My 4th atty consultation

[mbutterfly]

I had my 4 attorney free consultation last Monday. DH and I are very pleased with attorney, very professional and many years exp as BK attorney. We will be filing chapter 13 dec/jan. Since we are up-side-down on our home (like 98% of mortgage holders: cry, attorney requested for us to obtain pay for a appraisal to strip the 2nd mortgage (equity line of credit). Well the appraisal came $165K way below my first mortgage. First mort 175k equity line of credit $97k... I was in shock.... every other house in my neighborhood is either foreclosed or shortsales...

Since they are going to strip my equity line of credit would I have to pay more back on my BK chapter 13 plan? How would that work?

If someone has or had strip their 2nd mortgage would you please share your exp

Thank you
Mbutterfly

[BKParalegal]

Your repayment is not based on the amount of debt you are discharging, but on what your disposable income is after paying your living expenses et al. What you will have to consider is what expenses in your life will replace the monthly payment that was going to second mortgage. The is a simplified answer, but your attorney(hopefully) will assist you with your budget.

Good Luck

[mmenz22779]

I interviewed over 7 lawyers and found one that i like. It is scary some i think I knew more about BK than they did, others it felt like all they wanted was $$ i walk out of one during the interview.

Back your lien strip, Good for you, I am trying to strip my lien as well but am 30k shy of it. I wont file until may due to income and recent purchases but if i can stip my lein that would save us 250k and put us in a 13, and still i would not have any disposable income left. If not then it is a chapter 7.

as Paralegal said repayment is not based on debt discharging but on disposable income. You take all your normal expenses you would take in a chapter 7 means test and what ever that number is you will get to add other expenses. What would save me is i have 3 401k loans that total nearly 1000 and 401k contributions that count for 400 more so after those i would not have any disposable income and I have daycare of 1700 a month.

It is too late now for you to take out a 401k loan but you might be able to increase those 401 payments to a modist amount and get your disposable income lower.

[HHM]

Since they are going to strip my equity line of credit would I have to pay more back on my BK chapter 13 plan? How would that work?

Typically yes, because you will not be allowed to claim the payment you were making on the 2nd mortgage as an expense, so that would result in an increase in your disposible income.

[mbutterfly]

mmenz22779 & BKParalegal,

Our disposable income ...left over about $90 dollars, before the lien stripping...but since they are stripping the 2nd lien we would have a disposable income left of $650.00. Our chapter 13 plan payments are for approx $85.00 a month... that was not including the lien striping. My dh has a 401k that he has been contributing and I have a IRA. Would it be too obvious if dh increase his contributions.. we are planing to file in dec/jan??

[mmenz22779]

it is kinda on a judgment basis. I am not sure if an IRA is ok, but on the 22c it shows on the part 5 of the 22c.

if you dramitclly increase the 401k say presently you are contributing 100/month and all of a sudden you increase it to 1000 month then that could be an issue if you are only 1 month from filing. you are better off to just do a small amount, i am doing 300 a month as my employer matches up that amount. My lawyer said the trustee should not have a problem with it.

if you strip and have 650 left over then it is a good chance you will have to use that to pay your 13 for 5 years, still that is only 40,000 and you are wiping out 165k plus what ever expenses you have.

you have to balance it out, look at it logically, if you are having any thing more than 300 deducted then you may raise a flag and the trustee may stop you. another words dont push it to much to where it hurts you especially 1 month before. If you had more time like 6 months then you can increase your contributions and it will look better.

have you thought about increasing your with holdings? buy a car so you have carpayments enroll in a new child care that is higher quality?

no matter what your big issue here is you are filing next month and any big move you make in respects to your money will raise a flag.

If you are going to make these types of moves you need to allow more time.

good luck.

[mbutterfly]

Thanks for your input mmenz22779

You are correct! I do not want to raise any flag. Since it's only me and DH we always pay back taxes to uncle sam... I have kids in college but they do not reside with us. I am so anxious just to get this over and start our life again. Are most of BK cases that strip 2nd mortage are succesful? I believe that the judge will have the final approval