Question Newbie considering BK

[cc8225]

Hello,

I am nervous about filing for BK because of possible job implications (security clearance). I have 60,000 in cc and personal loans with a minimum payment of 1350 a month. I have a first Mortgage of 295,000 a second for 70,000, and a third for 58,000. My total mortgage payment is 3100 a month. My home is valued between 350,000-370,000. My wife is a stay at home mom and cares for our three children. i make between 4500-6200 a month depending on overtime. I am current on everything but barely we have been robbing peter to pay paul. We just recently took out 3000 in a 529 to stay afloat. I am running out of options any thoughts? advice? If I file a 13 will i be able to reduce the amount owed on the 2nd and 3rd? Last quest. From what I read it sounds like i will have to pay all three mortgages but what will my unsecure debt repayment plan be monthly?

Thanks,
CC

[frogger]

The more experienced will comment on most of your questions, but let me throw in my 2 cents worth while I'm here.

You say you're current, but you're robbing from Peter to pay Paul. You may be current on paper, but you're getting deeper every day that goes by.

You're running out of options, or you're out of options? Does the wife know? That can be the hardest part of the entire situation if she doesn't know. If she doesn't, it's time to have the talk and pull together as a family.

As to your security clearance, your financial situation puts it at risk now. Get your financial affairs in order and be honest to whom you need to about them.

Good luck, and others will be by to help with the other questions you asked.

[cc8225]

Thanks Frogger,

Yes, My wife knows and has been supportive. We are both feeling the pain we just dont want to rush into a decision just yet.

Thanks for the advice.

[frogger]

Thanks Frogger,

Yes, My wife knows and has been supportive. We are both feeling the pain we just dont want to rush into a decision just yet.

Thanks for the advice.

Don't rush. You're in a good place where people will help you. Read, read, and read some more. You'll learn a lot in a hurry if you'll study. Good luck.

[2manybills]

Hello,

I am nervous about filing for BK because of possible job implications (security clearance). I have 60,000 in cc and personal loans with a minimum payment of 1350 a month. I have a first Mortgage of 295,000 a second for 70,000, and a third for 58,000. My total mortgage payment is 3100 a month. My home is valued between 350,000-370,000. My wife is a stay at home mom and cares for our three children. i make between 4500-6200 a month depending on overtime. I am current on everything but barely we have been robbing peter to pay paul. We just recently took out 3000 in a 529 to stay afloat. I am running out of options any thoughts? advice? If I file a 13 will i be able to reduce the amount owed on the 2nd and 3rd? Last quest. From what I read it sounds like i will have to pay all three mortgages but what will my unsecure debt repayment plan be monthly?

Thanks,
CC

First of all, what State are you in? Property values really are all over the map from State to State. That being said, if you file for a Chapter 13, you can only strip the lien if there is no equity interest in that lien at all. In other words, if you owe $300K on your first, and $100K on your second and the house is valued at $350K, I don't think that you strip the 2nd mortgage for the $50K. I think your house would have to be worth less than $300K, leaving your second "fully unsecured". I might not be correct here, so someone else chime in if I am wrong.

If you can see your way through to a Chapter 7, you may want to go for that. Then you would have a "Fresh Start".

You are among friends here and we were all caught in the trap of robbing peter to pay paul!

[sigferl]

Thanks for your post cc. I have a opinion that is different then many others on this board so do with it what you want.

Have you listened to people like Dave Ramsey and Clark Howard who advice against BK and for hard work and frugal living.

Are you able to work part-time jobs to help you through these tough times? Many retailers are hiring for Christmas season, delivering papers, etc. I have worked numerous part-time jobs and have been suprised at how little of an impact it had on family time.

Good Luck. Freedom is not free.

Hello,

I am nervous about filing for BK because of possible job implications (security clearance). I have 60,000 in cc and personal loans with a minimum payment of 1350 a month. I have a first Mortgage of 295,000 a second for 70,000, and a third for 58,000. My total mortgage payment is 3100 a month. My home is valued between 350,000-370,000. My wife is a stay at home mom and cares for our three children. i make between 4500-6200 a month depending on overtime. I am current on everything but barely we have been robbing peter to pay paul. We just recently took out 3000 in a 529 to stay afloat. I am running out of options any thoughts? advice? If I file a 13 will i be able to reduce the amount owed on the 2nd and 3rd? Last quest. From what I read it sounds like i will have to pay all three mortgages but what will my unsecure debt repayment plan be monthly?

Thanks,
CC

[limage]

sigferl, your Capitalistic rhetoric is nauseating.

[cc8225]

Thanks for everyones advice. I am im Md. I do not work a part time job but i work as much overtime as is approved at my job. Im not ruling out part time work but at this point i would be working just to stay afloat with no end in sight. Again thanks for the support

[lrprn]

Forgive me, cc, but I need to say some things that may not be easy for you to hear.

From what you told us, your three mortgages are currently costing you more than 50% of your net income every month. This is not sustainable - frankly, it's slow economic suicide. It sounds like you are realizing this, and that's a good thing.

