Where do I start?

[HelpinNY]

Hello, My husband and I are in a horrible situation.. and don't know where to turn or what to do.

We bought a house we shouldn't have 4 years ago- and it needed tons of unexpected work. Due to this, job losses and economy, we now are swimming in credit card debt and mortgage. We are in real estate, and despite a solid amount of new business and closings, we don't expect steady cash for a while. Any closings we do have, go right to debt. I took on a part time job, but that doesnt help too much.

Our house is valued just under $1million, and we have it on the market. We continue to drop the price, and had 2 offers. We might have a deal coming soon on it. However, we now need to see if we can get another mortgage. This will greatly help our situation, as selling the house clears the mortgage debt as well as some credit card debt. However, due to the mortgage conditions, and due to our nature of work, we don't know our likelihood of qualifying. (we are going to know more in the next day or so).

So, we thought if we ended up not being able to sell the house, to try for bankruptcy to clear some of the credit card debts. My husband had a free consultation lined up last week, but we chickened out and were nervous if he was reputable, aside from a blog online etc, we dont know anything about this guy.

So- i guess I need to know the following:

1) Would we be able to keep our house if we file bankruptcy? Will they allow us to not pay our mortgage for any period of time to be back on our feet?

2) If we decide to consult w/ an attorney, how do we go about finding a good one? We have real estate attny contacts, I suppose we could ask them.

Thank you kindly for any help and info during this really stressful time in our marriage/lives.

ps- here is some info:

-Our income for last year was under $30,000.

-Our credit card debt is apx $60,000 total

-Our monthly expenses are total apx 8500/mo!!

-We have been paying our mortgage for the past few mo's w/ borrowed money from in-laws (this has to stop)

-We expect our income for the next year to be apx 80-100k due to new business and extra job for the 2 of us.

-We have only 1 car, and would like a 2nd car later on, but wonder if we can figure out a way, if we should get it now.

Let me know if you need any other info.

[hopeforus]

How much is your mortgage payment? There is no way I would be living in a million dollar home with only 80-100k of income. If *I* was in your situation I would just stop making all payments on the house and credit cards and file bankruptcy and include your house and just start over ... somewhere cheaper in a rental.

You can't do a chapter 7 and keep your house if you aren't current. Then if you do keep your house you still need to be able to afford the mortgage each month. You could do a chapter 13 and pay the appears in the plan but you still have to be able to afford the mortgage each month.

[HelpinNY]

Our mortgage payment is apx half of our debts. The rest is CC & car pmts. If we did not have CC payments killing us, we could pay the mortgage since things are picking up. We are current with the mortgage at present.

[keepmine]

There is noway you'll be able to service a 7 figure mortgage on $80K and still cover normal living expenses.
Let it all go. BK is about a fresh start and there is nothing fresh about draggng a 7 figure mortgage through bk particularly with negative equity.
If, you need another car, arrange the financing now-before you file.

[HelpinNY]

My mortgage is not 7 figure. That is the value of my home. The mortgage is in the 500k range. The Heloc is apx 100k. If we sell for apx 900k, we will cut even, and get some money back. We can then use that for downpayment on the next home and pay CC's.

[jadams]

I don't think you're being realistic about keeping the mortgage -- it looks like it would be setting yourself up for almost certain future failure.

Assume the high estimate for your projected income of $100,000. With *no taxes, insurance, or other deductions* that's $8333 a month income.

If you put a house that expensive in anything resembling a realistic mortgage (interest only and negative amortization mortgages don't count since we're being hypothetical fiscally sound and wealth building) that makes a $900,000 6% 30 year note $5395 *not including property taxes or insurance*.

Right there is 64.75% of your income.

Income taxes, property taxes, insurance, and electricity would likely eat up the remainder -- and you would still need to have food, car, clothing, etc.

Use this as an opportunity to start fresh.

[keepmine]

My mortgage is not 7 figure. That is the value of my home. The mortgage is in the 500k range. The Heloc is apx 100k. If we sell for apx 900k, we will cut even, and get some money back. We can then use that for downpayment on the next home and pay CC's.

If you have $300K equity in your home, why not sell it and pay off the cc's? Why is bk even a consideration?

[HelpinNY]

We are considering BK so that we can stay in our home or wait to sell until market improves. If we stay here, we have to do something. If we *can* sell, we will. Its on the market and we are aggressive w/ dropping the price. We had 2 offers in the mid-high 8's, who backed out.

[HelpinNY]

Also, we have considered renting, which in our area is very expensive for anything decent (over 2000/mo). i would rather get a townhouse or something that we can afford once we sell and pay CCs off.

[keepmine]

We are considering BK so that we can stay in our home or wait to sell until market improves. If we stay here, we have to do something. If we *can* sell, we will. Its on the market and we are aggressive w/ dropping the price. We had 2 offers in the mid-high 8's, who backed out.

In other words, you likely have minimal equity and are trying to hangon to something you can't afford. It really is time for a reality check about your situation. Many members who have come before you have followed the same path. Delay confronting reality in hopes of a dramtic turn around.
As someoneelse pointed out, you need to be current to save the home in a Chapter 7.

[olive]

HelpinNY the ppl replying have a point here ..... you might just be trying to hang on to something that's not really worth all the stress.

I believe many begin with your same thoughts, and in the end end up giving it all up anyhow. The difference is that by then they have miss spent tons of money, ruined their healths, and precious time (years).

[Flowers]

HelpinNY: i had wanted the same thing (keep the home). I went chapter 7 and the trustee declared my filing to be a no asset case, meaning even the sale of the home would not bring in enough to pay off creditors. Your attorney even in consultation should have explained how that figure is derived.
Bottom line in my case was that the trustee abandoned his interest in my home, and basically it was now between me and the bank. I was able to dive right into the Obama Home Affordability plan.
Good luck, if you would like a referral to my attorney PM me, they are in NJ but work in NY BK also.
Best.

[eddiep]

If you do have 300k equity in your home you need to see what the exemptions are in NY. sounds like you are in a tough position. Keep doing research here or with a lawyer to figure out the best plan. The first consultation with a bk lawyer is usually free. I wish you luck.

[dingdong]

I agree with above post, with 300,000.00 in equity, how are you going to exempt that in a 7?

The TT will drool.

I believe you only get 20,000.00 as an equity exemption with a cursory search of NY laws

Sell the house, pay off your debt and get a rental that is less than 30% of your income and then save for a manageable home.

I am pretty sure if you filled with 300K in equity , it would end up going to creditors anyway.

As , always, I could be wrong, consult an attorney.