Some "newbie" questions

[sos]

Hello,

I am new to the forum. My husband and I are considering filing Chapter 13. I will try to give a little background. I apologize if it is too much or too little. We have been working with a credit counseling agency since last September but we are still struggling and have missed two house payments. We have two car loans (these are current) and need to keep our cars as we both work in another state than where we live. I commute approximately 60 miles a day and my husband commutes 100+ miles a day. My car was bought in August of '09 and my husband's car was just purchased in Feb. of this year as the car he had was breaking down every month and heading to car heaven.

Do people who file Chapt. 13 normally get to keep their house and cars? I know each case is probably different but I am just wondering what the "norm" is.

We also bought a TV last year (when our 10 year old tv finally went kaput) that we are still paying on - will we have to return that or can we continue to make payments on it or should we pay it off?

Thank you for your time and information.

[debtinohio]

Yes - the norm is for you to be able to keep your house and cars provided you can afford them and fund your chapter 13 payment.

The TV debt will most likely just be listed as unsecured and they'll get a percentage of it, don't bother paying it off. Most likely you can buy a replacement for 1/2 it's cost now anyway. It's very rare for such an item to be repo'd.

[sos]

Thanks for the info debtinohio!

[blessed]

You can generally keep your house and cars with a chapter 7 also, but only if your mortgage is current and there's less equity than your state's homestead exemption. Meet with 2-3 attorneys and see what they say.

[LadyInTheRed]

We have been working with a credit counseling agency since last September but we are still struggling and have missed two house payments.

Are you making payments to the ageny in order to pay unsecured debts? If so, and you think you could afford the house if not for unsecured debt, you might want to consider stopping those payments and paying your mortgage instead. The mortgage should be a priority over unsecured debts if you plan to keep the house.

[sos]

Thanks for all the answers.

LadyInTheRed - yes we are making payments to ClearPoint Financial Solutions for our cc's.

If I understand everyone correctly - we cannot file for Chapt. 13 and keep our house unless the payments on our house are current - is that correct?

Thanks again for your answers and your time.

[blessed]

You CAN file for Chapter 13 without having your mortgage current. You CANNOT file for Chapter 7 without having your mortgage current. You should ask your attorney about both.

[SMinGA]

Ch. 13 can 'save' your home even if you are behind on payments. The missed payments are paid thru the trustee over the life of your plan. You would need to keep post petition payments current as well.

Have you started to assess your income and expenses? That is a good place to start, I think.

Net income - average your monthly. If you're paid every 2 weeks, take your net x 26 and then divide by 12. Weekly would be net x 52 divided by 12 and so on.

For taxes, do you normally get a refund or owe? You may need to adjust withholding. You want to be as close to even at tax time as possible. (This can change your net.)

What are your monthly bills? Not counting credit cards, but do count mortgage, cars, utilities, etc. What are your expenses? The usuals like groceries, transportation, clothing. But also try to consider things that happen less frequently - car maintenance, school expenses if you have children, etc. For things that are not so routine, think about an annual total and divide by 12 for a monthly estimate.

When you compare the 2 categories (income vs. expenses/bills) what remains? This is what can become your plan payment for a ch. 13. If the amount is very small, or negative, then a ch. 13 with your current expenses may be a problem. Are there things you can cut out or cut back? Or is your mortgage/cars/etc. too much for your current income? Could you rent for significantly ess than you're paying?

One last thing - do you have just one mortgage, or do you also have a 2nd or Heloc? How much do you think your home is worth, compared to what you owe on the 1st mortgage?

[sos]

Thanks so much everyone for all the help!

SMinGA - that is great detailed info. I will work on figuring that out and see what I come up with. We only have one mortgage and we (unfortunately) are upside down right now. Our main goal is to keep our house/cars.

Thanks again everyone - I am finding this forum very helpful!