My first Post and I have questions.

[Egr61]

If you have a car loan, once you file your bankruptcy papers, auto loan company will stop taking payments. Our car got reposessed even though we were keeping it.

This was not the case in Chapter 7. My car loan company accepted payments after I filed, but did stop sending statements. I got my discharge, and the car still hasn't been repoed. I'm current on the payments.

[catleg]

Yes when you file BK you will stop getting bills for car payments, but if you plan to keep the car you need to send them in on your own. Your attorney will usually get a letter from the lender stating this.

[Pandora]

From your many posts it seems we may want to rethink trying to save the house through Chapter 13 and go ahead with a Chapter 7. .....And a million other concerns that only a parent who goes through Bankruptcy could understand entirely.

What do you think will happen to the plot of land I own and described above? ...

Chapter 13 and struggle for 3-5 years and ‘hope’ we get a discharge or Chapter 7 where we get a clean slate relatively fast and walk away with a small enough ‘nest egg’ (through possible exemptions and staying in the house as long as we can rent free) to help us rent something large enough for a family of five in a good school district... and begin again.

Answering in order above :

House:

Its always a hard decision to give up things you've struggled to get (and keep) but the bottom line becomes you have to do whats best for your family / situation. As far as the children and pets - I understand totally where you're at, but should it end up that you decide to let the house go and rent, look for places that will allow pets, but dont throw out places that say "no pets" either. Talk with the landlord and explain the situation - even those that say "no pets" sometimes will relent. We were in a similiar situation before we purchased our home currently, landlord didnt want children OR pets due to previous tenants children and pets destroying the house.

Our plan of "only renting for 2 years" turned into 9 and we treated that home as if it were our own, did all maintenance, repairs, painted, landscaped, etc. (all with permission of course) and even went so far as to allow the owner to come in and inspect whenever he wanted. He only did that twice, but was extremely happy with what he saw. When we purchased our current house, it was heart wrenching to leave the rental as it had become home - and the landlord tried to get us to stay, he enjoyed us that much - so much so he kept the rent the same all 9 years (less than $700 a month for a 3 bdrm house when every other house was renting for $1200-1400), but raised it once we left.

All you need is for one person to give you the chance to prove you will be the best tenant ever and of course, have a heart. You'll find something if you have to go this route that will allow you everything you need. Keep the faith and know that if you do have to let the house go - in the end you are making the best financial decision for your children towards the future, i.e., no debt and actually can have money every month.

Land:

What is it worth if you had to do a quick sale vs. how much you owe, if anything? You can get a quick guesstimate if you look at your property taxes - call your county land assessment office and see if they do Fair Market Value at 100% or if they do a percentage. If you owe on it, then you should get the difference, but you also have to be able to exempt it if you want to keep it. If you cannot exempt it (assuming you keep it), filing CH. 13, you will have to pay that amount in your plan - else relinquish it to the trustee to distribute between your creditors.

Same with tax refunds... so be careful there.

Filing Chapters:

You answered your biggest question/concern IMO by writing "... struggle 3-5 years... in hopes we get a discharge.." regarding Ch. 13 or 7. Do not enter into a 13 if you know you cannot afford it for the time required (36-60 months). Think long term, you have to be able to afford to live and pay for things that come up (and they will come up..trust me).

You're assuming you would get to keep a "nest egg" based off of your land, but remember you must include all items owned, not just your land. Your statements earlier of

"If I have to keep paying anything more than the first mortgage past the end of December I will never make it."......If it is even as long as two months then I don’t see how we can afford to make those payments

also raises concern/many things - if you cannot strip your 2nd and HELOC, then no point in staying in a 13, convert it. Even if you can strip them - are you going to be able to make the payment on all secured items and pay the trustee fees / lawyer fees as well every month while keeping the 1st mortgage current? Does your district require adequate protection payments to junior lien holders before getting confirmed in a Ch. 13? Make sure you ask this.

Lots of questions to go over - but again, take your time, get to know the process and be honest with one another while making this decision together. Hang in there, its a long road but you will see the light at the end of the tunnel one way or another!

[Clabbergirl]

Chapter 13 and struggle for 3-5 years and ‘hope’ we get a discharge or Chapter 7 where we get a clean slate relatively fast and walk away with a small enough ‘nest egg’ (through possible exemptions and staying in the house as long as we can rent free) to help us rent something large enough for a family of five in a good school district... and begin again.

