New here, Please help.

[DetroitDM]

I'd like to apologize in advance because i'm sure many of my questions have already been answered somewhere in these forums. I have questions regarding; chapter 7 bankruptcy, foreclosure, property taxes, credit cards and a car lease and i'm not even sure where to begin. I've met with 3 different attorneys and am more confused now than when i started.
The story begins just like many others:
Upside down on mortgage, behind on property taxes, can't keep up. Considering bankruptcy, scared to death. Michigan home.
The numbers:
1st Mortgage: $160,000 2nd: $45,000 Property taxes: $10-15,000
Zero credit card debt. Total: $220,000.
Time frame:
2 months behind on mortgage. 2 years behind on taxes. Facing foreclosure either way.
Questions:
1.) Do I need to claim bankruptcy?
Asking a bankruptcy attorney if you should file bankruptcy is like asking a car salesman if you should buy a car. I was told that because I have 2 mortgages, I will need to file chapter 7 to protect myself from the 2nd loan.
2.) If my credit is ruined because of the foreclosure, does claiming bankruptcy really make it worse?
3.) Will it protect me from delinquent property taxes? I was told that the taxes "would be taken care of."
4.) Should I file for bankruptcy BEFORE foreclosure? I can't get a straight answer on this.
5.) Should I apply for credit cards NOW before filing? Would it make sense to postpone activation on any new cards?
6.) Will I be able to keep my checking account and debit card?
7.) Would leasing a new car prior to filing be wise? Will a judge approve? I have 5 months left on my current lease. Not sure if I can turn it in early but afraid I won't be approved later. Will it help to restore some credit?
8.) Is there ANYTHING I can do to "bounce back"- Maintain whatever sanity I have left and start rebuilding my credit ... please help.

~Any and all help would be greatly appreciated. Thank you.

[HHM]

Let me ask you a few question's first,

1. What is your monthly gross income?
2. What is the current market value of the house?

As to your questions.

1. Let me address that question later
2. No, BK is not really going to make it worse
3. Sorry, don't know the answer to that one
4. Yes, you would have to file before foreclosure, if your goal is to keep the house.
5. What do you need the cards for?
6. Yes
7. Leasing is probably the most costly way to get a car, so you probably should not lease period, but to answer you question, so long as the payment is reasonable, you can lease right before filing BK without negative ramification.

Ok, the real question you have to ask yourself...do you want to keep the house. The reality seems to be that you can't afford it. So the reality is, BK is not going to make you magically be able to afford the house, primarily because, your income is not being eaten up by credit card payments. So really, the solution to your problem is actually quite simple, you either need to earn more money, or decrease your expenses. Thus, I am figuring, you should probably let the house go and hopefully you can rent something cheaper. Also, time to stop leasing cars...you are better off financially buying a used car in the range of 3-5 years old.

[luckyinlove]

You still owe taxes

I agree that BK lawyers job is to make you think filing BK will be quick and easy when you get free advice from them..

From what you are saying, it looks like your only debt is the house.
If you are upside down, I would first try to get out of it without a BK, see if bank will allow a short-sale and call it even. You need to move now instead of waiting for them to start foreclosure.
You will still owe taxes, I don't think BK can wipe out back taxes unless they are more than 3 years old.

If you are going to file BK, don't get into more debt right before.

I agree about leasing cars, cars are just high expenses that you can avoid buying a used car.

hope that helps

[CindyLou]

I agree that BK lawyers job is to make you think filing BK will be quick and easy when you get free advice from them..

From what you are saying, it looks like your only debt is the house.
If you are upside down, I would first try to get out of it without a BK, see if bank will allow a short-sale and call it even. You need to move now instead of waiting for them to start foreclosure.
You will still owe taxes, I don't think BK can wipe out back taxes unless they are more than 3 years old.

If you are going to file BK, don't get into more debt right before.

