Not Reaffirming House - When to stop paying?

[cfgdag]

I live in Arizona.

We are filing for Ch7 today. On our paperwork we stated we "intend to reaffirm" our house (first and second mortgage). Our first mortage is thru Chase, our home equity line of credit is thru Desert Schools Federal Credit Union. However, we are almost certain we are NOT signing any reaffirmation paperwork and letting the house go (we owe $330,000 and is only worth $200,000).

My question is, when do we stop making payments to the first and second mortgage? Do we need to wait until after our 341 meeting? After discharge? Can we stop now? We are above the income level of Ch7 but qualify by the means test, showing -100 every month. If we stop paying now, will it effect our 341 and possibly push us into a 13?

Also, anyone know how aggressive Chase is at foreclosure? I would love to stay at least 9 months in the house if possible.

Thanks for any input/advice!

[lrprn]

If you really do file today, then check with your lawyer, but I'm pretty sure he/she's going to tell you to stop making your mortgage payments now.

Congratulations on filing and an even bigger congratulations for having the good sense to walk away from your incredibly upside-down house. It's uphill from here!

[cfgdag]

lrprn.....Thanks for replying. I got an email from my attorney last night stating we are officially filed!!! But he didn't mention anything about my mortgage payments. I guess I should shoot him an email.

Anyone else have any input??

[fooked]

why not include the house in the BK? that will save you some time when you're ready to buy later...

[LSUTiger32]

Yeah I am confused......did you change your mind? Why did you mark intend to re-affirm if you don't intend to do so?

You should include it in the BK, because otherwise you will have a foreclosure.

[cfgdag]

My attorney said I need to state that I intend to reaffirm but when we receive the actual reaffirmation papers, do not sign them. I seem to recall he said if I didn't state my intention to reaffirm it could have pushed me into a chaper 13. My mortgage payments are over $2300 a month and I am only -100 on the means test.

This was our plan:
- State our intention to reaffirm on the filing
- Quit paying mortage payments (but he did not say how soon to stop paying)
- Do not sign any reaffirmation papers (include it in the bk discharge)
- Live in house on a ride thru until we are "forced out"


Was it a bad plan? Now I am worried.

[monkatom]

I believe your attorney is correct. We checked the box that we were going to reaffirm and then walked away. Our plan was too keep the house but it did not work out so we walked. The house will be included in BK just do not sign the reaffirmation agreement. The house will still be foreclosed on as this is the legal proceding by the lender to take possesion of the home but it should not show on your credit report as the debt will be IIB. Hopefully someone else will come along and confirm.

[debtmonster]

It blows my mind that anyone could ever afford $2300/mo. for a mortgage. When we were making almost 6-figures, it bothered me to pay $1100/mo. P.I.T.I.

Now that I am netting almost $2,000/mo. after taxes and business expenses, I am trying like hell to find a 2 bedroom apt for $500/mo and can't find anything.

$1000/mo. comes straight out of my gross before I even see anything that it is being allocated for a car.

Even if I made a lot of money, I would never get something over $2,000/mo. $1,300 or so would be the absolute max and that's pushing it.

I don't mean to be so judgmental, but when I see stuff like this, it simply blows my mind. As soon as houses went over $200,000, they all became totally unaffordable for me. I need a $60k home some place. How do I finance one after a bankruptcy? I need the tax write-off's badly.

[cfgdag]

Debtmonster....At the time we bought our house, 4 years ago, we made just a little over 6 figures. We had 1 child and 1 car payment. We easily afforded it and lived comfortably. We mortgaged $330K. About 2 years after moving into our home we had an unplanned second child which bumped our daycare up to over $1600 a month...and both of us lost a bit of income due to ecomony and are now making about 10K less each year. The house overall wasn't too expensive for us to afford. Between mortgage interest, all our daycare expense, and the 2 kids we don't pay much into taxes each year and therefore our take home pay is pretty good. We could still afford our house payment once we get rid of cc debt BUT with our house being so upside down in equity it would be dumb of us to stay. Yes, we do pay alot on our house each month but it was our "dream house" and the high payment was worth it to us. It kills us to let it go but know in a few years we could by another house, similar to it, but for much less than we owe now.

[debtmonster]

That's what I did with my house. The builder who built my house had 3 others in the neighborhood that he put up in 2005. Here it is in 2009 and he hasn't sold one single house. They are all sitting there rotting with nobody maintaining them.

My sister's house was $260,000. They put down almost $100,000 from house flipping of their previous house. That would have been the ideal thing for you. I could never DREAM of paying $1600/mo. for daycare. WOW!!! That's like a whole salary for many people.

I always look at it this way now...

Just because you're making the money today doesn't mean you will make it tomorrow. No job is secure. I've been laid off so many times and now with this bankruptcy, I have learned my lesson. No more expensive stuff for me, even if I can afford it.

Luckily I don't have any kids. We would be homeless if we did as we could not afford to pay for children + ourselves.

[StartingOver08]

OP that is a good plan your attorney proposed. To be on the safe side, I would stop paying after the 341. But talk to your attorney first.

[cfgdag]

What makes me sick is we actually bought the house for $360K (put down almost $60K). So with it only worth about 180-200K now....we lost alot of equity and I just can't see staying any longer....

Hopefully we can stash away that 2300 house payment for several months, living there without paying. Then, rent a house for about 1300 a month, still stash away 1000 a month. We should be able to save a nice nest egg for another down payment.

Yes, 1600 a month in daycare is alot. My oldest just started Kindergarten so our daycare dropped to about 900 a month (we still have to pay for before and after school care for her and full time daycare for my 2 year old). So, that drop in daycare will help a bit.

I worry alot about if one of us were to be laid off. I am sure if we can get our rent/future house payment down to 1300-1600 we should be fine if one of us were to be laid off for a while. Heck, we wouldn't need daycare then...saving us 900 a month! My husband is in healthcare (works at a hospital) so I really don't see his job in jeopardy, people still get sick and need surgeries, etc. But, you just never know.

Trust me, knowing we are starting all over means we need to be smarter with our money. We are currently living paycheck to paycheck and we plan to never do it again!

edited to add: I have been at my job for 14 years and am the only gal in the office running things. I know my job is secure, other than if we have to ever close doors due to economy. With me doing the book keeping I know that would be a long way off, we are still making a profit every month. We are a small business (about 30) and I am extremely close with the owner and we often have talks about our future here and he has assured me we have nothing to worry about.....but, sh*t happens, right?

[cfgdag]

Startingover...that was my plan, to stop paying after the 341. But figured if I could stop now...why not? I sent an email to my atty, so we will see what he says.

[StartingOver08]

Well, you are in one of the locations where foreclosures are taking a looonnnggg time (CA, FL, NV, AZ) so you have lots of time to save after you 'surrender' your house.

My attorney said not to move until I received notice of the final judgment and foreclosure sale. Last week I checked to see when the 'average' foreclosure sale happened in my zip code - looks like 2 yrs now is the average! That's up from last year when I filed. Some of the properties I am showing that are still in the LP stage since 2005! Crazy. Don't be too anxious to move too early. Check FC cases in your neighborhood to get a general trend for your specific area.

[cfgdag]

Startingover....how would I look up forclosures in my area? Google search?? Specific website??

My co-worker was being forclosed upon (different lender, different part of the valley/city) and it took about 9 months for them. And they actually forced the issue with their lender to take it because they saved and paid cash (45K) for a forclosed house and wanted to move right away. I wonder how long they could have lived there if they hadn't forced the issue.