This is exactly the conundrum I'm dealing with currently. I cannot decide which option would be best for me and my family. I don't like the idea of a trustee controlling every penny of my income for 3 to 5 years, but then again, I apparently wasn't very good at handling it so maybe someone else should do it for awhile. Think I'll search the forums some more and compare what folks have said about living with a Chapter 13 compared to living with a Chapter 7. I've been told having a Chapter 13 on your back is 3 to 5 more years of being broke, and I'm weary to the bones of ends not meeting or just barely touching. You sound like you might be too, Iamnewtothis. I don't expect my income to increase in the near future, but I've recently gotten rid of a very large expense (ex husband), and that might help my future budgeting. I agree with others about saving the money you're been sending to creditors. If you are letting those debts go, no point in giving them more money. It might save you a phone call or two, but it won't help your credit since it will already be trashed. Get caller ID, or get a Google Voice Phone # (they are free and accessible online or via smart phone) and change your contact phone # it so your creditors can call it and leave messages. You can even have it transcribed so you know who is who (since they use alias #'s sometimes) and whether you want to call them back.

I understand some of your wife's concerns about how the kids will handle this, but things happen and they will see that when they do, their parents make use of the resources available to them. It might even be turned into a positive by showing the kids more about money and responsibility. I wish I'd had a few more lessons about money when I was a kid! Also, it's doubtful that anyone will know about your BK, and in my state at least, the only sign a house has been foreclosed on is maybe a tiny sticker in the window that you can only see from the porch, if that. No signs in the yard, no waving flags, or neon signs. Wishing you luck in this.

[LadyInTheRed]

I cannot decide which option would be best for me and my family. I don't like the idea of a trustee controlling every penny of my income for 3 to 5 years,

This is a bit of an exagerration. Once your Chap 13 plan is confirmed, you make a payment to the trustee every month and, if required by your trustee, send copies of your tax returns every year and maybe turn over your refund. You also need to report any significant changes in your financial situation. Other than your trustee payment, YOU decide how to spend every penny. Nobody watches you to make sure you are sticking to the exact budget in your BK petition. I suppose a trustee could if they wanted to, but they don't have the time to do that. The key is to work with your attorney to come up with a livable and approvable plan. If you have a choice between a 7 and a 13, a livable plan will probably be more difficult and require more drastic budget cutting, especially if you have non exempt assets, taxes or arrears on secured property that must be included in your plan payment. A Chapter 13 isn't easy and does require you to stick to a budget to be successful. But, you don't have the trustee constantly looking over your shoulder or managing your spending.

If you decide to go for a Chap 13, it's important to review your petition carefully, understand it, and talk to your attorney about what areas in your budget the trustee may object to. When it is time to sign the petition, don't hesitate to decide at the last minute you would be better off filing a Chap 7 if you don't think you can make that payment for 36 to 60 months.

[IAmNewToThis]

Pandora et al, you have wonderful insight and advice and once again I want to say thanks.

We meet with our lawyer tomorrow morning and thanks to the many replies, and the passing of time, we now have a plan. We will come ‘clean’ with my wife’s income and claim it on taxes. Since I expect to get back such a large refund it won’t have any effect on us - the trustees will take it all anyway. She has only been working since the kids returned to school in September but we hope it will be enough time for the trustees to include this money in our income. My wife deposited all earnings (checks) in a separate bank account so it will be easy to show a steady income. I don’t know what I was thinking - I thought if we used that ‘under the table’ money to help us through we could keep our cell phones and other non-essential ‘needs’ that amount to nothing more than unnecessary expenses. As it turns out when we include her income, examine my six months of pay stubs more closely and cancel a whole bunch of ‘stuff’ we had no business doing (family gym membership, music lessons and even an oboe rental) we comfortably fit into Chapter 13. Income, after taxes, is now $4,712.00 and expenses are $3,980.00

I can’t thank all of you enough. I suspect we can kiss good bye our lien free property around the corner and a quickly diminishing tax refund, but at least we should be able to remain in our home to raise our children and start anew, even if it is on a budget. And if it doesn’t work out I guess I can always begin a new thread to learn about the dreaded Chapter 13 conversion to Chapter 7.

I do have one final round of questions. After we meet with the lawyer tomorrow morning, and he accepts our case, how long before the phone calls stop? Last consultation he revealed that he will file at the end of December, does that mean we continue to be harassed throughout the holidays and into January sometime? Perhaps I should get a different lawyer who will file sooner rather than wait nearly an entire month?

[IAmNewToThis]

It's been a really busy couple of days, and while the phone calls continue (for today anyway) I can see the light at the end of the tunnel. Our Lawyer explained he will file for Chapter 13 at the end of December - Yahoo! Between this site, and the lawyer, all our questions have been answered - for now at least
Now, if I can survive the harassment for another day I might just escape with my sanity in tact, as well as my home. I guess the rest is up to us. At least now I believe we have a chance to make it. Having cut back and begun to live within our means awhile ago I find the budget is going to be a slight improvement over the last few months.
I'm sure I'll be back here to ask many more questions over the next few years but for now I feel I need a break. We'll celebrate Christmas with our family and start anew in the New Year.
On a very personal note I would like to say something. In a time when I felt I needed answers and had nowhere to turn to for them I am fortunate to have found this site. For those who took the time to read and respond I would like to say, “Thank you very much, and have a happy holiday!”