Chapter 7 Questions... re Keeping House and Car if behind in payments

[blueeyz]

Hello. I met with an attorney in March and have paid $800 towards my retainer and have been having a hard time coming up with the rest of the retainer. Today my boyfriend was served a summons for me from a credit card co. So I have decided I have no choice but to pay the full retainer next week. In order to come up with the rest, I must skip my car payment and mortgage payment which will put me 30 days behind on my mortgage as of Nov. 1. My car payment is current but will be one week late on the 30th.

So in chapter 7, is it true that you cannot keep your house and your car if you are behind in payments? It is imperative that I keep my house and car.

When I met with the attorney in March, I made $49,000 and I was told I should be able to file chapter 7 even though I make more than the means test allows in Arizona. After a raise this summer, I now make $51,000 a year and the median income is 42,000. He said he could use expenses to make my salary lower but I think that's a bit of a stretch.

Also, I have a means test question for household members. Does my live in partner of 12 years, 11 of which we have been living at the same address count towards household size? If so, I would qualify for chapter 7 for sure.

Thanks in advance for any help. I am a ball of stress today and I just want to move on with my life and do what's best for my situation.

[tcreegan]

Hi blueeyz,

was served a summons for me from a credit card co. So I have decided I have no choice but to pay the full retainer next week
You have a lot of time, at least 30 days to answer, then you ask for a last statement, takes another 30 days, these are easy to drag out.

So in chapter 7, is it true that you cannot keep your house and your car if you are behind in payments?
Pretty much, but you can always work with the lender.

It is imperative that I keep my house and car.
Have you run this past someone who knows financial business but is impartial, not connected to your situation directly?
Many, many people on the forum go into a BK with the idea that they HAVE to keep the car and house even when it is not a good deal.
Many, many people go on to regret this decision and wish they had explored their options more thoroughly.
Get someone (or post here) to look at the details of your house and car loans and give an honest assessment.

means test question for household members. Does my live in partner of 12 years, 11 of which we have been living at the same address count towards household size?
You use a household of 2 and have to include their income. Its kind of a double-edged sword. But if they don't have income, it helps.

Keep the questions coming, the folks here will try to answer and relieve some of the stress...we have all been there!!

Tom in Colo

[mrskal]

Good question on the car. I am late now on mine, but will pay that this week. ANother payment due on the 29th, which I will not be able to make and 341 meeting is on Nov 15. I hope they let me keep my van.

[october99]

Depending on the laws in your state there is a process for the lender to take back the house. If you don't have equity in it, then the trustee probably isn't going to be interested in it. I think then it would be between you and your lender what happens to the house. If you are behind but are catching up the lender is probably going to just let you stay. From everything I've read and come to understand, they really don't want your house, they want you to keep paying. I spoke with my lender last week and they said that if I can make a payment that is good faith that I am trying to catch up. I missed the first payment in Sept so come Nov 1 I am 60 days late.

As for the car, I have gotten a month behind on payments and had no issue with my lender. You might even consider calling your auto loan lender and asking if they allow you to skip a payment or two for hardship reasons. We've done that with both our lenders. Mine allows for one skipped payment/year with no explanation and two in a row if I fill out some paperwork and explain why. DH's lender allows for one every 12 months.

HTH a bit.

[backtoschool]

If you are not that late on the car (30 days or less) you should be able to catch up while you are under the automatic stay and before you need to make a decision as to reaffirmation. It will take the car finance company 30-45 days after receiving a notice of filing to file any relief of stay papers anyway.

You can count your household partner in your family size but you also have to count your partner's income as part of your income.

[blueeyz]

Thanks to all who answered. Today I contacted my car lender and I was able to get a one payment deferment. This will help tremendously so I will not get behind in my car payments. I also contacted my mortgage company and they were not able to do a deferment right away. I had to fill out a hardship application but they were able to offer me the option to make a payment minus the escrow which will save me $200 so I made some ground in getting my retainer paid in full next week and hopefully being able to file chapter 7. As long as I can include my live in boyfriend (who currently has no income) I can definitely qualify for 7.

