How does having $90,000 in home equity in Georgia and filing Chapter 13 work?

[UGACardman]

Hi everyone. Tom in Colorado suggested that I post in this section.

I have $90,000 in equity, owing $30,000 more on the mortgage, and owe $70,000 in credit cards.

I have not yet been to an attorney. I would like to get an idea here if possible and that way I would kinda know what's going on and what questions to ask the attorney. Someone told me, "Although Chapter 13 is complicated, the principle is simple: As long as you repay the debt, you can keep the property." My only steady income is social security and my retirement. I don't know how long or how many hours I will have my job at Wal-Mart.

I'm in Georgia and single, so $10,000 is the exemption amount.

If I file Chapter 13, what is going to happen to my house? Will I be forced to leave and the trustee sell it? I owe about $70,000 in credit cards and have $90,000 in equity.

I have:

$1,000 a month retirement from Georgia Power
$1,000 a month social security
$960 a month from part time job at Wal Mart

$1200 a month to debt consolidation company (2 months behind in payments-owe $70,000 to credit cards)
$250 a month to IRS (owe $20,000)
$120 a month to GA Dept of Rev (owe $10,000)

$350 a month to mortgage company (owe $30,000 more...not behind in payments)
$300 a month for health insurance

Equity in house ($90,000)

Vehicle-worth $900-$1200

Can someone please point me in the right direction?

Also, I was bullied by the credit card companies, and I foolishly went with a debt consolidation company, paying $1200 a month, and now I am 2 months behind with them. I was forced to retire last year from Georgia Power, and I'm 61, and now the debt consolidation company is calling my place of employment and I am afraid that I will lose my job.

So I've already been making lots of mistakes, and I am asking for some help here so that I do not make any more. Thanks.

I sure would appreciate any help or advice. Thanks.

[UGACardman]

I've been reading the forum yesterday and today, and this what I've found out:

House value: maybe $120,000 to $125,000

minus mortgage: -$30,000

minus judgment: -0 (none yet but maybe debt consolidators soon?)

minus homestead exemption: - $10,000

minus cost of sale -$8750

minus trustee’s fee : - 4,000

equals 72250 - 67250

So, if this $67,250 to $72,250 is what would have been available to a Chapter 7 trustee to pay out, so is that what a Chapter 13 trustee would say I have to pay, over say 5 years?

$1121 to $1205? That's about what I'm paying (or was 2 months ago) to a debt consolidation company and I couldn't pay it then.

Before I wanted to quit claim deed the house to my son, but after reading the forum, I see that would be a fraudulent transfer and I can't do that.

So, have I just basically lost my house? If I file a Chapter 7 bankruptcy case, almost for sure the bankruptcy trustee would take my home from me and sell it, because it has equity well beyond the $10,000 homestead exemption for a single Georgia filer.

[free2breathe]

Cardman, I'm sure a 13 pro will step in with answers, but in the mean time, here is a good explanation of how Chapter 13 works.

http://www.moranlaw.net/13workings.htm

I hope this is somewhat helpful until one of the forum's 13 filers can jump in.

[DebtEnder]

When you have assets that are not exempted and in Georgia A house gets 10k per filer if you are not married you can cover 10k of the house. Adding in selling fees and whatnot, as you have is a good idea. In a 13 with assets not otherwise covered then you have to within the 5 year plan pay at least what the assets would have been worth if liquidated. I would ask how you came to the house value but even if your over estimating the house by 50% it sounds like you would still have sizable equity in the house. However, if you can get a trustee to agree to say the house is worth say, 85k then that could reduce your required payment by a fair margin. A certified appraiser with a 90 day or less sell time appraisal is what you need to look at. Don't let a trustee force you into paying more for an asset then it is really worth.

Worse comes to worse if the house in say a chapter 7 gets liquidated you keep the 10k exemption amount once the sale is completed, and while it is going on you can keep the mortgage payments. You could of course try to sell it yourself before BK and then work out less then full payment deals with the credit cards and then not file BK at all.

