Still going back and forth deciding BK

[HOMEBODY]

I am going back and forth on my own situation and learning a lot from the other posts.

Last night I went to sleep thinking that perhaps I could just default on the loans, have them charge off and then settling with the collection co., but then realized after reading these very intelligent posts that I would have to pay IRS for forgiven debts..so NOPE, no settlements for me.

Now I am thinking perhaps I could do the Chapter 7 for the following debts

$50,000 in unsecured loans
$745,000 for my main residence which I will keep (worth about $650,000)
83,000 equity line of credit on main residence

$186,000 rental property (worth about $300-350,00) good rental income
248,000 equity line

$166,000 rental prop-worth about $140,000 (ok rental income)
20,000 equity line of credit

In reading your posts, I should not reaffirm any of the loans if I plan to keep them. Now, I understand that 4 years after Chpter 7, I can go back and file Chapter 13 and get rid of the 2nd liens on the properties. Would I have to reaffirm these loans to quality for Chapter 13 later on...is that correct?
I do not qualify for Chapter 13 now because I owe too much.

I will continue to pay...but these loans will not show up on my credit report at all? How will I build credit again?

Also, I will continue to pay on the 1st mortgages and later on settle the 2nds. I am concerned about the 2nd rental as the 1st is only $186,000 and it is worth $300-350,000 and the equity line is $248,000.00. The equity line could technically foreclose and note that they are both with Chase.

Anyway, this is my plan, let me know if you have a better way to handle this. I would appreciate everyone's ideas.

Thanks.

[HHM]

Back and forth on what?

Can you be out of debt in 5 years or less, on your own. If no, the decision is made for you, all the other crap is just pointless chatter.

As a practical matter, if you can afford a $745,000 mortgage payment, I am guessing your are over the median income for your state and household size, so you may have some issues qualifying for chapter 7, but let's assume you would qualify (after all, you can claim that mortgage payment on part II means test).

You will not (and should not) reaffirm any mortgage.

You should probably consider simply walking from the under performing rental, unless rental income is 30% over the monthly carrying cost, then the rent it NOT GOOD, and there is no equity and we are in a stagnant real estate market. Nothing worth saving.

[HOMEBODY]

My income is about $9,000.00, but I am self employed and have overhead costs of about 3,000.00, my mortgage on the residence is $2079.00, had it modified at 1.19% interest for the next 7 years and then it goes to 4.3%. I am paying about $20,000 a year on the principal and the house will again be worth a million, its on 2 acres of land.

One house rents for $2200 and the 1st loan payment is $1175.00.

The other house rents for $995.00 and the 1st mortgage is $985.00 and I am trying to get it modified.

In my income and expense declaration after writing down all of my expenses, I am over on the expenses. It looks like this.

$2,079.00 mortgage payment
230.00 equity line of credit payment
300.00 groceries
500.00 utilities
700.00 Property taxes
90.00 insurance
450.00 Disability Insurance
200.00 Health Insurance
47.00 Cancer Insurance
361.00 Car Payment
155.00 Car Insurance
100.00 home maintenance
100.00 charity
29.00 gym membership

150.00 gas
70.00 laundry and cleaning expenses

$5,561.00 household expenses


Business expenses

$1,010.00 rental
170.00 utilities
120.00 telephone
59.00 internet
100.00 office supplies
184.00 health insurance
700.00 taxes
200.00 monthly budget for software that needs to be updated yearly
100.00 office maintenance (cleaning, carpets, etc)
100.00 advertising

$2,743.00


TOTAL IS $ 8,304.00

My rentals take a lot of my income. I've finally rented one that was vacant for 3 months.

[HHM]

the house will again be worth a million, its on 2 acres of land

Well, good luck with that assumption, I hope your right, but real estate is only worth what someone is willing to pay for it, and now, and for the foreseeable future (10+ years), no one is going to be willing to pay top dollar. In most states, for homes in that $800,000+ range, there is a 5-10 year inventory of houses waiting to be sold.

You will have a rough road in chapter 7, even with your numbers, you show disposable income. However, it is an option you should explore, but you will need to visit higher end attorneys (the run of the mill BK attorneys will be of no help).