Hi, new here, need some help.

[SMinGA]

Bottom line to think on now, perhaps, is what is the house worth? If the mod goes thru - then the lender will add the missed interest back to the principal of the loan. Meaning your loan balance goes up. Won't go up by the full $40k in back payments - since part of those payments was for principal anyhow. Would probably go up by $30-33k is my guess so still pretty big change. Depending on what the house is now worth, is it worth keeping?

[SMinGA]

Exemptions are what you're allowed to keep in bankruptcy. They are more important in ch. 7, most people do not lose assets in ch. 13.

Lets say your financed car is worth $14k and you owe $12k, you have $2k in equity on that one. Then if the owned outright car is a $6k value, you have a total of $8k in vehicle equity. Each state has an amount that you can protect for vehicles, usually the amount doubles for joint filing and some states also have a 'wildcard' exemption you can apply to any item.

If your vehicle equity is more than you can exempt, then the overage can create a minimum amount that must be paid into the plan to unsecured creditors. Such as if you can exempt $5k total, and have $3k nonexempt and want to keep both cars - then in the course of your plan the unsecured creditors must get at least $3,000.

Saw something on here about if you own a vehicle outright, there is an exemption? What does all that mean? We have a loan on one vehicle and own one outright. Confused a little. momofthree thank you so much for helping me

[lynnws]

Thanks! The house is only worth around 150,000 give or take, loan is 198,000, 2nd is 40,000, so yes it doesn't look like we shouldn't keep it, but we hate to move again, our kids are school age and we have moved 7 times in the last 14 yrs with hubby's job, so moving sucks. I will know more when we talk to the lawyer.

So our car that we own outright, we will be able to keep it in the 13?

[SMinGA]

Very few people lose assets in a ch. 13, so you will probably be able to keep the paid for car. If it is worth alot, it could create a dilemma if you have very little DMI.

Kids are stronger than we give them credit for. I'd say to seriously consider all options before binding yourself to an underwater mortgage. Even though you could get rid of the 2nd in a ch. 13, you'd still be ~$48k under. And that might make it impossible for the mod to happen - I am not sure if the lender would add more negative equity to the loan.

Thanks! The house is only worth around 150,000 give or take, loan is 198,000, 2nd is 40,000, so yes it doesn't look like we shouldn't keep it, but we hate to move again, our kids are school age and we have moved 7 times in the last 14 yrs with hubby's job, so moving sucks. I will know more when we talk to the lawyer.

So our car that we own outright, we will be able to keep it in the 13?

[lynnws]

Car is worth 4,000 maybe. I see what your saying about the negative. Wonder why Wells just don't tell us they will not add negative equity into the loan mod?

[SMinGA]

I don't know for sure if the severe negative equity will have an impact on the mod. On one hand, it seems a bad move for the lender. On the other - you already have a mortgage that is (now) upside down and modifying the rate/bringing the loan current despite the equity situation means they don't have to deal with selling it now for that major loss.

For us, the key to staying (in addition to getting the mod to catch us up) was that we cannot really rent for less. Perhaps could have saved $50-75/mo on the monthly payment, but then that would balance out with tax advantage of interest/taxes. But we're also not as far off in equity. Worst case scenario, I'd say we are about -10% - but its hard to gauge without an appraisal and we have no need to sink $ into that right now.

Car is worth 4,000 maybe. I see what your saying about the negative. Wonder why Wells just don't tell us they will not add negative equity into the loan mod?

[lynnws]

I'm not sure we could rent for any less either.

[lynnws]

Spoke with lawyer, she said to wait to see if Wells does the loan mod. before making the decision to file. I really hate the waiting. At this point I am wondering if keeping the house is a good idea or not, I mean 45 or so arrears by now and another 45 -50 negative.

Ideas?

[SMinGA]

If you can't rent for less, then taking a wait & see approach seems reasonable.

Worst case scenario, if things change in a few years (job transfer, etc.) then you can modify the plan to let the house go.

[lynnws]

So wait on Wells to make their decision? Thanks for your help!

[SMinGA]

Seems reasonable. As long as there is no need to rush to file - such as wage garnishment or such by another creditor. Might as well wait it out.

My opinion - if renting is not going to save $ monthly, then staying in the house makes sense. It costs $ to move, and you get tax advantages on paying interest & taxes while on the mortgage.

I have fears in the back of my mind - the house will need work if/when we want to move in X years - but that does not make it reasonable to move now. With our mod, we'd have to pay MORE to rent anyhow. And that is not likely to change even when our rate caps at its maximum in ~4 years. And though we have not filed yet, its reassuring to know that a plan can be flexible should things change. That gives us the same sense of freedom we would have if we were renting and not tied to a mortgage.

So wait on Wells to make their decision? Thanks for your help!

[lynnws]

I've been looking at rental homes and it appears we can rent for less and be closer to my husband's job, he commutes 1 hr each way now. Spoke with lawyer again today and we are moving forward with the 13, but letting the house go.

When will we ever be able to buy a house again? I am still unsure if the court will take our tax refund and or bonuses, anyone know?

[SMinGA]

Taxes & bonuses - depends on the trustee/district.

I understand that you can qualify again for a mortgage 3 years after the official foreclosure.

[lynnws]

Thanks, so even doing the 13 the house will foreclose and then 3 yrs after sale for another mortgage? I was thinking it would be 2-3 yrs after the 13 is dishcharged, wow, that would be at least 7 more yrs. So, my thinking is wrong?

[SMinGA]

Are you thinking the foreclosure won't happen until after the 13?

It will happen based on your state's foreclosure process. The 13 won't stop the foreclosure. If you do a 5 year ch. 13 plan (over median, automatic 5 years) then as long as the foreclosure is finalized within 2 years of starting, you should be able to get a mortgage when your plan is completed.

I would think you may be best to move into the rental before filing. Figure out what your new expenses are so you can go into a plan with accurate #s. Just my opinion there...

Thanks, so even doing the 13 the house will foreclose and then 3 yrs after sale for another mortgage? I was thinking it would be 2-3 yrs after the 13 is dishcharged, wow, that would be at least 7 more yrs. So, my thinking is wrong?