New to this...have some 13 Questions.

[keepsmiling]

That is wonderful!
I want to invite you to my brand new blog:

http://joyofdebt.wordpress.com/

I just created it today!
It will be a journey of my struggle and solution to my personal debt crisis.
I have not decided which route to take, but it would be wonderful if you can come and join me!
See you there,
DebtGirl

Good luck with your blog. Very good idea!

[dmc-2008]

Thank you. I used to blog about frugal cooking and such, but it just didn't cut it for me. I love to blog, and this is very cool because it will be from start to finish. Please come by! I would love the support!

[mountanddo]

Nice blog!

[dmc-2008]

Thanks for checking it out! It will grow!

[Tonfee]

Thank you for replying. I am about 45,000 underwater without the 2nd Mortgage. It is not really house I would like to keep, but if i can't move I may as well have the 2nd mortgage stripped. Actually I would like to just walk away, but I imagine that option would force me into bankruptcy anyway. I would like to consider chapter 13, my biggest fear is letting my job know about the bankruptcy. Deepint mentioned making payments outside of payroll deduction. Is that normally an option or is this a special case?

Tonfee,

Ch13 provides some excellent tools to help you get rid of debt. Lein stripping is one of them. Especially if you love your house and want to keep it. Without the 2nd mortgage, how underwater are you? I owed 135 on my first and 66K on my 2nd. My house is worth 80K. Still way below the first mortgage. thats why I surrendered it...

I think of it this way, in 5 years going at the rate you are, where will you be? If you calculate how far you can pay down your debt on your own, it might open your eyes to the possibility that a Chapter 13 is a good solution. You dont have to be behind or incapable of making payments, but if your minimum payments make it extremely difficult to pay anything else, than Ch13 should provide some breathing room. I hear trustees can get finicky about saving for a 401K, when that money could be paid towards your creditors, but your age or employer contribution may help with that (each trustee is different).

[AZNoName]

Deepint mentioned making payments outside of payroll deduction. Is that normally an option or is this a special case?

My trustee requires cashiers check or money order. I don't have the option to do a payroll deduction even if I wanted to. Your options depend on the trustee.

[kakdbass]

I'm in Missouri and we have the option of payroll deduction or sending check/money order. We do the latter.

[debtinohio]

I am in the same predicament as the OP. We make about $150,000 per year, with 2 car payments($1350) and about $80,000 in CC debt. House severely underwater water with 2 mortgages. We are barely making minimum payments. behind on 3 cards with BOA due to being unemployed for a couple of months. Does anyone know if you can just decide to file chapter 13 because you feel it is better than making minimum payments. Do you have to be behind? Or incapable of making minimum payments? I have not spoken with an attorney, but would like to file simply because i have no strategy for getting out of debt. i think we make enough money to make all payments, i am just frustrated b/c i think with minimum payments i will still owe out a lot after 5 years and still will not be able to save for emergency or 401k. can they reject you for making too much money? like i said, i can pay, i just can not make a significant dent. Also i really would like to strip the 2nd mortgage. I can't see a reason to spend 10 more years paying on it and the house is underwater. my credit score is already in the tank. i have nothing to lose there.

Our income is around $156K we had over $200K in unsecured and car payments of $1320. I now pay $15XX/5 years including both cars. At the time our house had around $5K in equity now it's under by about that much.

We were current up till I decided to file. I then waited a few months and just kept saving that money I would have used to pay minimums. Might as well save the cash exemption amount allowed!

We're surviving just fine.

[booradley61]

Kellmax and Tonfee - it's not worth the pain, the agony, the sleepless nights and what it's doing to your health to continue to put off filing. Just do it, and after you do, you'll start sleeping again at night. Is it a picnic? No. I found that everything went pretty smoothly UNLESS some sort of unexpected car repair came up or appliance broke down. That's when it got dicey a few times. But you find a way! I found out that buying a used washing machine to get me by wasn't the worst thing in the world. We bought used tires for our vehicles as well - they're just a FRACTION of the cost of new ones and all you're trying to do is get through 5 years. You'll figure out ways to do it. I also found out that the Dollar store was my friend. You'll get creative with your finances and you'll make it work if you're determined. There will be times that will test your will, but it's not anywhere NEAR the nightmare of having collectors call your house all hours and being afraid to go to the mailbox every day while you watch your debt continually be out of control. I can't believe I waited as long as I did.