As for my house, nope, no equity here and I am not 30 days behind yet so hopefully I can catch up on that as well. I feel confident about keeping my house.

Dare I say I am excited about filing bankruptcy. I am! I am so tired of the stress and feeling like the walls are closing in on me every day. I am looking forward to getting my life back.

[tcreegan]

Hi blueeyz,

If you are having a hard time making the mortgage payment so you can pay your lawyer.....bad sign..+ no equity...keeping the house may not be in your best interest. I really hope you can disconnect from the house and look long-term. Home values in most markets are not projected to increase significantly for 10 years or more, interest rates are low and showing no sign of rising. We were so attached to our home we could not imagine losing it, but when push came to shove, we realized it was not a good deal and wasn't going to get better anytime soon.

Hope your filing goes well, glad to see the excited feeling over the stress ball !

Tom in Colo

[blueeyz]

I do not see any other choice but to keep my house. After I file bankruptcy, I can comfortably pay my mortgage each month and renting an apartment in my area will be more expensive than my mortgage (and an apartment is not even an option for me with 3 dogs) and after you file bankruptcy you are treated like a criminal when it comes to renting so I do not see any advantages to giving up my house. Practically no one in my state will have equity on their homes for many years and compared to some of my friends who are negative $150,000, my negative $25,000 does not seem too bad.

[jacksjean]

I attended a conference today and one of the workshops was given by a group of CPA's. One CPA covered the housing crisis. I was floored to find out their projection that it will take about 20 years to regain about $100,000 of value. I owe $242900 on my house. On a good day, I could probably sell it for $149000 (or so). Given my oldest son is 15, he'll be 35 when the house breaks even. That was my turning point of realizing that my earlier decision to allow my house to go into foreclosure after I file BK7 was the best financial decision I've made in my entire life.

[tcreegan]

after you file bankruptcy you are treated like a criminal when it comes to renting

You would be surprised, lots and lots of folks on the forum found this not to be the case.....

We not only found the BK wasn't much of an issue for renting, but we even found a local company that was willing to sell us a home...

Might not be as bad as you think...

Tom in Colo

[blueeyz]

Hmmmm interesting. I will have to do some research about buying a house after bankruptcy. I filed my first bankruptcy in 1997 (this will be my 2nd) and I tried to rent an apartment in 2005 while temporarily living in Indiana and they wanted 3x rent for a deposit because of my BK that was filed 8 years ago at that time. I was so livid, I basically told them where to go and moved back home to Phoenix and rented an apartment out here with no problems whatsoever.

[CoBelle]

When figuring out whether you should give up your home in BK or try to save it, there are lots of considerations that sometimes people forget about. I'm one for keeping your home IF you bought it before 2004.(This figure varies from locale to locale of course, but what I'm trying to get at is if you bought before the boom or after the fall. In my neighborhood I'd say before 2004 or (after) 2007. Meaning : did you buy at the high point and did you finance nearly all of it. And how low/high is your interest rate. consider property taxes in your area.

Then deduct your savings for being able to deduct mortgage/ taxes off your income tax.

Then compare with renting in your area. If you have kids, consider schools.

If you could give up an underwater house and buy a house that is at low bottom pricing you will probably come out ahead.
But if for some reason you will have to rent, and if you didn't buy at the high end of the market, and if your income is helped by having home cost deductions, then you might find it
cheaper to stay where you are.

Hope that helps a little

[researchnerd]

I do not see any other choice but to keep my house. After I file bankruptcy, I can comfortably pay my mortgage each month and renting an apartment in my area will be more expensive than my mortgage (and an apartment is not even an option for me with 3 dogs) and after you file bankruptcy you are treated like a criminal when it comes to renting so I do not see any advantages to giving up my house. Practically no one in my state will have equity on their homes for many years and compared to some of my friends who are negative $150,000, my negative $25,000 does not seem too bad.

As Tom mentioned, you might be surprised. Some things have changed a lot since 2005, and the renter's market is one of them. There are so many homes on the market now that tons of people are renting them out, sometimes at a loss. We have 2 dogs + 2 cats and were able to rent a nice house for less than half our mortgage payment, without a credit check. Might be worth a little research at least.