Can it get any worse...I'm still reeling and I need CH7 help!!

[flower04]

We were all set to file CH 13 on May 22. It's been a long road and we finally paid our attorney and are ready to get this over this.

UNTIL...Yesterday we found on my spouse's job (our main source of income) is being eliminated and he will be laid off June 1. Today, I found out that my teaching job (part-time) with our school district is getting cut due to district/state-wide budget cuts and deficits. So, as of June 1 we will have no income. We are unsure of the severance package (if any) but my husband worked there for 13 years. Don't even get me started if we don't get severance.

We spoke to our attorney and she said to wait and do nothing until June 1. Open up a separte account for any severance money.

I'm really struggling with 2 little ones at home, not knowing if we can keep our home. Our extended family is very prominent in the area and it would be a disgrace if we had to "auction" our home or something like that. We are under-water on our home by about $45k, have a newer car with 3 years left of payments...KBB trade-in value is less that we owe by about 3K.

I need to look at the allowed exemptions to determine where we are with assest, but do most people get to keep their homes or cars in 7? Should I be looking for a rental property? What if my husband gets a job after June 1, but still during the severance and before we are discharged from CH7? Do we have to go to a CH13?

Thanks for listening, I have learned so much from all of you!

Deep breaths, deep breaths....

[liz417]

Take a deep breath, it'll be okay. First of all, so sorry to hear about both you and your husband's job losses.
Yes, you can still keep your home and cars in a ch 7 provided that your state exemptions cover any equity (doesn't sound like there any) in either the home or vehicle. I would wait to file as long as possible (as your attorney suggested), so the look back period reflects your correct income with the job losses (they will be looking at your paystubs for the last 6 months). Also, regardless of what your "family" thinks or how this looks to their community, you have to do whats best for YOUR family. Do you want to keep the house? Can you afford the house if your husband has to take a lower paying job? These are some questions you have to sit down and discuss, you only get one shot at this bk thing (well, I guess you could file in another 7 years...but...), so it is important that you do some pre BK planning.
Good Luck

[flnybk]

i would listen to your lawyer. they seem to know their stuff. I am $100,000 upside down in my house. $12,000 upside down in one of my cars and about even in the other and he was able to just guide us in the process. I have 3 little ones. Our trustee was very nice and super understnading. there were two other cases ahead of us with unemployment and severance. Went smoothly with much less debt than you are talking about.

BTW my family knows nothing of my situation.

[flower04]

The house is a huge sticking point. We may have to move to where a new job is and sell it and our payments are high considering we have 2 mortgages.
If we decide to surrender/walk away from the house, what happens?

My child starts kindergarten next year and has medical issues that have unfortunately turned her into a very shy and scared little girl--especially of bigger, agressive, kids. Moving to a new home, new school, etc. will be SO very hard for her. We may not have a choice, but thank you for the info.

What type of pre BK planning would be different for a CH 7 vs. a CH 13?

[liz417]

The house is a huge sticking point. We may have to move to where a new job is and sell it and our payments are high considering we have 2 mortgages.
If we decide to surrender/walk away from the house, what happens?

My child starts kindergarten next year and has medical issues that have unfortunately turned her into a very shy and scared little girl--especially of bigger, agressive, kids. Moving to a new home, new school, etc. will be SO very hard for her. We may not have a choice, but thank you for the info.

What type of pre BK planning would be different for a CH 7 vs. a CH 13?

This is the time to get a fresh start, you could "walk away" from the home and file BK and you wouldn't be financially responsible for anything. If you file a ch 13, you might be able to "strip" the 2nd on the home (only if there is NO EQUITY in the home over the amount of the 1st mortgage). If your auto loans are over 910 days, you could "cram" the car down for what it's worth.

I would advise you get 3-4 free consults with a BK attorney. Good Luck!

[JRScott]

Okay first off don't worry what people will think if your house forecloses. Odds are at least one other person on your street is close to it.

As your lawyer says wait til after June 1st to do any filing. In the good news rather than a Chapter 13 this might get you into a Chapter 7 ultimately. I know that's probably not what you want to hear but in the long run maybe its the better resolution.

Since you know your jobs will end as the end of the month take a sick day from work if you have some left and head over and get a few applications in for jobs in your area or at least see what's out there. In the past teaching was a very safe job but frankly with the economy and lack of funds I fear a number will lose their jobs. (I'm friends with the Superintendent of Schools here, and he's fretted for the last 6 months over the potential of losing people.).

I would delay filing probably perhaps even a month or two after June 1st depending on circumstances. You did the right thing calling your lawyer. The next thing call your family, let them know you are losing your jobs, I know its hard, but you might need their help in the months ahead. If you go to church approach the preacher/rector/bishop etc and let them know of your job loss, perhaps someone in the parish/church/ward will have a job or know of one.

[JRScott]

The house is a huge sticking point. We may have to move to where a new job is and sell it and our payments are high considering we have 2 mortgages.
If we decide to surrender/walk away from the house, what happens?

My child starts kindergarten next year and has medical issues that have unfortunately turned her into a very shy and scared little girl--especially of bigger, agressive, kids. Moving to a new home, new school, etc. will be SO very hard for her. We may not have a choice, but thank you for the info.

What type of pre BK planning would be different for a CH 7 vs. a CH 13?

In a Chapter 7 if you surrendered the home you would leave it to the bank and would owe nothing.

In a Chapter 13 it is possible to get a second mortgage stripped depending on value of the home, loan amounts, and time of loans.

You might could still live in the home a couple of months during the bk process while the bank formally forecloses as part of the bankruptcy. Rather than buying a new home explore all your options including moving in with relatives or renting short term if necessary. Chose the option that is best for your situation.

Try to look into something in your school district if possible to help keep familiarity for your child, however perhaps this is the challenge she needs to overcome these problems of shyness long term.

[flower04]

Yes, we are investigating all avenues...
What happens to the house if we don't get a job and the judge doesn't take it? We can't pay for it unless we get a job...so are we just awaiting foreclosure? Same with the car?

[eddiep]

If you file for ch7 you can elect to not reaffirm the mortgage or the car. That way if things do not work out and you can not continue to pay these loans you can just walk away from the house and car and you would not be responsible for any money owed after the foreclosure. But if jobs come along in time you can keep the house.

I am not sure if you want to keep the house or not, but if you do call your mortgage co and explain your situation, ask if they can defer your payments for three months, the amount would be added to the end of your loan and could buy you some time to find a job.

I dont know about ch13 options on reaffirmation.