CH7, upside down mortgage, lions, tigers, bears etc.

[Conna]

NH.

I'm really hoping for some responses so Ill try and keep this from turning in to "War And Peace".

Unmarried couple sharing a home. Title and note in both names. HE went through CH7 in 2008 and listed the mortgage along with all his debt. HE was never asked to sign a reaffirm paper with lender. SHE has 28K credit card debt from a failed business and is considering claiming CH7 now. Mortgage is 180 owed, house is only worth 160 tops. House will never sell for what is owed, not a chance in hell.

Couple wants to leave the home and move to VT or CT and rent a home but can't afford to without saving money first.

Couple can't save money due to paying credit cards and mortgage! HE is self employed, pays all bills... barely. Can not afford health insurance or savings and barely pays owed quarterly taxes. SHE is seasonal worker. Begins lower-wage job again in March.

Questions:

1. Do we simply stop paying on mortgage and credit cards (and begin saving) and begin proceedings with BK lawyer?
2. Do we continue to pay property taxes and insurance on home?
3. If yes to 2, how do we do that if those are bundled in to the monthly payment (escrow)?
4. Can we be foreclosed on and tossed out before the CH7 is completed?
5. How long can we anticipate staying in the home before the sheriff comes knocking on the door?
6. Will we be able to rent a home, both having the BK on our credit scores?

EDIT - forgot some fun things

7. We share a leased car. Car is in HER name. HE pays the bill. 2.5 more years on lease. Can we reaffirm? Will we get option to buy? Can we get another car once the lease is out or will we have to buy one with cash?

Thanks all. You are much appreciated... by HE and SHE and COUPLE but especially by US.

;-)

[tobee43]

this is only a personal view and i'm certain you will get many more positions and ideas...but here goes:

1. Do we simply stop paying on mortgage and credit cards (and begin saving) and begin proceedings with BK lawyer?

yes, i would stop paying on the mortgage if you intend to surrender the house and i would stop paying the cc's and save for your atty fees and your move. however, i would stay as long as possible so you can try and find a place and rent it prior to your credit going completely down the tubes.

2. Do we continue to pay property taxes and insurance on home?

no. while you will get many different opinions on this, i stand firm. if you intend to surrender the house stop paying it all. (unless your insurance is not included in your mortgage and you intend to stay for the next 6-9 months or so, then i would pay the home insurance, just in case something may happen in that long of a time span).


3. If yes to 2, how do we do that if those are bundled in to the monthly payment (escrow)?

well, when you stop paying the bank, believe me, the bank will pick up what is called an umbrella policy to cover fire, water loss, etc.

4. Can we be foreclosed on and tossed out before the CH7 is completed?

it depends on whether your state is a Judicial and Non-Judicial state...one moves faster than the other. the judicial states are at a snails pace while other states get there NOD (notice of defaults) within 30-60 days and then out the door you go. i don't think that NH is a judicial state .....so i would check your county sheriff's site to see how quickly the foreclosers are moving. usually a "stay" is put in place while you are going through the bk and the bank has to cease all action temporarily, which buys you a bit more time.

5. How long can we anticipate staying in the home before the sheriff comes knocking on the door?

it depends how quickly your bank and your sheriff's office move. some are slow and others are not.

6. Will we be able to rent a home, both having the BK on our credit scores?

try and secure a place BEFORE your credit goes down. even if you make a trip or two up to vt or wherever and get that place and while you stop paying your mortgage just pay the rent even though you haven't moved there yet. (again, this is just what i would do).

7. We share a leased car. Car is in HER name. HE pays the bill. 2.5 more years on lease. Can we reaffirm? Will we get option to buy? Can we get another car once the lease is out or will we have to buy one with cash....

i would wait to see what happens, it's ok if you do decide to reaffirm the car if you intend to keep it, but i would sit tight and see what the lien holder of the car asks of you. i would see about extending the lease prior to making any moves if you can't afford to pay cash for a smaller cheaper car.

and best of luck to you!

[LadyInTheRed]

4. Can we be foreclosed on and tossed out before the CH7 is completed?
...usually a "stay" is put in place while you are going through the bk and the bank has to cease all action temporarily, which buys you a bit more time.

Unless you recently filed another BK, a stay will automatically be in place upon the date of filing. The mortgage company will have to petition for a relief from the stay if they want to foreclose before your discharge. They are more likely to wait until you are discharged. (I'm not sure how things work for somebody who recently filed a BK, but I am pretty sure there are instances in which the automatic stay may not apply for a "serial filer").

3. If yes to 2, how do we do that if those are bundled in to the monthly payment (escrow)?

If you want to pay your insurance directly, call your insurance agent and ask that bills be sent to you instead of the mortgage company.

7. We share a leased car. Car is in HER name. HE pays the bill. 2.5 more years on lease. Can we reaffirm? Will we get option to buy? Can we get another car once the lease is out or will we have to buy one with cash....

A lease is an executory contract that you either reject or assume. It's pretty much semantics. Assuming the lease is the same thing as reaffirming a loan, except that the trustee gets the first opportunity to assume the lease. If he doesn't reject or assume it within 60 days of your filing date, he is deemed to have rejected it. This probably what will happen, unless the lease has actual value. If the trustee rejects the lease, you then have the opportunity to assume it. If you assume it, you will have the same rights to purchase the car at the end of the lease as you did before filing. If you don't assume the lease, but keep making payments, you may still be able to keep the car. It depends on the Lessor's practices. Your ability to enter into a new lease will depend on whether you can qualify with your post-BK credit score. Buying a car with cash is preferable to incurring new debt.

[FairyPoor]

Thank you Tobee43 and LadyInTheRed for all this information. I find it very helpful to understand what choices can be made when faced with these type of situations.

[tobee43]

LadyInTheRed:Unless you recently filed another BK, a stay will automatically be in place upon the date of filing. The mortgage company will have to petition for a relief from the stay if they want to foreclose before your discharge. They are more likely to wait until you are discharged. (I'm not sure how things work for somebody who recently filed a BK, but I am pretty sure there are instances in which the automatic stay may not apply for a "serial filer").

yes, i suppose that would be true, and a bit scary! at least for those that are "serial filers".

it would make more sense to wait until the discharge one would think.