Analysis of my situation please

[chinup]

$70k a year income, wife not working, taking care of kids.

1st mortgage $400k, 2nd lien on home is $93k, home value is now $265k.

30k in unsecured CC bills, incl. 18k to Dell Financial through a sole proprietor business in my name. Not sure if that is secured, have nothing in possession I bought from them at this time.

Two car loans, total loans are 39k, total car values are 37k though bluebook shows around 41k.

2 kids /3 dogs, and wife in home.

Any thought on this?
thanks

[starr4law]

Looks like a Ch 7 to me - not a Ch 13. In fact, I don't even think you would be feasible for a Ch 13. Depends on the district, though . . . 4 person household, high mortgage, 2 car payments, definitely sounds like a Ch 7.

[starr4law]

Oh, you may want to walk on that house, too, as part of the bankruptcy. No way that negative equity is going to be recovered. Of course, that is up to you. Just make sure that you don't move until after you are filed.

[chinup]

Thanks, I was looking at possibly stripping of the 2nd which the 7 will not do and holding onto the cars.

[starr4law]

Well, depending on your district, you would probably keep the cars anyways (or at least be able to buy them back from the Trustee for cheap). Even if you strip the 2nd, you are still about $150k underwater on the home . . . that's ALOT of negative equity. The bonus of the Ch 13 is reamortizing your car loans over the 60 mo, but then you will pay more interest, too. Hmmmm . . . I'll be curious to see what others say, but if it were me, I would do the Ch 7, stop making the home mortgage pmts, live in the home as long as possible and save up all the cash I could while living rent free (in some districts it takes up to two years to finish the foreclosure process), and although I do not believe in reaffirmation agreements, I would at least check it out as it pertains to the car loans. Reaffirmations do not have to contain the same terms as the original loan, so you could potentially get a much lower interest rate and/or restructure the terms to your benefit.

Good luck.

[momofthree]

You'd keep your cars whether you file ch.7 or 13.

Even after stripping the 2nd, you are still nearly $150k underwater on the house. You'd be much better off walking away, renting for 2 years, and then buying an identical house for $265k at that point.

Good luck!

[catleg]

Unless you love the house, I'm thinking chapter 7 also. I think the double dip in residential real estate is real. There's just too much foreclosure pipeline.

momofthree is right about the cars, you can keep them or let them go.

You get an IRS auto expense allowance which is probably close to what you're paying in loans which would be a secured debt deduction.

The money you save from the house payments needs to go into an exempt asset.

You might at some point get cash for keys also. Ideally some progress is made on initiatives to rent houses back to foreclosed homedebtors. But who the heck knows.

Don't sweat Dell, they're just another unsecured creditor.

What does your income/outflow look like? If you have enough cashflow, you may be perceived as a strategic defaulter. (not that it matters).

[espo1357]

I choose a 13 over a 7 (right now, I don't qualify for a 13, but could have filed a 7 when I was out of work), because I wanted to keep the home.

However, I have a renter in my home and that makes a huge difference. Having no additional income on the property, through renters, makes your case an easy 7, in my honest opinion.

I also got the sweetheart Blackhouse HAMP deal, so it gives me great incentive to stay as well. This Blackhouse deal, combined with the renter and the chapter 13 payments, are only a few hundred dollars more than renting. And the fact that I love the house and neighborhood, makes a huge difference in going with the 13.

If you love the home, the neighborhood and see yourself living there in 30 years, then maybe a 13. You will recover the 150k lost. But, doesn't it make sense to just start over in a few years?

Regardless, if the finances are too tight, then the best move has to be to get out and lower you monthly rent. A chapter 7 is the best way to do this.

good luck.

[chinup]

Here is the deal. It would cost us the same if not more to rent another home of similar size, especially with the lot size we have for the two kids. Neighbors are great. We can even rent it out for what we are paying on the first if needed down the line. As we plan on keeping it for sometime it makes sense to us to hold onto it.
Problem is, if we go 7, then the 2nd lien is still on the home. BofA just sent us a notice lowering the payment (5 years) from $950 a month to $333 a month with a balloon-not what we want. Property taxes are paid up and the house is packed full of stuff, making moving difficult.

I was talking to the wifey, one remote possibility it to short sale the home to my inlaws and stay in the house, then when possible, buy it back from them. I just cannot stand having them holding a carrot over my head for a few years.

[espo1357]

Here is the deal. It would cost us the same if not more to rent another home of similar size, especially with the lot size we have for the two kids. Neighbors are great. We can even rent it out for what we are paying on the first if needed down the line. As we plan on keeping it for sometime it makes sense to us to hold onto it.
Problem is, if we go 7, then the 2nd lien is still on the home. BofA just sent us a notice lowering the payment (5 years) from $950 a month to $333 a month with a balloon-not what we want. Property taxes are paid up and the house is packed full of stuff, making moving difficult.

I was talking to the wifey, one remote possibility it to short sale the home to my inlaws and stay in the house, then when possible, buy it back from them. I just cannot stand having them holding a carrot over my head for a few years.

Forget the carrot. That is the right play. Short sell and then buy back.

[newbie2]

Here is the deal. It would cost us the same if not more to rent another home of similar size, especially with the lot size we have for the two kids. Neighbors are great. We can even rent it out for what we are paying on the first if needed down the line. As we plan on keeping it for sometime it makes sense to us to hold onto it.
Problem is, if we go 7, then the 2nd lien is still on the home. BofA just sent us a notice lowering the payment (5 years) from $950 a month to $333 a month with a balloon-not what we want. Property taxes are paid up and the house is packed full of stuff, making moving difficult.

I was talking to the wifey, one remote possibility it to short sale the home to my inlaws and stay in the house, then when possible, buy it back from them. I just cannot stand having them holding a carrot over my head for a few years.

Can't do it. The lender will require that the sale be an arms length transaction to approve the short sale. Your in laws would have to sign documents at closing that they are not related to you, nor are friends, co-workers, etc.

[chinup]

Spoke with the attorney today. Here is the skinny.

For myself, file chapter 13 for 3 years, my income of $70k with 4 in the family is under the means of $79k which moves it to 5 years. Both cars and home, strip 2nd and most likely nothing goes to credit cards. Trustee pulls money from bank account which is fine as I hate MOs and cashiers checks.

For my fiance (I call her wife), file 7 and be done with it. Even though her name is on the home and one of the cars, attorney says community property state, she does not have to file 13.

Sounds like a plan.

[biotechsolution]

If you're paying your cars through the plan, do they have to be paid off withing the 3 years?

It seems like a stretch, even with the 2nd gone to cover a 400k mortgage and 37K in car payments on 70K.

[chinup]

1st is $1900 at 2%, 26 years left, includes T&I. No balloon. Car loans are at $36k, BB @ 30k :eesh. 40k in unsecured. Funny how the numbers change once you add them all up.

I was also skeptical about the 36 months but would much rather not go 60. I'm going to get a 2nd opinion of course.