Trustees are different in all districts and states, and some require to see your income tax returns every year. Some don't. Mine never did. Some require that you sign over your income tax refund every year, but some don't. Mine didn't. But a good attorney can guide you through it and the court order you receive at the 341 meeting will let you know what is required. But in general, it's not scary at all. I was MUCH more afraid of creditors taking me to court. I had a car repossessed 3 days after Christmas in 2005. That is a whole lot scarier than anything I ever went through during bankruptcy. And they don't have time to monitor your spending, so don't worry about that. Some may monitor your income every year by looking at your return, but that's about it.

And when you're done, your credit rating will be, in all likelihood, better than it is now. I got my discharge last October. My credit rating is 700 on one reporting agency, 688 on another. I just bought a new car this past week (I had a 12 year old Jeep Cherokee which got me through the bankruptcy, but was beginning to have major problems). I got a 6% interest rate on a car loan from Ally Financial. I have one credit card FOR EMERGENCIES ONLY with a 9.9% interest rate on purchases. That's not terrible. You CAN get through it, it doesn't wreck you for life, you WILL get credit again and life will go on. If I were you, I'd "git-er-dun".

[Tonfee]

booradley61 - thank you so much for the your perspective and words of encouragement. I have been riding this fence about 1 year now and am no better off. Worse off as a matter fact because i missed payments during the last year and now have really bad credit. I still don't know why I am paralyzed and can't make the call. I wake up every morning and say I am going to call an attorney and then just block the thought for the rest of the day. Then go to bed worried and overwhelmed by the debt. I need to speak to a debt psychologist if there is such a thing. I am driving myself crazy and know there has to be lot of people out there stuck too. I believe all of you when you say I will be so much better off and relieved, but I think the thought of actually filing bankruptcy makes me feel like a failure. It just drives home the fact that I have made bad financial decisions. It seems that I should have been too educated to get in this predicament. My other fear is people finding out. We seem to be the family role model for acquiring nice things, traveling and having a good income. They will see that we are financial fakes. Live in nice house, drive nice cars, but barely keeping my head above water. I know I should not care about what others think. I guess it is done now and I have to self-correct. Anyways, this post turned into a vent. But who else am going to tell this stuff too? Thanks everyone for your input.

Kellmax and Tonfee - it's not worth the pain, the agony, the sleepless nights and what it's doing to your health to continue to put off filing. Just do it, and after you do, you'll start sleeping again at night. Is it a picnic? No. I found that everything went pretty smoothly UNLESS some sort of unexpected car repair came up or appliance broke down. That's when it got dicey a few times. But you find a way! I found out that buying a used washing machine to get me by wasn't the worst thing in the world. We bought used tires for our vehicles as well - they're just a FRACTION of the cost of new ones and all you're trying to do is get through 5 years. You'll figure out ways to do it. I also found out that the Dollar store was my friend. You'll get creative with your finances and you'll make it work if you're determined. There will be times that will test your will, but it's not anywhere NEAR the nightmare of having collectors call your house all hours and being afraid to go to the mailbox every day while you watch your debt continually be out of control. I can't believe I waited as long as I did.

Trustees are different in all districts and states, and some require to see your income tax returns every year. Some don't. Mine never did. Some require that you sign over your income tax refund every year, but some don't. Mine didn't. But a good attorney can guide you through it and the court order you receive at the 341 meeting will let you know what is required. But in general, it's not scary at all. I was MUCH more afraid of creditors taking me to court. I had a car repossessed 3 days after Christmas in 2005. That is a whole lot scarier than anything I ever went through during bankruptcy. And they don't have time to monitor your spending, so don't worry about that. Some may monitor your income every year by looking at your return, but that's about it.

And when you're done, your credit rating will be, in all likelihood, better than it is now. I got my discharge last October. My credit rating is 700 on one reporting agency, 688 on another. I just bought a new car this past week (I had a 12 year old Jeep Cherokee which got me through the bankruptcy, but was beginning to have major problems). I got a 6% interest rate on a car loan from Ally Financial. I have one credit card FOR EMERGENCIES ONLY with a 9.9% interest rate on purchases. That's not terrible. You CAN get through it, it doesn't wreck you for life, you WILL get credit again and life will go on. If I were you, I'd "git-er-dun".