I agree about leasing cars, cars are just high expenses that you can avoid buying a used car.

hope that helps

Real estate taxes go away with the house....You are giving up the house, right...did I miss something?

As far as the car, you should look into an early turn in and either buy or lease a new one (be smart!!!! I am a new car person....bought two new vechicles right out of BK...and plan to pay them off and keep for many years...only 2 years to go on one of them!!!) But everyone has their opinion on the new car vs. used car thing. I live in a big city and drive in major traffic on busy freeways and needed the warranty's. Couldn't lease because I woud go over the mileage and alse because I wanted to be without a car payment in a few years......

But you will have to do something or your will be in a bad place when your lease it up.

Good luck

[PaKettle]

I'd like to apologize in advance because i'm sure many of my questions have already been answered somewhere in these forums. I have questions regarding; chapter 7 bankruptcy, foreclosure, property taxes, credit cards and a car lease and i'm not even sure where to begin. I've met with 3 different attorneys and am more confused now than when i started.
The story begins just like many others:
Upside down on mortgage, behind on property taxes, can't keep up. Considering bankruptcy, scared to death. Michigan home.
The numbers:
1st Mortgage: $160,000 2nd: $45,000 Property taxes: $10-15,000
Zero credit card debt. Total: $220,000.
Time frame:
2 months behind on mortgage. 2 years behind on taxes. Facing foreclosure either way.
Questions:
1.) Do I need to claim bankruptcy?
Asking a bankruptcy attorney if you should file bankruptcy is like asking a car salesman if you should buy a car. I was told that because I have 2 mortgages, I will need to file chapter 7 to protect myself from the 2nd loan.
2.) If my credit is ruined because of the foreclosure, does claiming bankruptcy really make it worse?
3.) Will it protect me from delinquent property taxes? I was told that the taxes "would be taken care of."
4.) Should I file for bankruptcy BEFORE foreclosure? I can't get a straight answer on this.
5.) Should I apply for credit cards NOW before filing? Would it make sense to postpone activation on any new cards?
6.) Will I be able to keep my checking account and debit card?
7.) Would leasing a new car prior to filing be wise? Will a judge approve? I have 5 months left on my current lease. Not sure if I can turn it in early but afraid I won't be approved later. Will it help to restore some credit?
8.) Is there ANYTHING I can do to "bounce back"- Maintain whatever sanity I have left and start rebuilding my credit ... please help.

~Any and all help would be greatly appreciated. Thank you.

Any way you can get out of the house payment without filing bankruptcy? I think losing the house will ruin your credit but so will filing bankrupty. Both are reparable. But if you don't have to use bankruptcy then I wouldn't recommend it, it's only for when you really need it. Seems to me that if you just get out of the house, your problems are solved, no?

As to credit cards, if you apply for credit and don't use it, then you won't have to include it in your bankruptcy. However many credit co.'s will close your account anyway, once you file. My GM card allowed me to keep $300 of my $2500 limit with them, through the bankruptcy. (i.e.; they lowered my limit to $300 as soon as I filed). Probably won't do you much good to apply for credit if you're going to file bankruptcy. You can rebuild your credit within about 1-2 years after bankruptcy, though.

Good luck.

[imaloser]

What kind of loan do you have ? ARM? Neg-AM? Do you have a hardship that allowed you to fall behind ? If hardship is involved, and/or an interest reset - you would definitely qualify for a modification - they could capitalize your back payments and your property taxes to the back of the loan - or perhaps even extend the loan to 40 years (I've even esen 50). A lot of people don't realize this, but if you have received a NOD, a letter of acceleration, notice of foreclosure, or whether you do a short sale (which in your case will require the 2nd to subordinate), or a deed-in-lieu - they all report to the CRA's with a score factor code of 22 - no matter which way you go. So, don't worry about your credit - if you are 60 days you can redeem yourself - when you hit 120 days that's pretty bad.

[DetroitDM]

Keeping my head up...

Thanks to everyone so much for the advice.

