Filing Ch13 to save house

[stitchnrails]

My wife and I are getting ready to file 13 to save our house. I am scared to death over this. We are filling becouse we are behind on our mortgage and owe about $60,000. We have about $3,000 in cc debt and a car that is going to be paid off in 6 months. I fully accept responsibility for some bad decisions that were made, but I am scared to death that this is going to work. Can the trustee set up a payment plan that is more than we can afford? I was trying to work with the mortgage company (B of A - yea, thats right) of course they wouldn't. Our house was up for auction. I know what I can afford, but I feel if this is going to make me a slave for 5 years, its isn't worth it to my family.

[AngelinaCat]

Hi stitchnrails: Welcome to the forum. I moved your post into a thread of its own so that it can be more easily seen and responded to by the members. There are many members here who have either completed a Ch13, or are somewhere in the middle of one. I am certain you will be hearing from some of them soon. Meanwhile, read the 'stickies' in both the Ch13 and Ch7 boards, and you will get an idea of the process.

Good wishes to you!

[tobee43]

stritchnrails, welcome to the forum!!

as angelinacat points out we have many successful chapter 13ers here on the site. many have wonderful stories to share and the 13 has been a way for them to put their lives and finances back in order. please read some of the threads and it may help dispell some of your fears.

best of luck to you!

[lrprn]

Hi and welcome to the forum, stitchnrails! Glad you found us!

You didn't share why you fell behind in your mortgage. I have to ask you a hard question - is it possible that you are in serious financial trouble because you are trying to keep a house that you truly cannot afford on your current incomes? Or were there extenuating circumstances such a serious illness or job loss that created your situation?

[stitchnrails]

Hi and welcome to the forum, stitchnrails! Glad you found us!

You didn't share why you fell behind in your mortgage. I have to ask you a hard question - is it possible that you are in serious financial trouble because you are trying to keep a house that you truly cannot afford on your current incomes? Or were there extenuating circumstances such a serious illness or job loss that created your situation?

This is a tuff, suck it up moment. There is a combination. Medical (wife has MS and is in heart failure), poor financial choices - we over extended ourselves, and the case of the osterich....if I ignore it, it will go away. When I finally got the foreclosure papers ( 16 months after last payment ) is when it finally sunk in. We had been attempting a loan modification with Bank of America for the past 6 months (with no answer doing 2 of them), so that added to the amount & length.

During the time of waiting for the loan mod, I sold the truck (3rd vehicle), went thru the house and had a big garage sale, cut bills, I was able to save a lot of money, re-assess our expenses & income, get financial planning help and counseling. We can afford the house, it was all the extras...3rd car payment, toys, etc.

[HHM]

First basic question...

Is your mortgage payment, the one you are required to make (unmodified), 25% or less than your gross monthly income?

Keep in mind, a chapter 13 cannot modify your contractually due mortgage payment, whatever your mortgage payment is supposed to be, that is what you will have to pay. Also, if you are really saying you have $60K in mortgage arrears, understand that in a chapter 13 bankruptcy, that means you will have a payment of at least $1100 to $1200 per month to the chapter 13 trustee, on top of your regular mortgage payment. You tell us, is that feasible?

[justbroke]

HHM brings up a great point. Unless the mortgage is modified to put the $60K of arrears back into the loan or at the end of the loan, then you will have a rather large (relatively) Chapter 13 plan payment. You will have your 2-car payments (I'm assuming 2), plus the regular mortgage payment, plus the $1,000+ monthly arrears payment in the plan. (I guess the good thing is that 1 car will be paid off soon.)

The other thing I would have you assess is whether your home is even worth saving. Are you underwater? Do you have a second or third mortgage on it?

[stitchnrails]

We can handle $1100 per month since we made all the changes. Not much more than that though. I don't want the trustee to say we have to pay $2000. I only have 1 car payment, 1 is paid off. The house is under by $20k and I only have the one mortgage. my mortgage is about 25% of my gross. I know if we didn't make the changes we did, we would sink. I am also under no illusion that it will be easy, especially the first year. I am just hoping that I am not holding on to false hope (as I did with the 2 modification applications) that you go this route to find out that it won't work, that the payment is going to be astronomical. My employment is secure, so that is not an issue. Thanks for all of your questions!

