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    Income Level after discharge

    We may have to wait awhile to file Chapter 7 since we took out an equity line last September and took 3 very large cash withdrawals from that, the last being January. We only have receipts for spending about 20% of the money. (We weren't planning on foreclosure at that time.)

    Our home will be foreclosing in about 2.5 months in a deficiency-allowed state. The HELOC 2nd will be able to get a deficiency judgment if they so choose.

    If we wait to file until after foreclosure, but before a law suit is filed for judgment; our expenses will be much lower since we would no longer have the home.

    Here is my question:
    Even though we qualify for the means income level, could they change us from Chapter 7 to Chapter 13 because our expenses aren't that high after the foreclosure?

    Thank you.

    #2
    Correction: Should say "Income to Expense" Ratio

    Correction of my previous post. This is a question about Income to Expense ratio after foreclosure ... not just an income question. They may force Chapter 13 if we wait until after foreclosure?

    Sorry for the confusion.

    Comment


      #3
      They can change you from a Ch 7 to a Ch 13 if you have $166/mth left to fund the plan. That is why the filing date of the petition is so important. You will need to wait at least a year from the time you took out the new loan which should put enough time after your last large cash advance.

      If it were me, I would wait a year from the last large cash advance. Hopefully you made some payments on it since you took out that $$$.
      Filed CH 7 9/30/2008
      Discharged Jan 5, 2009! Closed Jan 18, 2009

      I am not an attorney. None of my advice is legal advice in any way..

      Comment


        #4
        Thank you for your info - it helped.

        Yes, we made 4 or 5 payments. From what you are saying about waiting a year and the expense ratio, Bankruptcy is not in the cards. We will have to do some serious negotiating with the HELOC lender to try to settle the debt the best we can.

        Thanks again.

        Comment


          #5
          Your best bet is to speak to an attorney in your area. The BK initial consults are usually free. You have a serious situation with the recent HELOC and the large cash advances, so you need a good BK attorney.

          Are you sure your foreclosure is going to happen so fast? It seems awfully fast for this market. You may want to speak to a good real estate attorney - sometimes they can buy you some time too.
          Filed CH 7 9/30/2008
          Discharged Jan 5, 2009! Closed Jan 18, 2009

          I am not an attorney. None of my advice is legal advice in any way..

          Comment


            #6
            In answer to your question, we are just going by the state's timeframe in GA. There is no redemption and lenders can do either judicial or non-judicial. We were told it is usually about 60 days after Default. We will be in default April 16. From what I understand, foreclosures happen pretty quickly. I guess it is up to the bank whether or not they stick to their own timeframe or drag their feet. It will be the first lender doing the foreclosing.

            Thank you. This is a really good forum that helps a lot of folks.

            Comment


              #7
              Sorry for yet another correction. The lender says we will be in default April 16, which is one month sooner than the 90 days they told me on the phone.
              Our first non-payment was February 1.

              Comment


                #8
                Just to give you an idea, I'm in Florida so all we have is judicial foreclosure. Our timeline on the various websites (attorney sites) is 6 months from NOD. Most of the lenders are taking much, much longer. Mine is 10 months so far and my attorney says stay until the final judgement which could be more than 60 days if they decide to go fast now LOL! Many of the foreclosures here are 12 + months and some are closer to 18 mths.

                Check your courts websites to see what the new reality is for your district - you may be in for a pleasant surprise. Don't cut yourself short.
                Filed CH 7 9/30/2008
                Discharged Jan 5, 2009! Closed Jan 18, 2009

                I am not an attorney. None of my advice is legal advice in any way..

                Comment


                  #9
                  If you are above means do you need the expenses from the home to qualify for chapter 7?
                  Having income above means doesn’t mean much if you have enough expenses to get you below $166 per month disposable income.
                  Chapter 7 07/30/2008
                  341 09/17/2008
                  Discharge 11/21/2008

                  Comment


                    #10
                    Thanks for both of your replies.

                    1. We are below means. However, after we are out of this home and foreclosure is over, our expenses (including the home we will move into) will leave about $250 or so left over after expenses. I entered the expenses on that handy online bankruptcy expenses calculation someone listed on this site. That is a great calculator, as I thought we would actually have more money that that left over each month.


                    2. Regarding the story about your FL foreclosure taking so long, that is pretty interesting. We are going to move to our 2nd home we purchased 3.5 years ago. We paid too much, as it turned out to be a fixer-upper, plus the market value fell on that also, of course. It is upside-down, so no one can really force us to sell that since it is encumbered with a 90% 30-yr loan that we continue to pay.

                    Also, my husband will be on SS in two more weeks and I can go on SS in September. That will mean they can't attach wages.

                    In one regard, I'd like the foreclosure to get over with -- on the other hand, delay would help us to be able to go Chapter 7.


                    It certainly isn't any easy thing to go through. Not only is this forum full of good advice, but it helps to be with others in the same boat. We never thought we'd see the day we would have to foreclose and possibly go Bankrupt also.

                    Thanks.

                    Comment

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