Hi, first post and very nervous going into this entire thing.
We first talked to an attorney in November, 2009. I was pregnant and on bed rest for pre-eclampsia. I was told that my son would be premature and spend at least a few weeks in the NICU. We had also just been informed that my husband was going to lose his job in January due to cutbacks. We had already stopped paying on all of our many debts (except our mortgage that we were trying to get modified) at that point. Together we had close to $60,000 in unsecured debt. I did not work and my husband made $35,000 a year. Our mortgage payments were $1,465 per month.
I was in real estate and flipping houses. We sold out previous home right before the market tanked in early 2008, at that point we were completely debt free and racked up 60k in credit card debt in less than 2 years. When we bought our house I got sick and started having seizures, we had moved to a remote location and I wasn’t allowed to drive. I couldn’t work and we had bought a house that my husband could not afford on his own. We racked up a lot of medical bills that I foolishly paid for with credit cards instead of submitting hardship letters and working out payment plans. After I got my medical issues somewhat worked out we started infertility treatments that were not covered under insurance, that was over $20,000. We had been taking cash advances to live and pay our many debts.
We realize that we made many, many financial mistakes. The last payment we made, other than our mortgage was in August of 2009.
My husband received a 3 month severance package and had a new job lined up with only a 1 week break in employment. His new job was even for $10,000 more a year – bringing his income to $45,000. We were also able to get our mortgage modified to $1,233 per month, not much but it helped.
The attorney we spoke to suggested to wait to file because of the medical bills from being pregnant – we had a high deductable and my son also ended up having kidney and digestion issues. With birth, NICU and other medical bills they totaled around $15,000 – we haven’t paid any of them.
We were also advised to file chapter 13 because our unsecured debt was unusually high. That it would look suspicious and we would most likely be investigated with a fine tooth comb for fraud (especially with my past in real estate). That even if we were honest, that one simple mistake could cause a lot of trouble for us. He said with my husband’s income of $45,000 that our payments would be around $150 per month for 3 years. With 3 people in our household I think the means test is around $55,000. He didn’t explain anything about raises or bonuses effecting our payments and I was honestly ignorant about the entire thing.
My son is now well past a year old and all of his medical issues are (mostly) resolved. We are finally getting things together and I came to this forum to research everything. My husband is hourly and able to work as much overtime as he wants, if he continues on his current path he will make $65,000 this year. I’ve already realized that he needs to stop all of his overtime for the time being, that it will put us over the means and extend us out to 5 years of payments, etc.
We also need to buy a new car as mine is starting to burn oil (and is 10 years old with close to 200,000 miles on it – no way it will last 5 or 3 years). We obviously have to finance and will buy something used. If we buy it ourselves we will have an outrageous interest rate – but my father in law would be willing to co-sign for us to get a very low rate and more affordable payments. I’m very afraid of what co-signing would do to him when we filed. Would it affect his credit in any way?
We really don’t have much disposable income at all with my husband working overtime, but I admit that I am not very good with a budget and could probably save more. I’m afraid that we won’t be able to make it if he cuts back (even with me becoming very strict with our budget). I’m glad that I’ve gone close to 2 years already without using a credit card though!
Would we be able to file chapter 7? Is it stupid to even try? From what I’ve read on these forums it sounds like we would have payments much higher than $150 per month and would probably have to pay for 5 years, unless we wait even longer for my husband’s average 6 month income to go down.
Also, 401k contributions – we contribute 8% to get a 4% match from my husband’s employer, will we be able to continue that in a chapter 13?
I know this was a very long introduction, and if you actually read it – THANK YOU! Any advice you could give me would be wonderful!
We first talked to an attorney in November, 2009. I was pregnant and on bed rest for pre-eclampsia. I was told that my son would be premature and spend at least a few weeks in the NICU. We had also just been informed that my husband was going to lose his job in January due to cutbacks. We had already stopped paying on all of our many debts (except our mortgage that we were trying to get modified) at that point. Together we had close to $60,000 in unsecured debt. I did not work and my husband made $35,000 a year. Our mortgage payments were $1,465 per month.
I was in real estate and flipping houses. We sold out previous home right before the market tanked in early 2008, at that point we were completely debt free and racked up 60k in credit card debt in less than 2 years. When we bought our house I got sick and started having seizures, we had moved to a remote location and I wasn’t allowed to drive. I couldn’t work and we had bought a house that my husband could not afford on his own. We racked up a lot of medical bills that I foolishly paid for with credit cards instead of submitting hardship letters and working out payment plans. After I got my medical issues somewhat worked out we started infertility treatments that were not covered under insurance, that was over $20,000. We had been taking cash advances to live and pay our many debts.
We realize that we made many, many financial mistakes. The last payment we made, other than our mortgage was in August of 2009.
My husband received a 3 month severance package and had a new job lined up with only a 1 week break in employment. His new job was even for $10,000 more a year – bringing his income to $45,000. We were also able to get our mortgage modified to $1,233 per month, not much but it helped.
The attorney we spoke to suggested to wait to file because of the medical bills from being pregnant – we had a high deductable and my son also ended up having kidney and digestion issues. With birth, NICU and other medical bills they totaled around $15,000 – we haven’t paid any of them.
We were also advised to file chapter 13 because our unsecured debt was unusually high. That it would look suspicious and we would most likely be investigated with a fine tooth comb for fraud (especially with my past in real estate). That even if we were honest, that one simple mistake could cause a lot of trouble for us. He said with my husband’s income of $45,000 that our payments would be around $150 per month for 3 years. With 3 people in our household I think the means test is around $55,000. He didn’t explain anything about raises or bonuses effecting our payments and I was honestly ignorant about the entire thing.
My son is now well past a year old and all of his medical issues are (mostly) resolved. We are finally getting things together and I came to this forum to research everything. My husband is hourly and able to work as much overtime as he wants, if he continues on his current path he will make $65,000 this year. I’ve already realized that he needs to stop all of his overtime for the time being, that it will put us over the means and extend us out to 5 years of payments, etc.
We also need to buy a new car as mine is starting to burn oil (and is 10 years old with close to 200,000 miles on it – no way it will last 5 or 3 years). We obviously have to finance and will buy something used. If we buy it ourselves we will have an outrageous interest rate – but my father in law would be willing to co-sign for us to get a very low rate and more affordable payments. I’m very afraid of what co-signing would do to him when we filed. Would it affect his credit in any way?
We really don’t have much disposable income at all with my husband working overtime, but I admit that I am not very good with a budget and could probably save more. I’m afraid that we won’t be able to make it if he cuts back (even with me becoming very strict with our budget). I’m glad that I’ve gone close to 2 years already without using a credit card though!
Would we be able to file chapter 7? Is it stupid to even try? From what I’ve read on these forums it sounds like we would have payments much higher than $150 per month and would probably have to pay for 5 years, unless we wait even longer for my husband’s average 6 month income to go down.
Also, 401k contributions – we contribute 8% to get a 4% match from my husband’s employer, will we be able to continue that in a chapter 13?
I know this was a very long introduction, and if you actually read it – THANK YOU! Any advice you could give me would be wonderful!
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