[HHM]

Let's fill in the picture a bit, because the facts are still somewhat vague.

What IS your mortgage payment
What is the Balance Due on the mortgage.
How much is the home really worth (what could you actually sell it for, in present condition, with no fixing up, in the next 60-90 days).
What is your gross monthly income
How accurate is that $60K arrears, does it factor in the lenders attorney fees, interest etc.?

[LadyInTheRed]

I'll assume you can afford your house after you are out of BK and that during the Chap 13 you can afford the house payment plus a plan payment of $1100. Also, if you have any non-exempt assets you want to keep, you'll have to add to that $1100 the non exempt value of the assets divided by 60.

...I am scared to death over this. ... Can the trustee set up a payment plan that is more than we can afford? ....I know what I can afford, but I feel if this is going to make me a slave for 5 years, its isn't worth it to my family.

This is a tuff, suck it up moment...
During the time of waiting for the loan mod, I sold the truck (3rd vehicle), went thru the house and had a big garage sale, cut bills, I was able to save a lot of money, re-assess our expenses & income, get financial planning help and counseling. We can afford the house, it was all the extras...3rd car payment, toys, etc.

We can handle $1100 per month since we made all the changes. Not much more than that though. I don't want the trustee to say we have to pay $2000. ... my mortgage is about 25% of my gross. I know if we didn't make the changes we did, we would sink. I am also under no illusion that it will be easy, especially the first year. I am just hoping that I am not holding on to false hope (as I did with the 2 modification applications) that you go this route to find out that it won't work, that the payment is going to be astronomical. My employment is secure, so that is not an issue. Thanks for all of your questions!

You have a lot more control in a Chap 13 than you do in a mortgage modification. The trustee does not set up a payment plan. It is you who proposes the terms of your plan within certain parameters. A good attorney can help you propose a feasible plan that will get confirmed. If the trustee objects to your plan, it is negotiation time. If you don't reach an agreement with the trustee, the judge makes the final decision.

If you can truly afford to keep your home, including paying the mortgage arrears over 5 years, and you have a good attorney, you should end up with a plan you can live with. If you have already tightened your belt with the help of a good financial counselor, you are a step ahead of many Chap 13 filers. As you know, it won't be easy. It is possible you will have to tighten your belt a little more.

Consult with at least 3 experienced Chap 13 attorneys and have them run your numbers to get an idea of what your plan payment will be. You won't have a firm number until you retain an attorney and they take the time to go through all of your financial details. But, if the plan payment your attorney proposes is not something you can handle, you can discuss tweaking some of the living expenses the attorney used. If that doesn't work, then you can reconsider your options. You are the only one who decides whether to sign that petition. You are in control, not the trustee or your creditors or your attorney.

A Chap 13 is not supposed to be easy. But, it is supposed to give you a fighting chance. It sounds like you are willing to fight. Just be certain that you can afford what you are fighting for.

[stitchnrails]

To HHM - payment $2478; balance due $248600; looking at comps, i beleive I could get $215,000; Monthly Gross is $9995; the 60k is including late fees ($174) 2478+174 X 23 = $60996.

Thanks for looking HHM!

[stitchnrails]

to LadyinRed: Thank you for that reply, that actually cleared up a lot. I thought the trustee just came up with a number and that was it. I didn't realize my attorney and I work at it. I know that if we didn't make the changes we did, we would sink and quick! We have reduced and use the budget plan for utilities, etc. I also know that this will make us that much stronger when to get out of it.

[shark66]

To HHM - payment $2478; balance due $248600; looking at comps, i beleive I could get $215,000; Monthly Gross is $9995; the 60k is including late fees ($174) 2478+174 X 23 = $60996.

Thanks for looking HHM!

The way I'm reading this, you're looking at around $3500/month just for the mortgage payment and arrears.

If you can swing that, and have no other secured debt to be paid off in Ch. 13 you'll likely be OK.

My $0.02 only...

Good luck to us all.