Is 13 right for me?

[robb471]

We are totally unsure which way to go, any advice?

Mortgage -

405K first 5/1 ARM P&I first reset to 3.25% With BofA
174K 2nd currently @ 4% I/O With Chase

375K House Value

45K in CC Debt

170K RV Loan that is worth 75K after maker went out of business

190K per year income.

Our main goal is to get rid of the second that is worthless. We are on track to pay off CC debt in 3yrs. We want to keep the house.

Unsure if Chpt 13 would be best, or to stop paying the 2nd and let it go to charge off and hope & work for a settlement that strips the lien. Just stopping the 2nd would be our first choice...

We will have the CC & car loans paid off in less then the 5yr Chpt 13 on our own, so the only real issue is the 2nd. BK is not something we really want to do, but want to at least explore it.

Suggestions?

[espo1357]

We are totally unsure which way to go, any advice?

Mortgage -

405K first 5/1 ARM P&I first reset to 3.25% With BofA
174K 2nd currently @ 4% I/O With Chase

375K House Value

45K in CC Debt

170K RV Loan that is worth 75K after maker went out of business

190K per year income.

Our main goal is to get rid of the second that is worthless. We are on track to pay off CC debt in 3yrs. We want to keep the house.

Unsure if Chpt 13 would be best, or to stop paying the 2nd and let it go to charge off and hope & work for a settlement that strips the lien. Just stopping the 2nd would be our first choice...

We will have the CC & car loans paid off in less then the 5yr Chpt 13 on our own, so the only real issue is the 2nd. BK is not something we really want to do, but want to at least explore it.

Suggestions?

If you can strip the second, then doesn't make sense to save all that money in the long run?

Unless you are in a job (your income is very good or else I wouldn't mention this) where you 13 might screw you over bad, then I would do it.

good luck.

[SMinGA]

What is your net income less expenses/bills? (Count home loan, car payments, regular bills & expenses. Do not consider credit card payments, 2nd mortgage payment since you would not make them in a ch. 13.)

I'm guessing with that much income, you'd be on a 5 year plan and with a high payment. You might end up paying 100% of unsecured - including the 2nd. If so the only benefit would be the unsecured would stop interest. Is that enough to offset the legal fees and other downsides of bankruptcy? I don't know.

[robb471]

Any advantages/Downsides to just stopping payment on the second and seeing what the back does? Their not going to foreclose.

[LIENSTRIPPIN]

Any advantages/Downsides to just stopping payment on the second and seeing what the back does? Their not going to foreclose.

After 9 months of not paying our HELOC, GMAC has offered a settlement of 10%. However we have another JR lien that we are not paying and they are not budging after 6 months. So it looks like we still will have to file a chapter 13 after all to strip both mortgages. Our house is valued under our 1st by approx. $30K.
I don't know if it matters GMAC received money form the bailout-Flagstar did not.

[robb471]

That would be great, I hope Chase will go that route. I would jump at 10%.

[robb471]

What is your net income less expenses/bills? (Count home loan, car payments, regular bills & expenses. Do not consider credit card payments, 2nd mortgage payment since you would not make them in a ch. 13.)

I'm guessing with that much income, you'd be on a 5 year plan and with a high payment. You might end up paying 100% of unsecured - including the 2nd. If so the only benefit would be the unsecured would stop interest. Is that enough to offset the legal fees and other downsides of bankruptcy? I don't know.

We're still trying to figure out what to do. CC & 2nd alone is about 2k. Were putting an extra 700 toward CC payments.

We understand out payment would be high. What determines a 36 or 60 month payment?

Our main issue is the 2nd. We just have no idea how to deal with it. The home value will not be in the black for some time, if ever with it there. When the rate adjusts we are screwed!!

Thanks

[momofthree]

You may want to fill out the means test to see where it puts your dmi. If the 2nd lien was stripped and you count the deficiency balance on the RV, your total unsecured debt would be around $314k. Depending on your DMI, with your income, you may or may not end up in 100% payback plan. The upside would be that you'd only owe the $314k, the interest would stop accruing, and on a balance that high it would save you tens of thousands in interest alone by filing bk.

You'd have to weigh the risks & benefits of bk vs. settling. Only you can make that call.

Definitely fill out an online means test though to see where it puts you....

Over the median filers are automatically put into a 60-month payback plan.

[Pandora]

When the rate adjusts we are screwed!!

and therein lies the real issue and problem. Can you really afford to keep the house irregardless of filing BK or not? If you cannot afford the payment when the rate adjusts, then you need to seriously look at the bigger picture. When you file BK its going to be based off of what your mortgage payment is now - not what it will be in the future and chances are your mortgage will be paid outside of your plan.

[momofthree]

and therein lies the real issue and problem. Can you really afford to keep the house irregardless of filing BK or not? If you cannot afford the payment when the rate adjusts, then you need to seriously look at the bigger picture. When you file BK its going to be based off of what your mortgage payment is now - not what it will be in the future and chances are your mortgage will be paid outside of your plan.

I believe, please correct me if I'm wrong, he is referring to his 2nd, which would be stripped and therefore not accrue interest during the 13 repayment.

Nevermind, just checked the original post, and the first is indeed an ARM. Ignore me.

[Pandora]

I believe, please correct me if I'm wrong, he is referring to his 2nd, which would be stripped and therefore not accrue interest during the 13 repayment.

Nevermind, just checked the original post, and the first is indeed an ARM. Ignore me.

I had to read it twice before I understood what the OP was referring to myself, so...

[robb471]

and therein lies the real issue and problem. Can you really afford to keep the house irregardless of filing BK or not? If you cannot afford the payment when the rate adjusts, then you need to seriously look at the bigger picture. When you file BK its going to be based off of what your mortgage payment is now - not what it will be in the future and chances are your mortgage will be paid outside of your plan.

Sorry it was confusing. I was referring to the 2nd. It is totally underwater, and at 4% interest only right now. If that goes up, it will put more of a strain on our finances, not to mention it is like throwing money away!

Our first is P&I currently at 3.125 down from 4.75 last year. Now that the first adjustment is out of the way, it can only move 1% a year max. So if rates hit the roof, we have a few years before its an issue. With the rate this low, and protected for a few years, it doesn't seem to make since to mess with it now.