Planning My BK - Have Questions

[AlmostAmos]

I have been sinking for the past few years & am ready to do something about it in 2010. That is my New Years Resolution!

I was making significantly more than I am now, I had to reduce my time at work as my wife is having rather serious medical problems with a pregnancy. We have 2 children at home and a third on the way. I've been reading here for a while & am ready for some advice!

Here are my debts:
-80k on Credit Cards (current)
-100k in Student Loans (deferred but I'll need to start paying SOON)
-40k in Car Loans (current)
-440k Mortgage (current, house is worth 325k and needs 20k worth of repairs!)

Here is my income:
-3240 GROSS every two weeks. This is ~42k every 6 months.

Because of my wife's medical problems, I've had to start staying home a couple of days/week to take care of her & our children. Paying for this is not an option, obviously. My income up until last month was about 4800 gross every two weeks. This 62k every 6 months. This would put us above the 6 month maximum for CH 7 in our area (46k/6 months). Because I will not be able to back to work for some time (over 6 months for sure), I have been thinking about filing in 6 months from now as my income over the previous 6 months will be under this amount. I'm basing this on the numbers for a family of 5 (we're 4 currently but would have a 5th prior to filing). Am I correct in my thinking/planning?

We CAN'T afford the credit card payments and I'll probably stop paying them this month. The mortgage is too much also. Honestly, I'd like to keep the house but it just too much especially with the repairs that are needed (water damage, rot, etc.). We're paying 2500/mo for the house. I would like to keep both of our cars (they are worth exactly what we owe at this point) as we can't get by with just one (I work 90 miles from home).

I want to come out of this with both cars, my student loans and no other debt. My biggest worry at this point is housing. I don't know if I should look to move now or save $ during the spring since I plan to stop paying my CCs/Mortgage and find a rental before/after filing. Any planning tips/advice would be appreciated. Any glaring problems at this point?

-AA

[frogger]

The mortgage is too much also. Honestly, I'd like to keep the house but it just too much especially with the repairs that are needed (water damage, rot, etc.). We're paying 2500/mo for the house.

-AA

You're thinking ahead and that's good. Now, start thinking with your head and not your heart. You're underwater on the house, it has damages, you're paying 2500/month.

I'm not that sentimental......

How about you?

[AlmostAmos]

You're thinking ahead and that's good. Now, start thinking with your head and not your heart. You're underwater on the house, it has damages, you're paying 2500/month.

I'm not that sentimental......

How about you?

I know you're correct - that is why I'm planning this out & am going to follow through with it. One question about the house that I didn't think of until now. I have a first mortgage for 350k and a second for 90k (both with the same company). My mortgage person set this up when I moved in to keep us from having to pay PMI (or something like that!). Is it possible to discharge the second but keep the first? Is this smart to do? The payment on the first (1800/mo) would be doable for us & wouldn't get us into further trouble.

[jribe]

I know you're correct - that is why I'm planning this out & am going to follow through with it. One question about the house that I didn't think of until now. I have a first mortgage for 350k and a second for 90k (both with the same company). My mortgage person set this up when I moved in to keep us from having to pay PMI (or something like that!). Is it possible to discharge the second but keep the first? Is this smart to do? The payment on the first (1800/mo) would be doable for us & wouldn't get us into further trouble.

not in a chapter 7. It's a secured debt, and the only hope would to be try and negotiate with the bank. Have you asked for any modifications? Or is the income too high?

[aljohnson007]

Not a chance in Ch7. You may be able to get a mortgage mod but the banks are very reluctant to go that route. Try to give a little more info like:
What State are you filing in?
Are the debts in both names are yours alone?
If you decide to give up the house, stop paying now and save the money for attorney fees and other expenses. You could be able to stay there for a year before being evicted. JMO

[AlmostAmos]

Not a chance in Ch7. You may be able to get a mortgage mod but the banks are very reluctant to go that route. Try to give a little more info like:
What State are you filing in?
Are the debts in both names are yours alone?
If you decide to give up the house, stop paying now and save the money for attorney fees and other expenses. You could be able to stay there for a year before being evicted. JMO

Thanks, I figured that would be too easy.

1. Virginia
2. CCs are in my wifes name only. Cars/House in both of our names. We each owe 50k in student loans.

[aljohnson007]

You may want to explore having your wife file alone and use Tenancy by Entirety (TBE) since you will be giving up the house. I don't know what the law is in VA but in FL, the vehicles have to be titled in both names with the term "...AND ..." and not "OR." I used TBE and was able to exempt everything
including the house that was paid for, two vehicles, bank account and all the furnishings. You can Google Virginia TBE and by all means, discuss this with an attorney. Keep us informed on your progress.

[StartingOver08]

Look up your exemptions here www.legalconsumer.com

Did you get the value of your home from the tax valuation or do you have a recent appraisal? IF your homes value is less than the first mortgage balance you can strip your second in a Ch 13, but not in a Ch 7. The disadvantage to a Ch 13 is you will not be able to pay your student loans during the 3 to 5 yr plan.

