't moved on Foreclosure yet.

A lot too, depends on what State and the Foreclosure Laws where the property is located. NY is a Judicial Foreclosure State. Takes about 15-18 months to complete a Foreclosure there. Other States have "Right to Sale" clauses in the mortgage contracts. Foreclosures move quicker in those States.

When I first joined the Forum, there were people here who'd gone years without making payments. Since then, a few people have been sued by Creditors after as few as 5-6 missed payments.

Not saying you can't/won't make it a year. Just you should be ready to move to protect yourself on a moment's notice at any time while you're getting prepared.

[nazstar]

I am moving this weekend - I secured a really nice rental at half the price of my current mortgage payment. The house will be vacant and I don't care when they foreclose - I just need to buy time until a judgement is made against me to cough up the difference.

I live in Florida, BTW and it seems every 5th house is in some type of foreclosure. It might move fast in my case because of our HOA. They will try to foreclose first for non payment of HOA fees.