Big questions

[poorinny]

So met with my former lawyer from my Ch 7 in 2015 yesterday. I need to stay in my house for the next 4-5 years, foreclosure started, but, tried to negotiate with the bank using the local county office that helps families. Bank ultimately made an offer that is double what the past mortgage payment was. Obviously I can not afford raising 2 children with 1 income (fighting in court for unpaid child support). He suggested a Ch 13 for modification & would also take care of the piggyback mortgage - not discharged in the CH 7. My student loan payments are also $1700 per month partially because of the total amount and partially because of sell off & the inability to pay the total amount cash to these companies who by student debt. According to my attorney it will take 1 to 1.5 years for the foreclosure to complete, however, he wants to file asap. My thought is to wait and save up as much as possible so we are not underwater during the Ch 13.

He also said there are changes going on with student loan debt. Particularly local judges who are interested in this type of case. I told him I believed this could not happen unless there were major life changing reasons to have SL debt discharged. He said this is not so.

Am I missing something about the student loans?

Is there any benefit to filing Chapter 13 now?

[LadyInTheRed]

If your attorney thinks the local judges are open to discharging student debt in situations like yours, then you should let him try. What qualifies for discharge is fact dependent and pretty subjective.

Having some cash when you file Chap 13 can be helpful, but there is also a lot to be said for filing now and getting on with it. Also, it is unclear from your description whether you have a 2nd mortgage that would be stripped in a Chap 13. If you do, and you wait to file, you risk the value of the property increasing and making you ineligible for the lien strip. There could be other reasons in your situation not to delay filing. If your attorney says to file asap, you should ask why.

[poorinny]

Thank you for your response. I do not have a 2nd mortgage, but, do have a piggyback that was part of the original and was not dischargeable during the chapter 7. The 13 - from what I understand will take care o that, but, I have not heard anything from them as it is the main mortgage that was stripped in Ch 7 that was discharged. I asked him if there was any advantage to waiting & he said "it is up to you". When I asked if it will prolong my duration in the house (I am trying to stay here 4-5 years) he said it works out to the same amount of time whether we file now or later. That doesn't make sense to me.... If they aren't going to foreclose for 1-2 years then why wouldn't I wait?

[bcohen]

If your attorney wants to file ASAP, then he probably has good reasons. Remember that your Chapter 13 payment plan will be based on your regular income, which does not include the child support which is currently in arrears. Because of this fact, Chapter 13 is a smart option to deal with your unaffordable student loans, especially when there are secured debts such as your mortgage which you want to prioritize.

If you are able to pay down your mortgage through Chapter 13, and force your student loan creditors to accept whatever the plan provides them, that can give you financial breathing room. While your case is open, that is exactly what will happen. (Of course, student loans are not discharged by default, and if the plan payments are less than the interest accruing on the loans, your balance can actually increase, but you can always file another bankruptcy if necessary.)

[poorinny]

Thank you for your response. So it will not decrease the student loans, just put the big payments on hold & increase the amount I owe?