I met with a bankruptcy attorney today. He was strongly recommended, and has a LOT of experience with debtors and rental properties. He has argued (and won) cases through a couple of levels of appeals, and several of his cases are used to interpret the bankruptcy law.
He is also a very interesting guy in person. Our 1 hr consultation went well past 90 minutes and we talked in great detail. Good personal connection. He is not a clock watcher, and he doesn't mind discussing alternate actions.
The meeting was very interesting... besides my day job, I own several rentals that cash flow positive, but are upside down in equity. Because of other issues in my life, the rental money has been drained away to pay for other costs (medical, jacked-up interest costs, etc.)
Because of the laws in my state, my wife and I have (mostly) separate finances, in case a tenant ever tries to sue... a C-13 was always a fallback plan in case of a bad lawsuit, and I wanted to keep my wife firewalled apart. In this case, it looks like the strategy may pay off well.
Rentals: I plan to reaffirm the mortgages, and continue to pay the mortgages outside the plan. Attorney thinks this will not be a problem, and with the drop in R/E prices, there is no equity to tempt a trustee into forcing a sale. Attorney thinks the rental company will be left alone. It is profitable, but needs time to rebuild the repair/vacancy reserves.
Wife: She will not be filing, and her income will be deducted in the 22c. But since her car is in both names, it must be paid for from my C-13 payment plan using my money. This will give her an "interesting" pay raise.
There is the issue of how the car being paid will look on her credit report, but it is too new to cram down the balance, so it is being paid in full.
Me: I had been running the 22c and it looks like the payment it proposes is actually less than I can afford to pay. I thought I had done something wrong. The attorney looked at it, grinned and said "You did it right.. and this is the first time I've seen this happen!" So if the 22c is followed, I will actually have breathing space. We plan to start with the 22c figures for the trustee. If the trustee also thinks it is too low, we have room to negotiate.
A significant question for the trustee is whether to demand the student loans be put into forebearance during the 60 months, paid normally or interest only. It will make a big difference to the amount paid the unsecured creditors, but my attorney doesn't seem to be worried about a credit card company protest. It's another chip to negotiate with.
Bottom line: Yes, it will be 60 months of high payments. But if the rental company is left alone, I can build a savings/repair cushion within it. And it will be 60 months of being able to sleep at night, without worry.
And in my case, another good issue is starting the planning now. I am not late on any payments yet, but it is about to happen, it will not be avoided, and I can plan the steps to reorganize and rebuild without rush and panic.
I wanted to say "thanks" to everybody here who answered both my questions and others. Reading this forum has been fantastic!
He is also a very interesting guy in person. Our 1 hr consultation went well past 90 minutes and we talked in great detail. Good personal connection. He is not a clock watcher, and he doesn't mind discussing alternate actions.
The meeting was very interesting... besides my day job, I own several rentals that cash flow positive, but are upside down in equity. Because of other issues in my life, the rental money has been drained away to pay for other costs (medical, jacked-up interest costs, etc.)
Because of the laws in my state, my wife and I have (mostly) separate finances, in case a tenant ever tries to sue... a C-13 was always a fallback plan in case of a bad lawsuit, and I wanted to keep my wife firewalled apart. In this case, it looks like the strategy may pay off well.
Rentals: I plan to reaffirm the mortgages, and continue to pay the mortgages outside the plan. Attorney thinks this will not be a problem, and with the drop in R/E prices, there is no equity to tempt a trustee into forcing a sale. Attorney thinks the rental company will be left alone. It is profitable, but needs time to rebuild the repair/vacancy reserves.
Wife: She will not be filing, and her income will be deducted in the 22c. But since her car is in both names, it must be paid for from my C-13 payment plan using my money. This will give her an "interesting" pay raise.
There is the issue of how the car being paid will look on her credit report, but it is too new to cram down the balance, so it is being paid in full.
Me: I had been running the 22c and it looks like the payment it proposes is actually less than I can afford to pay. I thought I had done something wrong. The attorney looked at it, grinned and said "You did it right.. and this is the first time I've seen this happen!" So if the 22c is followed, I will actually have breathing space. We plan to start with the 22c figures for the trustee. If the trustee also thinks it is too low, we have room to negotiate.
A significant question for the trustee is whether to demand the student loans be put into forebearance during the 60 months, paid normally or interest only. It will make a big difference to the amount paid the unsecured creditors, but my attorney doesn't seem to be worried about a credit card company protest. It's another chip to negotiate with.
Bottom line: Yes, it will be 60 months of high payments. But if the rental company is left alone, I can build a savings/repair cushion within it. And it will be 60 months of being able to sleep at night, without worry.
And in my case, another good issue is starting the planning now. I am not late on any payments yet, but it is about to happen, it will not be avoided, and I can plan the steps to reorganize and rebuild without rush and panic.
I wanted to say "thanks" to everybody here who answered both my questions and others. Reading this forum has been fantastic!
, but enough to let me save money again, build up the rentals again, build a future again.
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