[LadyInTheRed]

booradley61 - I believe all of you when you say I will be so much better off and relieved, but I think the thought of actually filing bankruptcy makes me feel like a failure. It just drives home the fact that I have made bad financial decisions. It seems that I should have been too educated to get in this predicament.

Making bad financial decisions does not make you a failure. I'm not a failure, so stop saying that!

Many successful people make bad decisions. What makes them successful is that they do what is necessary to recover from the bad decisions and move on. Do you think Abraham Lincoln is a failure? He filed Bankruptcy as have many successful people. Read about Abraham Lincoln and six others at http://articles.cnn.com/2008-11-19/l...s?_s=PM:LIVING. Google "famous people who filed bankruptcy" and you'll find many others, including Henry Ford, Donald Trump, Larry King .... and the list goes on. You've kicked yourself enough. Now take control of the situation.

My other fear is people finding out. We seem to be the family role model for acquiring nice things, traveling and having a good income. They will see that we are financial fakes. Live in nice house, drive nice cars, but barely keeping my head above water. I know I should not care about what others think. I guess it is done now and I have to self-correct.

Now it's time to be a family role model for accepting your mistakes, making good business decisions to repair those mistake and move on with your life. You may be suprirsed at how understanding people are when they hear you filed BK. If not, as you say, you can't worry about what others think. It's also possible they will never find out if you don't tell them.

Anyways, this post turned into a vent. But who else am going to tell this stuff too? Thanks everyone for your input.

You can always turn to your new BKforum family for support!

[booradley61]

booradley61 - thank you so much for the your perspective and words of encouragement. I have been riding this fence about 1 year now and am no better off. Worse off as a matter fact because i missed payments during the last year and now have really bad credit. I still don't know why I am paralyzed and can't make the call. I wake up every morning and say I am going to call an attorney and then just block the thought for the rest of the day. Then go to bed worried and overwhelmed by the debt. I need to speak to a debt psychologist if there is such a thing. I am driving myself crazy and know there has to be lot of people out there stuck too. I believe all of you when you say I will be so much better off and relieved, but I think the thought of actually filing bankruptcy makes me feel like a failure. It just drives home the fact that I have made bad financial decisions. It seems that I should have been too educated to get in this predicament. My other fear is people finding out. We seem to be the family role model for acquiring nice things, traveling and having a good income. They will see that we are financial fakes. Live in nice house, drive nice cars, but barely keeping my head above water. I know I should not care about what others think. I guess it is done now and I have to self-correct. Anyways, this post turned into a vent. But who else am going to tell this stuff too? Thanks everyone for your input.

Tonfee, I've been where you are. I remember the sleepless nights, worrying all night and paralyzed with fear. I remember having fitful sleep and then waking up after too few hours of sleep and that feeling - that THUD in the pit of your stomach when you wake up. We've all been there. I'm a college graduate - I'm too smart to have gotten into that shape too. My husband and I are both professionals. We were somewhat role models in our families too. But good, smart people get in a bind sometimes. IT HAPPENS! It's time to stop beating yourself over the head for it. You're in good company with a lot of smart people who just made mistakes. That's all.

