Do I include my house or not?

[deedee642]

I am very new to all of this. I have retained an attorney and want to file Ch. 13. I want to include my unsecured credit cards and loans. When I left my attorney's office he told me I could stop paying my credit card bills. This is going to sound silly, but I couldn't do it and already paid some. I am worried about the phone calls I am going to get. I know it is silly. My attorney said that I should pay my car bill and mortgage. But then he said, unless you want to put it in the bankruptcy. I am in a ARM that is at 8.9% interest rate. I tried to refinance but I am underwater. I have been in the house for 4 years and I owe $119,000 but it was accessed at only $99,000. What are the advantages and disadvantages of including my house in the CH. 13?
Thanks,
Dee

[lrprn]

When I left my attorney's office he told me I could stop paying my credit card bills. This is going to sound silly, but I couldn't do it and already paid some. I am worried about the phone calls I am going to get. I know it is silly.

You are right - it is silly to pay money to your credit cards when you know you are going to file bankruptcy. Keep in mind that phone calls can be answered with your name, "I don't have any money to pay you right now" and then hang up, even if they are talking. You can also choose to get caller ID with an answering machine and not answer any calls with numbers you don't recognize. Another option is to get a pay-as-you-go new cell phone and give the number only to your friends and family asking them not to share the number if anyone else calls.

Don't let your fear of the calls make you keep giving money away that you could use to better prepare for filing. Use that money to get things done you've been putting off - dental work, doctor's appointments, house repairs, car repairs....all of these are legitimate uses for your cash before filing.

My attorney said that I should pay my car bill and mortgage. But then he said, unless you want to put it in the bankruptcy. I am in a ARM that is at 8.9% interest rate. I tried to refinance but I am underwater. I have been in the house for 4 years and I owe $119,000 but it was accessed at only $99,000. What are the advantages and disadvantages of including my house in the CH. 13?

The biggest advantage of surrendering your home when you file is since your house is worth less than you owe on it, by walking away from it now and renting for the duration of your plan, this is your chance to get a truly fresh start. The chances of your home's value increasing the amount you need it to over the during of your plan is very, very small. Another advantage is by combining your surrender of the home with your filing, the credit bureaus see the home surrendar and filing bk as one black mark, not two. One more advantage - depending on where you live, how much the housing market has recovered there, and how aggressive your mortgage lender is, you could potentially live in the home without making any mortgage payments for quite some time.

The biggest disadvantage of surrending your home when you file is that you will eventually have to find a suitable rental - whether that's before you file or after depending on your housing market and lender.

Make an appointment to meet with your lawyer again to discuss all the options around keeping or surrendering your home when you file. Ask what he/she normally recommends in this situation with their other filers. Good luck, and keep us posted about what you find out.

[deedee642]

Thanks for your suggestions. I actually want to keep my home. I thought that I might actually qualify for some programs if I do place it in with the CH 13, as silly as that sounds. It is a condo and we are not allowed to rent our units out. My loan was not backed by the federal government, so I have not been able to qualify for any of those types of programs.
Dee