Wife, car lease, mortgage mod

[outsidetool]

First off, note that I had a previous post asking for info on how a 13 budget would be hashed out if only I filed and wife did not.
Now, my wife is thinking that filing jointly would be a good idea...she is drowning in bills also. Are most (if not all) of her issues due
to my inability to handle credit? Well, no doubt my issues have helped her in to a corner also.
My wife is worried about filing a 13 due to two problems:
1) She leased a new car 6 months ago; 3.5 years left on lease. (note she did this lease to lower her car payment, which it did by $100/m).
So question: If she files, and we're in a 5-year plan, what is she going to do for a car in 3.5 years? Our employment situations pretty well
require us to have our own cars. Any chance she will get financed in 3.5 years, even to buy the leased vehicle?
2) Mortgage! The house is in her name only. She got a modification just a few months ago which lowered the payment a little ($125/m), but
it is only a 5-year plan. So there is like a $140,000 final payment. Even if a 13 plan is finishing up about the time that the mortgage contract
is coming due, will she be able to get a loan to refinance the house?

She is concerned that filing will overall destroy her ability to get another car and keep the house. We talked to our atty several months ago about all this, and he could not guarantee much of anything. Now she is really thinking that her life would be simplified by us filing together, and yet she
worries about the "end game" with a car and the house.

If anyone has any thoughts about these issues, or perhaps some direct experience, we would greatly appreciate the info. We're going to talk to the atty again this week, so any input would help us with prepping for that meeting.

[LadyInTheRed]

The car problem is easily fixed. She can stop paying the lease now and let them take the car. The BK will discharge her obligations under the lease. She can finance another car before filing BK and before the default of the lease shows up on her credit report. The new loan should not be more than 5 years so that the car is paid off by the end of the BK. She should not buy a car that she can't afford when not paying on unsecured dischargeable debt. It's a good idea to know what your Chap 13 plan will look like before buying the car. Discuss this with your attorney. Keep in mind that many attorney's won't recommend that you buy a car because they aren't supposed to recommend you incur new debt when you are about to file BK. So, instead of asking if it is okay to buy a car, ask what the consequences will be of buying a car with a payment of $x.

The mortgage is more difficult. There is no guaranty that she will be able to refi. But, FHA does allow loans to people while still in Chap 13 after making plan payments on time for a year. Does she have equity in the home? That would help. Another possibility is that the lender would rather continue to take payments then foreclose. If she can't refi or work something out with the lender at that time, filing a second Chap 13 might help. Or it could delay the inevitable for another 5 years. She really needs to take an honest look at whether she can afford to keep the home. Has she tried refinancing recently?

Are you certain you can't qualify for a Chap 7?

[LadyInTheRed]

I went back and looked at your old threads. Once again, you are leaving out important details that would better help us help you.

In November 2013 you posted:

I had a ch 7 in 2008; wife refused to file with me, felt her credit and situation wasn't all that bad.

Now fast forward to the present: my finances are in good shape, 690 credit score, have a few cc's, but I live within my budget.

Wife, however, is in deep on cc debt of about $8k, nice car, about $4k of medical bills, and is in financial stress. I don't take in enough to help her out much.

In January 14 you posted:

The house is underwater by about $20,000.

and

So, some details: owed on house--$173k, approx. value--$158k (1st = $145k; 2nd = $28k)
Owed on car--$25k, 2011 VW Tiguan, approx value $22k
Unsecured cc debt: $4000 Payday lenders/loan consolidation lenders debt: $8000

I think the last quote lists only your wife's debt, but I'm not certain. If so, how much unsecured dischargeable debt do you have?

Since you can't get a Chap 7 discharge, if your wife qualifies for a Chap 7, the answer may be for her to file alone, after financing a different car. I suggested this to you before. Did you talk to an attorney about that? (Maybe not because she wasn't as open to the idea of BK at that point). Her mortgage would be discharged in a Chap 7 so if she can't find a solution to the balloon payment when it comes due, she can walk away without any personal liability. That fact may give her some leverage in negotiating with the lender. Also, by the time the balloon comes due, the Chap 7 discharge will be far enough behind her that she will have better chances of qualifying for a refi than if she is fresh out of a Chap 13. Filing a Chap 13 later will still be an option if needed to deal with the balloon.