If you don't mind reading it, let me tell you a bit of my story. My problem was from starting a business I didn't have enough money to start in the first place. I should have known better - I was running things on a shoestring, working a job and running this business on the side. It was exhausting - I was averaging 2 hours of sleep a night and was juggling everything - including bills. My employer was a very jealous man who, upon hearing that I was running a business after hours, started doing his best to antagonize me. We got into a couple of heated discussions and he fired me - there went that income which was propping up my business. Then I had 2 pieces of equipment to break down, and a couple of people didn't pay some large invoices which I was counting on. Things spiraled downward VERY FAST. I used credit cards in a way that I KNEW was going to get me in trouble, but I panicked. I was paying credit cards with credit cards. I was paying a lot of bills with credit cards, just trying to stay afloat. I knew it wasn't smart, but what can you do when you're drowning? We've all done it. My husband and I fought all the time. We blamed each other and it wasn't the fault of either one of us! I was 1 payment behind on my house, had not paid on a credit card in about 3 months, and had 2 equipment leases I was 3 months behind on. Not to mention my CAR. I was almost 3 months behind on it. I will never forget the morning we woke up and it had been repossessed. They came in the middle of the night and got it. What if the neighbors had seen? We live in a nice neighborhood and I was petrified at that thought. I had talked to the bank just the morning before, and promised if they would wait until Friday when my husband got paid again for 2 payments, I'd get it caught up. They said they'd do what they could. That night, it was repossessed while we slept. My husband was leaving for work and came running back in the house screaming that someone had stolen my car and to call the police. Then it dawned on him - no one had stolen that car..... He had the saddest look on his face, and he looked at me and said "Ok. We are OFFICIALLY white trash." He turned and left. He told me later that he cried all the way to work. I cried all day. It was a few days after Christmas, 2005. He couldn't work the whole day - he was too uset - so he took the afternoon off. He came in, put his arms around me and we both cried. We decided that day that MONEY wasn't going to tear us apart and we were going to get through this together, and we did. He asked me how much money I had in the bank. I had about $100. He said "Let's go out." And we did - we couldn't afford it, (we hadn't been out in months) but creditors be d@mned, and we laughed for the first time in a long time and we decided to get this monkey off our backs and file for bankruptcy. We both slept better that night after just making the decision. I went the next day and talked to my very nice and wonderful attorney, who made me feel better - SAFE even. She is a great attorney and I'd recommend her to anyone.

So I know what you're saying about feeling like a failure, but you're not! This economy is horrible. Inflation is driving prices through the roof and it's effecting all of us. That's not YOUR fault! It takes more to live than ever before. Companies get to reorganize their debts and restructure and get fresh starts and no one thinks much about it. They even get gov't bail outs, for God's sake! Why shouldn't the individual? We have the same pitfalls on a smaller scale, but those pitfalls and problems loom large in our own lives. Companies do it as a matter of course, and go about their business. So should we! That's why the laws are there to protect us. Our founding fathers put those bankruptcy laws there so that we would never have to endure anything like the debtor's prisons of Europe. Good people can make bad decisions. Good people become victims of a bad economy they didn't create. I remember reading about, in the Old Testament, it was Jewish custom to forgive the debts of those who couldn't pay them every 7 years. Banks and creditors perpetuate the idea that you're irresponsible if you file bankruptcy, while they practice usury on a daily basis. Don't fall for it! You're not irresponsible if you file. You're simply making use of a legal business tool to get back on your feet. That's all!

So please think about what I've said. I know we all struggled with the decision to do it. I'd worry about you if you didn't. But please know that it will make your personal life, and your family life BETTER. It's no picnic, and is not without its struggles as well. But it's far and away the best way to reorganize and get you and your family back on track. And we're all here if you need us.

[kakdbass]

Tonfee, I've been where you are. I remember the sleepless nights, worrying all night and paralyzed with fear. I remember having fitful sleep and then waking up after too few hours of sleep and that feeling - that THUD in the pit of your stomach when you wake up. We've all been there. I'm a college graduate - I'm too smart to have gotten into that shape too. My husband and I are both professionals. We were somewhat role models in our families too. But good, smart people get in a bind sometimes. IT HAPPENS! It's time to stop beating yourself over the head for it. You're in good company with a lot of smart people who just made mistakes. That's all.

