How long do I wait to file?

[Riley]

I have a question about when to file... I have just this month stopped making payments on all credit cards and mortgages. I Have had the initial consultation with the attory. Do I file immedieatly or do I wait and save $ to pay the attorny since this is only the first month that I have not paid? I know I will begin to get phone call any day, but how long until the creditors and mortgage people do more than just make phone call?

[Riley]

Oh- I also wanted to mention that I usualy get over $1000 back at for taxes and may get a pretty good bunus in month of Feb from work. So should I wait until after that so that I don't lose that money or will I loose it anyway if I file soon after I get it.

[Bandit]

I doubt anyone can answer that question in full on a specific date with so little info.

BK has a way of funneling you through the process and when you finally fall through the last grain of sand in the hour glass, you file. Be very patient. Do not jump into anything without knowing everything there is to know about the Law in your state.

While timing is important, in my experience, I am glad I did not rush into it and gave room to let some things happen on their own.

You might be able to salvage the return and bonus under your states exemptions and it depends on what chapter you get.

I can't add any more at this time because I have to leave for work but hope that gets you started.

[Riley]

Thanks for your input bandit...

Just for FYI.. the attorney told me that Ch 13 would be best for me because 80% of my debt is in first and second mortgage and I do not want to keep the house. He then said that I would only have to pay back my unsecured debt (which is only about $7000) only and that would only be a couple hundred a month. So that is a much better situation for me.

I will def ask the attorny, but didnt know if they would tell me to go ahead and file now because they of course want the money. So I will ask them what would happen in both scenarios to see what they say.

[Bandit]

So you are walking from the house because you cant afford it?,
because it is not worth the debt you owe on it?
or what?

I think it is sad when people give up their house and still get stuck in a 13. Are you sure there is no way you can land a ch 7 while letting the house go? It seems like filing for 7000 unsecured is odd, but I understand you wanting out of the house deal, but there are other ways to get rid of the house beside BK, but I am not saying BK is not another good way.

I often wonder if some people reaffirm their house or an asset on purpose just to get a ch7, then dump the asset right after discharge & deal with penalties, thus it being less of a loss.

Have you already hired your attorney?
No good attorney will try to force you to file fast if you are not ready, with very few exceptions.

[Riley]

Sorry this is so long but here is all the story....

I am letting the house go because that is the majority of my debt. Between the 1st & secong mortgage I owe about $110,000. Last appraisal was mid 90's So I have negative equity. Between 1st & secon mortgage I pay about $1100. Add my heat pump furance loan that I paid way too much for and that add $7000 of secured debt

Then school loan, car payment- which I want to keep and other credit cards leaves me with about $200 a month after everything is paid. So I can never get ahead because that is with only paying the minimum on everything and having to still use cards every once in a while if something comes up that the 200 doesnt cover.

With what the attorney originally told me the most relief would come from ch 13. I want to walk away from the house bc I am tired of the maintenance and yard etc. Ive been in it for 8 years. I want a fresh start. I figure do an apartment for a couple years and then maybe a condo.

He said that the mortgages and the furnace would be cleared out and I would only have to pay back the unsecured debt. Which would be about $200 a month. Even though that only save me about $200 a mont bc my unsecured min payments right now are about 450. It would be paid off in 5 years vs never.

Now I am wondering if maybe I should go and talk to another attorney for a second opinion about maybe qualifying for ch 7.

[Riley]

Oh yeah.. I have only had the consult with one attorny. No money has been paid yet.

[Bandit]

Very Cool. See a couple more & see what they say about getting into a 7. You would be suprised what good attorneys can do and there have been people here who were able to pull it off when other attorneys told them only a 13 was possible. If you were keeping your house I would not even suggest it but since you are letting it go, you will still have your rent as a living expense and maybe the other 200 bucks you would pay in a 13 plan can be used in other allowed living expense.

Does your job pay for your health insurance or do you?
Is foreclosure an option for you? then you could pay back the other debt, save the BK card. Or bad idea? I see what you mean about never getting it paid off with minimum payments & foreclosure is just as bad as a BK on the record, me thinks.

I am not saying you will, but do talk to quite a few others. You still have plenty of time. Some others here will give you ideas & options as time goes on.

Now I am wondering if maybe I should go and talk to another attorney for a second opinion about maybe qualifying for ch 7.

Exactly

[Riley]

I pay just a small portion of my health insurance. Its only $30/month.
I am not sure what the difference is in a foreclosure and a bk. IS that just where I don't make payment and the bank takes it back? Then what about the 2nd mortg? If I did that then I would sill have to pay the 7k in credit card right? Then what about the 7k for the furnace that obviously will still be in the house?
wow a lot of questions.... I def will be going to at least a couple more attorneys.

[Riley]

"I often wonder if some people reaffirm their house or an asset on purpose just to get a ch7, then dump the asset right after discharge & deal with penalties, thus it being less of a loss."

