About to File 13 need guidance about Mtg

[myhearts07]

Good morning all, Hearts here. Here is our situation. Worked with lender to try and get loan mod. We lost $1500 in income (I am self-employed as a daycare provider) and a couple of clients lost their jobs so I lost clients. Lender says not enough income, so denied mod. After a few months, got some new clients, about $1200 more in income for me so I am at about $2500 and hubby at $2600. Monthly mtg pymt $2913 (pit) going up however and unsecured debt pymt $2400/mo and there is no money left for food, utilities and other living. Sent in new income info to lender, approved a partial claim, which put a lien on how for the arrears and the payment goes up to $2937. She rcvd daughter's income info but did not and would not take into account her debts. Daughter is co-signer on mtg. She is planning to move out with her grandmother and we had been making the payments on our own as she just got a job in January. Anyway, we refused the partial claim bcuz it would put us in a worse situation with an upside down 1st at $338K and a 2nd that would have been $17K. We want to file a 13 but are not sure that we would be able to . We have $26K in cc debt because we lived on cc's last year when I couldn't get anymore clients and $10K unsecured loan with HSBC, one car pymt of $409.00. I am concerned about the means test but I know we need to do something to get this debt off of us. We never meant to not pay our creditors, but there will be absolutely nothing left if we paid everything. No money for food, clothes, utilities or anything. Any advice? We are talking to a housing counselor on Thursday this week and we want to keep the house. Is this true that the trustee makes the lender or myself get a new appraisal and give a new loan if the appraisal comes in lower in value than what it was? Please clear this up for me. Thanks Hearts.

[StartingOver08]

Your situation sounds like a good canidate for BK. If you want to keep the house, a CH 13 would work. But are your sure you want to keep the house? It sounds like the payment is 57% of your gross income and that is extremely high. (Normal is 28% of gross, some people recommend 25% of gross max).

Of course, this would be a problem if your daughter does not file as well since she is a co-maker of the note on the house. Even if you got rid of all of your other debt, cc's and car payment, you will have a difficult time making the house payment IMO with this economy.

It is something to expore as it seems BK is really the best option for you given the details you have posted so far.

[myhearts07]

So08, thanks for your response. Yes, we need to keep the house right now because I run my home daycare busines out of it. If we give it up, I will have no place to do my business and finding a house to rent that would let me keep the kids there would be hard. Will the BK trustee even allow a 13 with this much debt? We made about $60K last year, AGI and I was told that you could not go over $55K for a couple is this correct for a chapter 7 and that we would have to do a 13. I filed a 7 8 years ago and I don't think that I could do another 7. I wondered though, since I am not on the loan, would I even need to file and could he and my daughter file a 7 together? I got myself removed as an AU on his cc's and we have one account together that I know they would come after me for but that would be okay, I could pay it. I just don't know what to do, I am confused and a little scared. I didn't want to ruin her (daughter) credit and looks like we will be headed that way. I knew the mtg ate up a lot of our income but OMG!!

[UpsideDown]

Go to legalconsumer.com and it'll tell you what the median income is for a family your size. From there you can run the free online means test.

[myhearts07]

Thank u Upside Down. I did go to the website and based on what I input, we are eligible for a chapter 7. However, I filed BK 7 October 2001 and was discharged January 2002. I don't know the timeline for me to be able to file a 7 again. Do you know? Should my daughter file also because she is on the mortgage and will not be able to pay that debt should they come after her?

[StartingOver08]

You can file a CH 7 if it is 8 yrs since your last filing. If none of the debt is in your name, then maybe you do want to only have your husband file.

As to your daughter filing, that could be an issue that you need to discuss with the attorney. I assume she does not live in your house so she would actually be a separate filing.

There are pro's and con's to you filing a CH 13 rather than a 7, the main one is to keep your home. If you keep your home, your daughter should not have to file as long as you keep current on the payments.

You will need to come up with a long term plan to afford the home since it is such a high payment relative to your income.

[myhearts07]

My daughter does live with us and her 2 year old daughter as well. She has a job that she just started in January 2009, and she gives us $200/mo in rent. Will the courts be able to revise the payment amount if I show them an appraisal with the real value or do they not have that authority? Is the bk from the file date or the discharge date that you start counting the years? If from file date, this is the 8th year and if from discharge date, this is the 7th year.

[myhearts07]

Sorry I forgot to add that the only debt jointly in my name is a $10K unsecured loan with HFC. Other than that, no, we don't have any debts together. Won't the BK trustee look at my income in determining if hubby can file a 7?

[StartingOver08]

My daughter does live with us and her 2 year old daughter as well. She has a job that she just started in January 2009, and she gives us $200/mo in rent. Will the courts be able to revise the payment amount if I show them an appraisal with the real value or do they not have that authority? Is the bk from the file date or the discharge date that you start counting the years? If from file date, this is the 8th year and if from discharge date, this is the 7th year.

You count from the FILE date of your original BK. Make sure you tell the attorney the exact file date of your last BK. (You may need to supply a copy of your petition and discharge to the attorney too)

Right now the court does not have the ability to modify your payments in the BK. Apparently there is something in the works to allow the courts the ability to modify your mtg - but it has not passed yet.

Your daughter lives in the house too - that is good. That means you have what - a family of 4? Make sure to check your exemptions at www.Legalconsumer.com for your state.

[myhearts07]

Thanks. Daughter and granddaughter live with us. It was October 10. 2001 that I filed. WOuld i have to wait until then to file again?

[StartingOver08]

Thanks. Daughter and granddaughter live with us. It was October 10. 2001 that I filed. WOuld i have to wait until then to file again?

You would have to file after Oct 10 2009 for a CH 7. You can file for a 13 without having to wait until then,IMO.

[myhearts07]

Ok. that is fine. I won't file with him. My concern in the house and the arrears. THey might foreclose on us anyway if we do a 13. There is no way to pay anything on the unsecured debt as the house will eat up so much of our income. Can a Consumer Counselor try to work our lender to get a loan modification?

[StartingOver08]

Ok. that is fine. I won't file with him. My concern in the house and the arrears. THey might foreclose on us anyway if we do a 13. There is no way to pay anything on the unsecured debt as the house will eat up so much of our income. Can a Consumer Counselor try to work our lender to get a loan modification?

You can only pay your arreage in a CH 13. If you file a CH 7, you have to be current on any asset you are keeping (house, cars etc).

Don't pay on the unsecured now that you know you are filing. Also, don't charge anything (no BT's or CA's too).

A consumer counselor does not help with the modifications.

Go to Loansafe.org or loan modification information

[rjl0206]

if you get a mortgage mod prior to filing bk and they add your arrears to the back of your principal are you considered current by the time you file 13 or 7?

[HHM]

First, what do you think the house is worth? (not that it really matters though).

Ok, I will be the one to say it...you really have NO CHOICE but to walk away from the house. Bottom line, you do not have enough money coming in; thus, the day care business is a losing business for you (your just making excuses at this point of why you should keep the house). Your mortgage payment is too high, there is no modification program or financial option available to you to change that. To afford that sort of payment, you would, at a minimum, need to increase your income by $3000 per month, and realistically, more like $4,000 per month. Since doing so in the next 3 months is unlikely, it is time to walk,

Does your daughter contribute anything to the mortgage? I.e. does she make over $3,000 month and contribute at least 1/3 of the mortgage payment? If not, you have no choice. Even with a chapter 13, your financial situation is not sustainable, and you will eventually lose the house one way or the other. (at least based on the info you have provided so far).

Sorry.