If you don't mind reading it, let me tell you a bit of my story. My problem was from starting a business I didn't have enough money to start in the first place. I should have known better - I was running things on a shoestring, working a job and running this business on the side. It was exhausting - I was averaging 2 hours of sleep a night and was juggling everything - including bills. My employer was a very jealous man who, upon hearing that I was running a business after hours, started doing his best to antagonize me. We got into a couple of heated discussions and he fired me - there went that income which was propping up my business. Then I had 2 pieces of equipment to break down, and a couple of people didn't pay some large invoices which I was counting on. Things spiraled downward VERY FAST. I used credit cards in a way that I KNEW was going to get me in trouble, but I panicked. I was paying credit cards with credit cards. I was paying a lot of bills with credit cards, just trying to stay afloat. I knew it wasn't smart, but what can you do when you're drowning? We've all done it. My husband and I fought all the time. We blamed each other and it wasn't the fault of either one of us! I was 1 payment behind on my house, had not paid on a credit card in about 3 months, and had 2 equipment leases I was 3 months behind on. Not to mention my CAR. I was almost 3 months behind on it. I will never forget the morning we woke up and it had been repossessed. They came in the middle of the night and got it. What if the neighbors had seen? We live in a nice neighborhood and I was petrified at that thought. I had talked to the bank just the morning before, and promised if they would wait until Friday when my husband got paid again for 2 payments, I'd get it caught up. They said they'd do what they could. That night, it was repossessed while we slept. My husband was leaving for work and came running back in the house screaming that someone had stolen my car and to call the police. Then it dawned on him - no one had stolen that car..... He had the saddest look on his face, and he looked at me and said "Ok. We are OFFICIALLY white trash." He turned and left. He told me later that he cried all the way to work. I cried all day. It was a few days after Christmas, 2005. He couldn't work the whole day - he was too uset - so he took the afternoon off. He came in, put his arms around me and we both cried. We decided that day that MONEY wasn't going to tear us apart and we were going to get through this together, and we did. He asked me how much money I had in the bank. I had about $100. He said "Let's go out." And we did - we couldn't afford it, (we hadn't been out in months) but creditors be d@mned, and we laughed for the first time in a long time and we decided to get this monkey off our backs and file for bankruptcy. We both slept better that night after just making the decision. I went the next day and talked to my very nice and wonderful attorney, who made me feel better - SAFE even. She is a great attorney and I'd recommend her to anyone.

So I know what you're saying about feeling like a failure, but you're not! This economy is horrible. Inflation is driving prices through the roof and it's effecting all of us. That's not YOUR fault! It takes more to live than ever before. Companies get to reorganize their debts and restructure and get fresh starts and no one thinks much about it. They even get gov't bail outs, for God's sake! Why shouldn't the individual? We have the same pitfalls on a smaller scale, but those pitfalls and problems loom large in our own lives. Companies do it as a matter of course, and go about their business. So should we! That's why the laws are there to protect us. Our founding fathers put those bankruptcy laws there so that we would never have to endure anything like the debtor's prisons of Europe. Good people can make bad decisions. Good people become victims of a bad economy they didn't create. I remember reading about, in the Old Testament, it was Jewish custom to forgive the debts of those who couldn't pay them every 7 years. Banks and creditors perpetuate the idea that you're irresponsible if you file bankruptcy, while they practice usury on a daily basis. Don't fall for it! You're not irresponsible if you file. You're simply making use of a legal business tool to get back on your feet. That's all!

So please think about what I've said. I know we all struggled with the decision to do it. I'd worry about you if you didn't. But please know that it will make your personal life, and your family life BETTER. It's no picnic, and is not without its struggles as well. But it's far and away the best way to reorganize and get you and your family back on track. And we're all here if you need us.

Your post made me cry. My husband a I went through so many of the same emotions. Finances were tearing our lives apart, making us horrible spouses and parents. It feels so good to have control of our lives!!!

[kellmax]

Thanks to everyone on this thread. We retained a lawyer yesterday and are going to start over. The only decision now is what to do with the house we no longer want. After the second is stripped, we will still be 30K under. Does anyone have any experience with Chapter 13 protection if we walk away or do a short sale or Other options? we have outgrown this home and the neighborhood is not what is was 9 years ago.

[LadyInTheRed]

Thanks to everyone on this thread. We retained a lawyer yesterday and are going to start over. The only decision now is what to do with the house we no longer want. After the second is stripped, we will still be 30K under. Does anyone have any experience with Chapter 13 protection if we walk away or do a short sale or Other options? we have outgrown this home and the neighborhood is not what is was 9 years ago.

If you don't want to keep the house, you should probably give it up during your Chap 13. Otherwise the debt will not be discharged and you could be liable for a deficiency if it is a recourse loan. Paying your attorney to strip the 2nd doesn't make sense if you are going to give up the house during the Chap 13. You should discuss your options with your attorney. It is important he know right away of your intention to give up the home.