Bandit
What do you mean by this?

[Bandit]

You know I just posted a big long reply to this and it did not go thru.

I will get back to it as soon as I get home from work tonight.

If anyone else has input of this please jump in

Riley, What was the results of your means test? Were you over, under? right on the line?

[Bandit]

assumimg your attorney is correct and a ch13 will get you 5 years at 200 a month and that is what you have left over each month, and WHAT IF you have not used all your living expense allowances, then why not use 100 or 150 in a better way than what you would pay in a ch 13, dump the house, dump the furnace, dump the 2nd mortgage and dump the cc debt in a ch 7?

Based on that plan you will have paid back 12,000 in 5 years. Not a bad deal but who is getting the extra 5,000 if you are only paying back the 7,000 in cc debt?.

In this day it is not too hard to find out where a little 100 to 200 dollars per month can go that would serve you better.

In the 13 you are giving up the furnace & giving up the house & 2nd mortgage anyway. What do you actually get to keep? A car? & the school debt? Giving up the tax check & bonus would be nothing in comparison to 5 years of ch 13. They may not even want all of that.

What did that attorney say about the means test or did they even do it?

*Scratches head*
or else my math is real bad today

[Bandit]

"I often wonder if some people reaffirm their house or an asset on purpose just to get a ch7, then dump the asset right after discharge & deal with penalties, thus it being less of a loss."

Bandit
What do you mean by this?

and what I meant by that is reaffirming something to get you out of the 13 but I would not recommend it unless a last resort. You may be able to get this resolved with living expenses.

What state you are in would be helpful at this point unless you can use federal exemptions & allowances.

Get ready for about 20 more questions after you respond to those

[Riley]

OK Here is more info... I will try to give all that I know so far. The attorney just looked at the figures that I had but did not actually "run" them to see if I passed the means test. I am guessing he could tell already?? I tried doing the online means test that is on one of the links and it said that I did not pass before I even got to put any of my unsecured debt in. SO I am not sure if I did it right or not.

I live in IN. I make about 52,000 a year. Also bring in 8,840 in child support. My daughter is 15. So in a year she will need a car/insurance etc.

Here is rundown of bills
Min Payment Balance
Sallie Mae 165.24 $10,000.00
Chase- Auto Loan 358.56 $18,247.00
Wells Fargo 1st mort 740.57 $74,000.00
Country Wide 2nd mort 415.71 $34,000.00
American General- Furnace 234.00 $7,776.76
Capital One-5064 99.00 $3,300.00
Chase 9391 35.00 $1,400.00
HSBC- Mastercard 15.00 $1,400.00
Kohls 20.00 $375.00
Paypal 10.00 $27.80
Bank Line of Credit 60.00 $1,500.00
Sears 10.00 $350.00
Victoria Secret 10.00 $80.05


Cingular 140.00 $0.00
Home Gas bill 40.00 $0.00
Comcast(cable/phone & Internet) 137.45 $0.00
Light bill 80.00 $0.00
Water company 50.00 $0.00
Hartford-IRA 50.00 $0.00

Daughter's Lunch$50/allowance$50 100.00
Ballys 41.15 $300.00
Gas & Grocery 400.00
Daughters Tennis Lessons 50.00

Total Expenses 3,260.39


Total Income-Expenses 345.61 Total Debt balance$152,456.61

So with only paying the min on all the credit cards and not doing anything extra at all I have $345 extra each month.
But that does not count my car insurance that is about $300 every 6 months. My taxes and homeowners insurance is included in my house payment. This also does not include $7000 of credit cards that my mom tried to help me out and put in her name at 0% interest-that I know I can not include since it is not in my name but that is another $200 monthly payment.

I usually get about $1500 back each year in taxes and may get up to $3000 bonus in Feb. Not sure yet on the bonus..depends on how the year closes.

I also put $50 each check into 401K.

Everything is current to date. Never been late or anything just balances never go down since I have little money left over so I sometimes have to still use card or short pay utility.

Also child support comes from chrysler- so with the layoffs not sure what future holds He may be ok though. Also since she is 15- That means only 3 more years until college so I know that no matter what after I add her car and college I will be screwed and will not be able to shift money around to keep everything paid.

I think that is everything. Whew!

[Riley]

Forgot to mention... He said that if I do chap 13 then I would have to pay all the unsecured debt back 100%. The furnace creditor could possibly challenge the BK and I might have to pay that $7000.

I was also mistaken when I said ch 13 would save me only $200 a month. In reality I would be saving the 2nd morgtage payment of $400 on top of the approx $250 that I am paying for the credit cards. So I would be saving $650 a month and from what he said I would only have to pay the unsecured debt (approx 8,000) back and the payment would be about $200 a month. Could go up if I still have to pay the furnace.

And this is assuming I can get an apartment for about $740 that I am now paying for mortgage- which here should not be a problem.