Not sure if Chapter 13 is right for me, need advice!

[travlinladi]

Hi everyone!

I am new here and need some advice. I've read a lot of other posts dealing with Chap 13, but not sure if this is the way to go. I had an initial consultation with a bankruptcy attorney and he suggested 13. My situation is I have a Florida investment property that is way upside down. I owe 244,000 on a house that has been recently appraised by a real estate agent at 115,000. I have a interest only loan that keeps going up ( I asked for a 30 year mtg, didn't happen) I cannot afford the payments anymore. I own a house in PA with a 2nd mortgage that I owe 25,000 only and want to keep my primary PA home. I do not have any other debts, no credit card debt, car payments, etc. My name is on the deed to both homes, not my husbands. I am self employed and do not get a regular income and no unemployment. The attorney recommended that I no longer make payments on the FL home, because it is way upside down and try to do a short sale. I am 2 months behind on payments and have been out of work for 6 weeks. I am getting calls from the bank daily wanting me to pay, which I can't. Do I have any other options or is 13 right for me? Thanking all in advance for advice.

[lrprn]

Do I have any other options or is 13 right for me?

If you intend to surrender your Florida property as a part of filing Ch 13, then given what you've told us so far, Ch 13 is worth considering. How much unsecured debt do you have? Do you intend to file alone?

Given that you have no consistent, reliable source of income, filing Ch 13 on your own could be very difficult for you. If you file, you cannot miss even one payment without cause or risk the chance your trustee will dismiss your case.

If you've had no income now for six weeks with no end in sight, it's worth investigating if Ch 7 might be a possibility to surrender the Florida property instead.

Set up several more free initial consultations with experienced bk lawyers in your area who file both Ch 13s and 7s to find out what could work in your situation.

[travlinladi]

Thank you. I have no unsecured debt, no credit card debt, car paid in full. Just that upside mortgage in Florida. My husband is not on the deed, so I would be filing alone. I just want to get rid of the Florida investment and keep my primary home in PA. I will actually be going back to work in 1 week and have steady work until 2 weeks before Christmas. Thank you

[rrockinggramma]

well I do not know the exemptions for PA but you sound like a chapter 7 to me although the equity in your vehicle and your home in PA might cause you to be an "asset" chapter 7 which is more involved.

But perhaps for now, just let the florida home go and wait to hear from the bank on the deficiency balance and then decide what to do about it.

It could take a year or two to hear from the lender on that investment property deficiency balance.

I wouldn't rush into anything at this point. I would wait and let it all play out and see what happens with that deficiency balance.

[travlinladi]

Thank you for the info. Not quite sure what an asset Chapter 7 is though.

[killinstinct]

Yeah, maybe I'm missing something, but why not just let the bank foreclose? Is there only one loan on the property? Then research deficency balance laws in that state....?

I'd cross that bridge when I got to it. Deficency judgement is a loooong ways out from what you've said so far....are you sure you need to BK? You have no other debt!

[travlinladi]

I do only have one loan on the property. My lawyer advised me not to pay anymore payments on the house and when they come after me for deficiency judgement, which I understand they will soon in Florida, then file chapter 13. I just don't want to lose my primary residence, just get rid of the debt from a bad investment. Thanks!

[rrockinggramma]

I would wait right now. Your income isn't really stable enough for a chapter 13 and since you have equity in your vehicle (paid off) and possibly your PA home, (makes your chapter 7 "asset") I would just wait for now until someone calls and asks how you are going to pay for the deficiency balance on the florida home.

By then you may have a more stable job and could fund a chapter 13 or you might be in a position to settle up on the deficiency balance and avoid bk all together.

I just wouldn't jump in right now in your situation.

[killinstinct]

I agree. You're a long way from BK. I would see what the lender does and then negotiate with them after foreclosure. You can also try a short sale, although they rarely work. At least you can say you tried. This takes some ammunition out of the lender and would give you an idea of what fair market value would be.

Check out this website as well. Good info here...has the deficency laws outlined for each state as well. Don't be premature with the bk!!!

http://www.foreclosurefish.com/blog/index.php?cat=3

[killinstinct]

Here's another site that summarizes foreclosure in FL. Looks like it takes at least six months. I would ride it out and see what happens.

http://www.foreclosures.com/pages/state_laws2.asp?state=FL

[travlinladi]

Thank you so much for the advice everyone. I am going to wait it out to see what happens. I can't pay the mtg on house in Florida anyway since I have been out of work for 6 weeks and no unemployment. I'll let you know the outcome. Thanks again!!