Approximate monthly income: $2,000
Approximate market value $180,000 -just a guess, in today's market, who knows...
I DO have an A.R.M. and my interest rate is nearly 12-13% on both loans. Hardly worth it. My mortgage company said they're not taking on any new loans or adjusting any of the mortgages they currently hold. I think they plan to close their doors once all existing loans are paid.
I am ready to give up the house... walk away and accept foreclosure and or bankruptcy. As funny as it sounds, I would just like to know the best way to do that. I'd like to make this as quick and painless as possible. There are lots of rumors but does anyone think our government is ever going to implement anything worthwhile? By the time it trickles down to the average homeowner, will it be too late? I don't think a short sale is even an option at this point. A car lease IS a bad investment, and although I would rather not have such a large payment, I do need reliable transportation and used cars have been nothing but trouble for me in the past. I do NOT have any other debt and any credit cards would be for the sole purpose of rebuilding my credit. Thanks again everyone.
At least i'm not alone in this...

[imaloser]

ok - idea - why don't you just walk away - hand back the keys ? there is a company, in fact, called "youwalkaway.com". They were on national news over the weekend - it is legitimate - but it costs a grand - and i'm not sure what they do that you can't do for yourself. you say you are in michigan - i don't know whether they allow deficiency judgements or not - i.e., when the bank takes the house, sells it at a loss, thereby creating a deficiency, along with your 2nd which is also a deficiency - you need to find out if they can legally come after you for the difference. you don't need to file bk - just walk away if that is your only debt. especially if you want to keep leasing your car. you will get a ding on your credit report (a big one) for the foreclosure - but you better find a place to live (rent) before it becomes a matter of record.

[lrprn]

ok - idea - why don't you just walk away - hand back the keys ?

Walking away from a mortgage/mortgages without filing bankruptcy leaves the debtor owing the entire amount.

Far better under these circumstances to file bankruptcy and surrender the home inside the bankruptcy to wipe out the mortgage deficiency AND recover credit standing more quickly because lenders see the bankrutpcy and the surrender as one event, not two.

[lrprn]

So if you make about $2,000/month, that's an annual income of $24,000 - way, way below Michigan's median income no matter what your family size is - http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm . That means it's very likely you can file Ch 7.

I see you said in your first post:

The numbers:
1st Mortgage: $160,000 2nd: $45,000 Property taxes: $10-15,000
Zero credit card debt. Total: $220,000.

It breaks my heart to see that you've gone into arrears two months on your mortgage to pay your non-secured creditors and keep that balance at zero instead. If you had filed bankruptcy before doing that, you could have wiped out the non-secured debt and possibly not be behind now on your mortgage. Oh well - too late for that now.

HHM is right. If you have no unsecured debt right now and still can't make your house payments, then you are over-extended on the house and will eventually lose it no matter what you do. Filing bankruptcy and surrendering the house as a part of the bankruptcy will wipe out the mortgage debt completely. Just be sure *not* to reaffirm any of the house loans after you file.

When you met with the lawyers, did they recommend filing Ch 7 and surrendering the house? Unfortunately filng Ch 7with no unsecured debt you lose out on one of the largest advantages of Ch 7 - wiping out unsecured debt completely. But still there's a big advantage to you if you file Ch 7 and surrender your home - you will wipe out what you owe on the mortgages - no small thing!

[DetroitDM]

Thanks again everyone. Tons of great input.
I'm sure I could get caught up on the mortgage OR the taxes but not both. Unfortunately, I think I would just be throwing my money away. Your right, Irprn, I wish I had been irresponsible and gone shopping, gone to the dentist or at least gotten a vacation out of the deal. It appears, I'm only postponing the inevitable. The attorneys recommended immediately filing for chapter 7 and surrendering the house... at this point, I'm not sure there is any other option. I keep waiting for someone or something to fall into my lap. To voluntarily give up my home is going to be one of the hardest things I've ever had to do.
You have all been a huge help. Thanks again.