Questions after 1st consultation

[mwesthoven]

I finally had my first consultation and i have to say, it wasn't as helpful as i thought. I did learn that i would have to file a ch 7 becuase i have equity in my house (which is currently not disposable if i sell because i have a 2nd mortgage). Anyhow, aside from learning that i would lose my house what about my car? i know i have no equity in it so if i add that into my ch 7 will they take it also? i am going to make another appt with another attorney as i know most of you on here recommend going to a few before doing anything. i went into the meeting not knowing what questions to ask. she just kept talking alot of lingo that i wasnt sure about. also, what is a means test exactly? is there a sight i can find a sample one or something? thank!!

[keepmine]

Your post is way confusing. What do you mean by you must file a 7 because of equity in your house? Is the equity above what your state exempts?
A means test asks if your income is above or below the median for your state. A search of this site will deliver many threads.
Do you know the exemptions for your state?

[JollyGG]

I think you meant to say chapter 13 rather than chapter 7 in your post. Chapter 7 is when any nonexempt assets are sold and the proceedes go to your creditors, you discharge all non-secured debt and you are done. A chapter 13 is where you make payments of all of your disposable income into the plan for 5 years and then recieve you discharge. Chapter 13 may allow you to better protect certain assets, allows you to make up behind payments on a secured debt, and are the only option for filers who are above the median for their state ans show some disposable income to pay creditors.

Also in regards to equity in your home, Equity = Value - all mortgages. So if you have a second it would be Value - 1st mortgage - 2nd mortgage - any home equity lines of credit or other mortgages.

Are both mortgages current at this point?

[mwesthoven]

i am sorry to be so confusing i am so confused myself. i owe 82000 on my first mortgage, 32000 on my second (two separate loans). The attorney said that since i only owe 82000 on my first mortgage and my house is appraised at 100,000.00, even though i have that 2nd mortgage which makes me negative in the equity dept, i would have to surrender my house. She didn't mention anything about exemptions for Ohio. Geesh know i am starting to feel like she was just rushing me out the door. And i was talking of a chapter 7. I am behind on my second mortgage but current on the first. She said i can only file a ch 13 if i have negative equity on my 1st mortgage.

[JollyGG]

i am sorry to be so confusing i am so confused myself. i owe 82000 on my first mortgage, 32000 on my second (two separate loans). The attorney said that since i only owe 82000 on my first mortgage and my house is appraised at 100,000.00, even though i have that 2nd mortgage which makes me negative in the equity dept, i would have to surrender my house. She didn't mention anything about exemptions for Ohio. Geesh know i am starting to feel like she was just rushing me out the door. And i was talking of a chapter 7. I am behind on my second mortgage but current on the first. She said i can only file a ch 13 if i have negative equity on my 1st mortgage.

Huhh.

Okay

Chapter 7
You can file a chapter 7 bankruptcy if you are below the median for your state and you show less than $100 in disposable income each month. Or if you are above the median but your schedules I and J show no disposable income you may file a chapter 7.
There are certain exemptions for each state. You may keep all of your assets that can be protected by your states exemptions. Any assets that you cannot protect by an exemption are seized by the creditor and sold the money is then distributed to your creditors.
All no secured debt is discharged. To keep secured property you must be current on payments before you file. You receive your discharge about 60 days from your 341 meeting.

Chapter 13
Chapter 13 is utilized by those who are above the median and show to much disposable income to file a chapter 7. Chapter 13 allows you to catch up on payments you are behind on for secured assets so is sometimes used by someone who would otherwise qualify for a chapter 7 but are behind on payment for an asset they would like to keep. Finally Chapter 13 is used by someone who would like to keep an asset that they cannot exempt. As long as they pay at least as much into the chapter 13 plan as the asset would fetch if sold they keep the asset.
In a chapter 13 you monthly disposable income is calculated and you pay that much into the plan each month for five years. The trustee distributes that money to your creditors and at the end you receive your discharge of all non secured debt.

As for the equity in the house - as long as the second mortgage has a lien on your house that loan should be added in when calculating your equity. The lawyer was wrong, or confused, or explained poorly. Your equity is equal to your value minus all mortgages.

[mwesthoven]

geesh you were more helpful than the attorney. when i add both mortgages my equity is negative. i have none. i have no other debts but the mortgages but i can't pay them any longer. cost of living has become so high for me and daycare has become outrageous i cannot continue to make both mortgage payments along with my car payment and other bills (utilities and such). so it is possible to file ch 7 and still keep my house! and yes, i have absolutely no disposable income after bills. i don't make enough to pay them all as it is.

[JollyGG]

You can file a chapter 7 and keep your house if you are current however, you will still need to make your full payment every month.

It sounds like bankruptcy may not be your best option at this point. All bankruptcy will get rid of is nonsecured debt such as credit cards, medical bills, personal loans.

I sounds like what you really need is to get rid of the house, or find some way to get more income and lower expenses.

If you decide to let the house go they will sell the house and then you can discharge the difference that the house sells for verses what you owe in a chapter 7 bankruptcy. You could then rent for two years and purchase another house in a few years when you have something saved and can find something you can afford.

If you want to keep the house you need to look at finding a roommate, a second job, trimming your budget and other options to increase income and decrease expenses.

[mwesthoven]

ok i see. it doesn't matter to me if i keep it or not at this point. i just want to afford my bills every month without worrying. my plan was to rent for a few years until i was back on track financiall then buy again at some point. i just thought it would be nice to keep the house but, if that is what i have to do then that is what i will do. thank you!