Question on qualifying

[billybob37]

My brother is wanting to file ch. 7. He lost his job and is now only making about $1200 a month. His mortgage is $1400 a month which is current and he is living off his 401k which has almost run out. He wants to keep his house which I don't see how he can pay for it. If he tries to file and his monthly income does not cover his bills, will he be denied?

[AngelinaCatHub]

I cannot tell the future, but he must attempt to work with the mortgage company. Remember, he is far from being alone at this time. 'Hub

[eddiep]

Are you asking if the judge force him out of his house because he can not "prove" that he can cover his expenses? My lawyer said no, but he has to be current on his mortgage payments if he is filing for chapter 7. Has he tried to get a loan modification from his mortgage co?

[billybob37]

Yes that is basically what I am asking, or also will they not grant him a bankruptcy? He is current and never been late and already has a great interest rate so I don't know if he could do a loan mod.

[dingdong]

Bankruptcy in a basic sense is-- your income doesn't cover your bills, which equals insolvency.


So if your friend doesn't have enough money to pay his bills, and qualifies under median, he should have no problems with his filing BK.

If he can "make it" by getting rid of his unsecured debt, (CC, old utilities, etc) and possibly was able to get a forebearance or some other kind of loan mod temporarily until his income was better, would he make it?


Is his 1200.00 from unemployment compensation?

Does he have any equity in his home?

Does he have any equity in a car?

What state does he live in?

These are all questions he should consider when deciding to file, wheter he can protect any assets he does have through either his state or federal exemptions.

[eddiep]

We were in a similar situation when we first contacted a lawyer. If you added up all our bills including our mortgage we were coming up with -$600 a month. This was a huge concern for us because we wanted to keep the house. Our lawyer said that as long as we were current the judge could not force us to surrender the house. As a matter of fact as you will see in many posts here that unless you are under median you have to show a deficite or you end up in a chapter 13.

As far as the mortgage goes, how long does he have left on the term? If he stretched the loan out to 30 or 40 years, would that lower his payment enough? That is exactly what we did. It lowered our payment by $1030 a month and the bank does not want a payment for three months while they complete the paperwork because they did not want the principle amount to change in the process. I was current and never late, I think that actually helped. go to www.mortgagecalculator.org and run the numbers. If there is anything else let me know, I wish you luck.

[eddiep]

PS

When talking to the bank about a modification he will want to show a deficite but not more than $200 a month. These numbers are estimates and if he decides to try getting a modification make sure he does not "wing it". Before he calls write it down, figure it out, they will want estimates on electric, gas, car payment, groceries, auto insurance, property tax, credit cards etc... Make sure the numbers are not more than -$200 with his current mortgage payment.