Check out your housing options in your area...I thought that rentals were expensive in the Virginia area (more expensive than your current mtg). I don't know where you are specifically so I don't know for sure...just saying to check out your options first. Filing BK is a business decision. You want all the facts and figures so you know the best route to take on this journey.

If you are going to give up your home in the Ch 7, it looks like VA can use a judicial OR non judicial foreclosure. http://www.realtytrac.com/FORECLOSUR...osure-laws.asp Apparently the preference is for non judicial foreclosures, which are much faster than the judicial type. Check with your attorney as to the average time you will have to save funds after your Ch 7.

[AlmostAmos]

I got the value of my house by comparing it to recent sales of similiar houses in my neighborhood. It is an estimate - but I feel it is accurate.

I'm not interested in trying to keep the house if I have to go ch 13. I want this done & I want a fresh start.

If I quit paying for my house now, they'll start hounding me in a month or two - so I have to drag it out until I file for CH 7, right? Then, it will depend on the state as to how long it will take for the bank to actually take the house back, correct?

As far as cars go, we have a 07 Expedition (700/mo) and a 06 Wrangler (425/mo). These wouldn't cause a problem, would they? They're nothing special by any means. I just purchased the Wrangler if that matters.

[StartingOver08]

Check with your attorney, but the Expedition payment is more than what is permitted ($489/mth). Find out what happens in your district when you vehicle payment exceeds the allowed amount. Do you have equity in the vehicle? Probably not.

[AlmostAmos]

Check with your attorney, but the Expedition payment is more than what is permitted ($489/mth). Find out what happens in your district when you vehicle payment exceeds the allowed amount. Do you have equity in the vehicle? Probably not.

No, right now - we owe about 19,800 on it still. KBB says trade in is about $16,900 for it.

[AlmostAmos]

I'll try to keep this updated as I move along in my BK...

My paycheck was, as expected, significantly less this past time & I am unable to pay the CCs. So, here come the dogs I guess. A week has gone by since the first missed payment & I haven't received any calls yet.

My wife and I will not be able to file until July 1 as our income will be too much in the previous 6 months if done sooner. SO, we have a while to plan this out & make smart choices. I have the names of a couple of attorneys (recommended by others) and we'll make calls this week. My current questions are:

1) Because we're not going to file until July 1 and we are going to give up the house when we do, what should I do about it for now? Stop paying? I MIGHT be able to afford the payment for now. Seems stupid to continue paying it.

2) If I don't pay my mortgage, I'll obviously have some extra $ available each month. What do I do with it? I know I have to save up for the attorney, but I'm not sure what else to do. I would like to begin putting $ aside for a rental. I don't know how soon I'll need that though as I plan to stay in my house until the end!

I really appreciate the opinions from everyone, this forum has taught me a TON so far!

-AA

[JEM]

I'll try to keep this updated as I move along in my BK...

My paycheck was, as expected, significantly less this past time & I am unable to pay the CCs. So, here come the dogs I guess. A week has gone by since the first missed payment & I haven't received any calls yet.

My wife and I will not be able to file until July 1 as our income will be too much in the previous 6 months if done sooner. SO, we have a while to plan this out & make smart choices. I have the names of a couple of attorneys (recommended by others) and we'll make calls this week. My current questions are:

1) Because we're not going to file until July 1 and we are going to give up the house when we do, what should I do about it for now? Stop paying? I MIGHT be able to afford the payment for now. Seems stupid to continue paying it.

2) If I don't pay my mortgage, I'll obviously have some extra $ available each month. What do I do with it? I know I have to save up for the attorney, but I'm not sure what else to do. I would like to begin putting $ aside for a rental. I don't know how soon I'll need that though as I plan to stay in my house until the end!

I really appreciate the opinions from everyone, this forum has taught me a TON so far!

-AA

Any type of auto maintenance. Tires, repairs, general upkeep....

Medical or dental procedures/exams that have been put off. Eye exams, glasses, contacts...

Reasonable clothing, shoe expenses...with kids--they always NEED something.

If you have a new baby on the way--any necessities that are needed--carseat, stroller..you can always stock up on diapers, wipes.

And of course save up for the attorney, and first/last month rent at a rental, and security deposit.

[AlmostAmos]

...And of course save up for the attorney, and first/last month rent at a rental, and security deposit.

In regards to the $ I put aside for the rental (first/last, security deposit, etc.), am I able to hold onto this $ or is it going to be taken if it is in my account when I file? I live in VA if that matters.

I feel like I need to have $ set aside for the rental in case I only have a short amount of time to get a place. But, I'm hoping I have 6 months or so in the house AFTER discharge to save $. Is this unrealistic?

[Mi Bankruptcy]

I would check with your attorney and see if after you start spending it on maintenance stuff if you can pay on the principal of your student loans? I know their are concerns about preferential payment. However, since you can't discharge it would seem like you could pay on them?