I am a wreck

[jwmc1]

I have spent the 2+ years trying to reduce my debt and keep everything current. I have wiped out every dime I have in savings and I have leveraged my house to the point where it is now about $80,000 under water. My net worth is substantially negative and my monthly house payment beteen the 2 mortgages is more than $2,100 (not inlcuding taxes). I am a banker and I have seen my pay decline by nearly 40% during the last 2 years. I am behind on everything. I also owe about $25,000 in federal taxes as well as another $5,000 in state income taxes.

I went through the NOLO site and did the means test, and I will not be able to file for 7. However, the I am only allowed $1600 or so for my house payment.

I have about $45,000 in unsecured debt that is in various stages of collection from the credit card company or collection agency. I also have two car payments.

I am riddled with anxiety and I simply don't know what to do. I can't sleep or eat and I feel like there is no hope. I have a couple of questions I was hoping someone could help me with.

1. Can I claim more than the IRS allowed amount for my housing expense?
When you go through the calculations, are you expected to devote every dime of the "disposable income" to the 13 plan?
2. What is the purpose of the threshold debt amount?
3. My first mortgage is $180,000 and my 2nd is roughly $100,00. My house value has collapsed to $190,000 or maybe less. Will this be to my advantage in anyway?
4. Is it possible to get into a 7 even if you have a positive disposable income?
5. I am from the Ann Arbor area, does anyone have recomendations for an attorney?

Thank you

[rrockinggramma]

so you are a Michigan filer in the Eastern District. I also filed Eastern District, Michigan.

On the surface yes every "dime" goes to disposable income however any good attorney can help you create a good budget that won't starve you to death.

I filed under the old law, so I don't know if the trustee's allow more than the 1600 for the house payment (per IRS guidelines) . But with a good appraisal you might be able to lien strip your second, third etc but there are guidelines on how to make that all happen.

I have found that even though living on a "budget" is tough filing chapter 13 was the best thing I ever did for myself. It was a blessing in disguise. I would recommend that you contact several local attorney's and make appointments for that first free consulation and see what they have to offer.

You want an attorney that will stick with you throughout the plan and one that will respond to your questions and emails without delay so put that on your list of questions when you interview them for hiring.

I know who I used of course and he was "ok" and was there til the end but didn't always answer my emails right away. LOL

[BigJohn]

I have spent the 2+ years trying to reduce my debt and keep everything current. I have wiped out every dime I have in savings and I have leveraged my house to the point where it is now about $80,000 under water. My net worth is substantially negative and my monthly house payment beteen the 2 mortgages is more than $2,100 (not inlcuding taxes). I am a banker and I have seen my pay decline by nearly 40% during the last 2 years. I am behind on everything. I also owe about $25,000 in federal taxes as well as another $5,000 in state income taxes.

I went through the NOLO site and did the means test, and I will not be able to file for 7. However, the I am only allowed $1600 or so for my house payment.

I have about $45,000 in unsecured debt that is in various stages of collection from the credit card company or collection agency. I also have two car payments.

I am riddled with anxiety and I simply don't know what to do. I can't sleep or eat and I feel like there is no hope. I have a couple of questions I was hoping someone could help me with.

1. Can I claim more than the IRS allowed amount for my housing expense?
When you go through the calculations, are you expected to devote every dime of the "disposable income" to the 13 plan?
2. What is the purpose of the threshold debt amount?
3. My first mortgage is $180,000 and my 2nd is roughly $100,00. My house value has collapsed to $190,000 or maybe less. Will this be to my advantage in anyway?
4. Is it possible to get into a 7 even if you have a positive disposable income?
5. I am from the Ann Arbor area, does anyone have recomendations for an attorney?

Thank you

If you can get a legitimate appraiser to appraise your property for under $180,000, you can lien strip your 2nd mortgage.


What is your gross income?
Car(s) payments?
How long have you been paying onthe cars?

[jwmc1]

Our adjusted gross income is about $145,000. The car payments are $404 and $358...insuarance is about $300 per month. Been paying on the $404 car for about one year, the other one is a lease with about 4 months left.

[jwmc1]

If you can get a legitimate appraiser to appraise your property for under $180,000, you can lien strip your 2nd mortgage.


What is your gross income?
Car(s) payments?
How long have you been paying onthe cars?

What if it is appraisaed for $190 or 200? Could the lien be reduced, or is it an all or nothing type of situation?

[Billssuck]

My mortgages are over the IRS standard amount and were allowed. I agree with others who have posted: see if you can get an appraisal and/or quick sale value on your property that is less than the amount of your first mortgage so you can try to strip your second. Our value of our house was way above the first mortgage so we couldn't strip the second one.