[Pandora]

Tough place to be. If it were me (and again, just my opinion) before I pulled the BK trigger - I would:

1. Be 100% positive I had the equity in the house

2. Stop paying all credit cards

3. Try to refinance the house, cashing out the equity available - and extend the mortgage out to 30 years (you're 61...and thats why I would do it - in 30 years.. you'll be 91...may we all live that long)

4. If refinancing works in your favor, and you get lets say even 60K out of it... then:

5. Pay off IRS and other tax debts in full ($30K) - saving yourself $370 a month that will pay the mortgage increase

6. Take remaining monies ($30K) and sit on it - offer to settle all credit cards at 5-20% (start small, but no more than 20%) so realistically it would cost you anywhere from $3500 - $14,000 on the higher end (20%).

7. Put any monies you have left over back to your mortgage (pay it down 1 huge payment) or put it in the bank to assist in paying your mortgage every month.


If you do not have the equity and you must file BK - then:

1. Consult with several attorneys

2. Stop paying all credit cards

3. You will end up having to pay the equity in your house that you cannot exempt, back into your CH. 13 plan - so 80K *if it appraises at what you state* - which will mean a hefty payment for a 5 year plan of $1334 a month based on the equity alone. Tax debts are not discharged so you will also have to pay those at 100%.


Thats what I'd do if it were me. I dont plan on living until I'm 91 - after I'm gone...the gov't can sell my house for whatever it can to recoup monies lost.

[UGACardman]

Hi free2breathe! Thank you very much for the link to the lawyer's site explaining "How does Chapter 13 work?".

Hey DebtEnder-I appreciate your thoughts. I came up with the value from a realtor last year. I looked at the value that the county has appraised the house at, and it is $98,310. I didn't think about a certified appraiser. Thanks for all your advice, especially, "A certified appraiser with a 90 day or less sell time appraisal is what you need to look at. Don't let a trustee force you into paying more for an asset then it is really worth."

Hello Pandora. Thank you for taking the time to give me your advice step by step. I appreciate your opinion.

Merry Christmas everyone, even if some of us are having economic problems, it's the kindness to strangers like y'all have shown to me that makes my outlook on life positive. As Robert Burns wrote in Auld Lang Syne or Times Long Ago,
"And surely you will pay for your pint,
And surely I will pay for mine!
And we will take a cup of kindness yet
For old long ago!"

Tough place to be. If it were me (and again, just my opinion) before I pulled the BK trigger - I would:

1. Be 100% positive I had the equity in the house

2. Stop paying all credit cards

3. Try to refinance the house, cashing out the equity available - and extend the mortgage out to 30 years (you're 61...and thats why I would do it - in 30 years.. you'll be 91...may we all live that long)

4. If refinancing works in your favor, and you get lets say even 60K out of it... then:

5. Pay off IRS and other tax debts in full ($30K) - saving yourself $370 a month that will pay the mortgage increase

6. Take remaining monies ($30K) and sit on it - offer to settle all credit cards at 5-20% (start small, but no more than 20%) so realistically it would cost you anywhere from $3500 - $14,000 on the higher end (20%).

7. Put any monies you have left over back to your mortgage (pay it down 1 huge payment) or put it in the bank to assist in paying your mortgage every month.


If you do not have the equity and you must file BK - then:

1. Consult with several attorneys

2. Stop paying all credit cards

3. You will end up having to pay the equity in your house that you cannot exempt, back into your CH. 13 plan - so 80K *if it appraises at what you state* - which will mean a hefty payment for a 5 year plan of $1334 a month based on the equity alone. Tax debts are not discharged so you will also have to pay those at 100%.


Thats what I'd do if it were me. I dont plan on living until I'm 91 - after I'm gone...the gov't can sell my house for whatever it can to recoup monies lost.