To strip your 2nd and 3rd mortgages, you *MUST* file Ch 13 and your house *MUST* currently be appraised for equal or less than your first mortgage. Period. No exceptions. You said your house is worth $350-370K. How did you arrive at that figure? What have comparable houses sold for in your area in the last six months? If your house is truly worth that much, then you might be able to strip the third mortgage but you can't strip the second.

Worst of all, you owe $423,000 on a house that's now could be worth significantly less than that. Even if you strip off the third mortgage, you'll still owe more than the house may be actually worth. Mortgage prices haven't finished sliding down in some areas of the country yet - what's happening in your area?

Second, since you've been remortgaging and now withdrawing from your retirement funds, that tells me you've been spending more than you make for quite awhile. Bankruptcy can give you a fresh start, but only if you change the bad financial habits that drove you both to spend more than you make in the first place.

After filing Ch 13, there's no more credit to make up any cash shortfalls for five long years. You also can't withdraw money from your retirement funds without taking a risk that your trustee might take the cash if you can't protect it with exemptions. You absolutely have to learn to live within what you make. In fact, for the few years you have to learn to really cut back to build up an emergency fund for the inevitable stuff that comes up while living life.

It takes a lot of discipline and determination to get your fresh start - do you and your wife have the ability to make those necessary lifestyle changes and stick with them no matter what? If you can't live within what you make, then your only choice is to surrender secured assets until you can live within your means.

You didn't mention if you have other properties or assets - do you? You also didn't mention how much credit card and other unsecured debt you have. How much unsecured debt do you have?

You're in a very tough spot, but it's surviveable if you can make the necessary changes in your lifestyle to make it through a five-year Ch 13 successfully. Many of us here were where you are right now. We're making it because we made the tough changes necessary to do so.

Start by both of you putting together a real budget that allows you to live within what you make and start following it even before you file. Write down every single penny you both spend or give over to the kids starting today. Find out exactly where your money is going. Figure out what can be cut back. Learn the difference between "I want" and "I need". Do this before you file and you'll know what it takes to get your fresh start.

Please continue to hang out with us - we want to help. There's tons to learn here from those of us who already figured out we had to file to survive. We're surviving - most of us are even thriving! You can too.

[OhioFiler]

Thanks for your post cc. I have a opinion that is different then many others on this board so do with it what you want.

Have you listened to people like Dave Ramsey and Clark Howard who advice against BK and for hard work and frugal living.

Are you able to work part-time jobs to help you through these tough times? Many retailers are hiring for Christmas season, delivering papers, etc. I have worked numerous part-time jobs and have been suprised at how little of an impact it had on family time.

Good Luck. Freedom is not free.

I'm sure you too will have your own radio show one day Siegferl.

[frogger]

Have you listened to people like Dave Ramsey .

Dave certainly advises people not to bk, even though he did it himself.....

I do agree with many of the things he talks about, but for many people, picking up a part time job or two or three won't even begin to start solving the problems. I could work 24/7 and not be able to avoid bk.

[cc8225]

Hello Lrprn,
I have 60K in unsecured debt (credit cards, signature loan). I sold a 4 unit apartment building and another investment property four years ago. Capital gains crushed me and i owed the IRS a significant amount of money. I was on a two year payment plan of 1250 a month with the IRS, causing me to take a third mortgage on my home and take out personal and credit card loans just to survive. My wife is working on her masters and hopes to work in the next 3 years but its been tough with three kids under the age of 5. Our original goal was just to stay afloat until she gained employment and was able to contribute to the debt but im afraid we are just to deep in the hole. We tried loan mods on all three but were denied because we were on time. Zillow has our house at 350,000-370,000. Last home sale was 350,000 a few months ago. Like everyone else i do not want to make excuses for past business and spending decisions, at this point it is what it is and I never want to find myself in this position again. I have a good job paying around 76,000 a year and with overtime i made 105,000 last year. This years overtime was not as solid as last year and that has put us in panic mode. Our house orginally appraised at 468,0000 so it did tank but its starting to come back VERY slow though... Thanks for the thoughts and words this forum has really helped..

[LZGuy]

"Freedom is not free"....????
What is this lunacy??? Is this guy for real?
What about "greed"? Is it free too? Stupidity is free, for sure!!

[sigferl]

Thanks for your insighful post OF. Looks like CC thought my advice was worth reading. Do not worry OF, CC will file BK because of the one sided advice that is controled by this forum.

Some day, you will have to admit that my advice is not really that bad.

Do unto others as you would have them do unto you.

CC:
Thanks for everyones advice. I am im Md. I do not work a part time job but i work as much overtime as is approved at my job. Im not ruling out part time work but at this point i would be working just to stay afloat with no end in sight. Again thanks for the support

I'm sure you too will have your own radio show one day Siegferl.

[sigferl]

Thanks for your post LZ. From wiki:

...
"Freedom isn't free", "freedom is not free", or "freedom ain't free" is an idiom in the United States that expresses gratitude for the service of members of the military. It implicitly states that the freedoms enjoyed by many citizens in Western democracies are only possible through the voluntary risks taken and sacrifices made by the military.
...

In this context, 'freedom is not free' refers to taking care of ones own problems(non severe medical disabilities) because what someone does not pay for, someone else will.

"Freedom is not free"....????
What is this lunacy??? Is this guy for real?
What about "greed"? Is it free too? Stupidity is free, for sure!!