[rrockinggramma]

you will want to replace the lease car before you file. Once in a chapter 13, you will not be able to finance another vehicle.

If you house appraises for 180,000 or LESS then yes, you can get rid of your second mortgage completely in a chapter 13. But the key is getting the appraisal LESS than your first.

But in Michigan right now, it is pretty bad so you might be ok. I live in Brooklyn and just got a place for 105,000. (foreclosed of course) In this subdivision, houses were selling for 150,000 to 175,000 before the bust.

And depending on the tax situation, (when filed, when notified of owing etc) you might be able to discharge some if not all of those as well. But depends on the age and if you filed on time etc. I was able to discharge my State taxes.

[woeisme]

Yes, lien stripping 2nd mortgage is an all or nothing situation, if your home value is less than 1st, can strip others, basically making it unsecured debt. If home value is higher than 1st mortgage, then part of the 2nd is secured, and as a result, you can't strip any of it. If you can strip, that doesn't mean the 2nd gets nothing, just means they get the same rate as the rest of your unsecured debts, which is based on disposable income, which would go up as a result of the lien strip. So in the short term over the 5 years of your CH 13, might not make a bit of difference in your budget, same money goes out, just to all unsecureds as opposed to 2nd mortgage 1st, but once you come out of CH 13, is definitely to your advantage to have the balance of that 2nd discharged.

[jwmc1]

OK, thanks...nothing in our neighborhood has sold for even close to my first mortgage balance. It has been a complete disaster in our area, foreclosures, short sales, etc.

Can someone tell me that filing is going to help me sleep at night...I truly have never felt so hopeless.

[rrockinggramma]

well I won't make you any promises I can tell you that although living in a chapter 13 is not totally stress free it definitely makes a difference. No more phone calls, no more worrying about a vehicle disappearing from the driveway.

I included everything in my filing. My cars, all of my debt some of which was only like 15.00 but I put it all in there. And I made sure I listed every creditor.

It takes a few days for the phone calls to stop but one you file, your mail delivery is less stressful. The fear that every car that pulls into your driveway is a judgment servicer goes away. I think it took a full 6 months after I filed to realize that it was definitely better. Then it was just a matter of making sure my priorities were right and for me, learning how to budget what money I had was a real eye opening experience. For the first time I lived within my money and wasn't trying to plug holes.

Everyone has different experiences. But with a GOOD chapter 13 budget it can be a positive experience.

And it helps if you are ready to file: Cars that will make it through the next 5 years with minimum repair (get rid of the lease) Make sure your home is in good shape (no roof leaks, no water leaks in basement, structure is good etc because money for major repairs is non existent)

Since you are a banker you make business decisions every day. Think of this as a business decision for your family. This will help you catch your breath and reorganize your finances and get back on your feet. And stop the IRS from filing tax liens.

so if you see filing as the best thing for you and your family and go into it with a positive attitude, it will work for you. If you feel dragged into and look at it negatively (woe is me attitude) then you will be miserable.

[woeisme]

Filing CH 13 was the best financial decision I ever made. Of course the fact that I let my finances get to the point where I needed to file probably means I wasn't that good with my finances in the past, lol. But seriously, am 2 years into it, and don't regret making the decision to file for a minute. Yes, some months are tight. My hubby went on disability a year into the 13, we had to get a new car, all kinds of stressful things happened. But they would have been stressful events even if we hadn't filed, you know? And I know how to live within my means now, and in 3 more years, will emerge from this CH 13 with a whole new way of thinking about my finances and "needs" vs. "wants". I come to this site to learn things, because in the past I used to hide from my financial problems, now knowledge is power, and it really helped me navigate the tough times. Sorry you are in the situation, but CH 13 is not the end of the world, for me it was a new beginning.

[poorold]

what is your monthly housi5n2g payment if you exclude the second mortgage paymnet?

plus, If you are able to strip the second, you gain 100,000 from that alone. Not a bad trade-off.

[DSIG]

Its been a while since I posted as I have been busy, but with my 341 mtg in two days I came back here to ramp up. Don't have regrets about filing. You already have drained your savings. This is an unsustainable path that leads nowhere. A ch 13 plan will force you to strike a balance. Bottom line, if you dont have enough money for something you want, you save for it. That is the best thing about paying with cash for everything. You cannot over-spend! This is a humbling experience but it gets better with each day. Let us know how you make out. You are in the best place to seek advise.

[jwmc1]

My first mortgage payment is $1,050