Scared and new to Forum - Help Please

[DRP]

My situation
Wife and I are in our late 60's
Credit card debt -31k
Mortgage 1700 month (owe 275,000) Value 325K

Looking for advise we are overwelmed with cc debt (31k) and costly home upkeep. My husband no longer has stable income and we are both collecting social security. My husband does work as a real estate agent but salary is inconsistent. We are current on our mortgage but have been robbing peter to pay paul on our unsecured debt. Question. is there a way to keep house and lower the payment through the bk process. We are in the state of Maryland. Not sure if a 7 or 13 is better. Other issue is that the home loan is an adjustable rate (3 %) for another 2 years.
Thoughts/advise?

Thank you !

[Geeznowwhat]

So, looked up the home exemption for Maryland..it is $23,000

so..it looks like you have $50,000 in equity in your home....a chapter 7 would mean you lose your home

do you have enough income to enter a chapter 13? Meaning, do you have the income to pay back some amount of your debts and your living expenses?
if you file for chapter 13 you will keep the house. But, to do that you need enough income

before freaking out, go talk to a bankruptcy lawyer. They all provide a free consultation, Go talk with one. Bring answers to all the questions he will ask..your current income Your current assets. Your current debt.

Knowledge is is the only way to move forward. Chewing your fingernails and getting upset will not solve this. Take action

[DRP]

Thanks very much

[bcohen]

So, looked up the home exemption for Maryland..it is $23,000

so..it looks like you have $50,000 in equity in your home....a chapter 7 would mean you lose your home

Not so fast. First of all, just because you "think" your house is worth a certain amount of money, or a website such as Zillow lists it at a certain amount of money, or your county assessor taxes it based on a certain value doesn't make it "worth" that much. The first step should be a professional appraisal to see how much the house is really worth--in its current condition--in order to establish how much equity, if any exists. It is possible that the house is worth a lot less than you think, and may in fact be "underwater" i.e. you owe more than it's worth.

Second, even assuming the $325,000 valuation is correct, the $50,000 of apparent equity doesn't necessarily translate into profit for a Chapter 7 trustee. Remember that any item of property, be it a car or a house, or anything else is going to sell for much less at a trustee sale than it would if professionally reconditioned and offered for sale by the owner (or a dealership or realtor). This means that the auction might very well end with no bids given the starting bid must at least pay off the mortgage plus any commissions, title transfer fees, etc.

Third, assuming that you are able to qualify for Chapter 7 bankruptcy, and assuming that the trustee is very aggressive and thinks they can sell the house for enough money to benefit your creditors, you are still better off. Not only do you stand to discharge more unsecured debt than the amount of equity you would have to "buy back" from the bankruptcy estate, but the trustee would let you pay it off over time. The amount would, of course, be subject to negotiation, and given the high costs of preparing the house for sale, the mortgage balance which must be paid in full, and the fact that the sale price will be less than appraised value, it could only amount to a few thousand dollars.

That being said, it is entirely possible that keeping the house is not in your best interest. Even if your mortgage carried a 0% interest rate, it would take 16.2 years to pay off the balance. Based on your APR, and the fact that the variable-rate mortgage resets in 2 years, it sounds like you have another 22 years left on the loan. If you were in your 30's or 40's, that would be fine, but you're in your late 60's. Unless you are expecting to receive some windfall which will allow you to pay off the loan early, it is very likely that this mortgage will present extreme hardship as you age. If you are struggling to pay the mortgage plus upkeep now, how do you plan on paying when the interest rate goes up, and the house needs more and more repairs?

[AngelinaCat]

Zillow is not always reliable. That said, if you both are on SS and one of you have a very iffy income, you sound very much like 'Hub and I. We tried for a CH13, but our pre-filing counselor told us with our income and outgo, we were more suited to a CH7. We demurred, because we really wanted to do the 13. But when I lost my FT job, and had only a small iffy PT job, we had no choice but a CH7.

Most of our debt was CC--about $36,000 or so, and medical debt. Our house was paid for, and part of a Life Estate to the State of Florida. We had about 13 months yet to go on a car payment, and could comfortably afford it.

Schedule several consults with different BK attorneys and get their opinions. You will get several different opinions. And for the most part I agree with my fellow poster above, bcohen.

Good wishes to you!