Figuring out a timeline that will make sense...

[Resigned2BK]

So we (hubby and I) have not filed Chapter 7 yet. We are completely certain we will pass the means test as even at our best gross numbers ever we never hit the WA state income limitation.

At this point, the main stumbling block is our house. We aren't upside down on it, at least that's if I'm interpreting that correctly. Zillow puts us at an estimate of $7-10K more than the combined of what we paid (did the Countrywide ARM and HELOC 6 years ago). We only have around $5K or so of equity -- IF, and big if, we were to get at least what we paid. With so many short sales and foreclosures rampant these days, good luck to anyone on that I think.

So we are waiting for paperwork from the bank regarding HAMP. That was from Tues last week and BofA said it'd take 7-10 days for that to get to us by FedEx. Of course, I've been reading here that the HAMP process is not quite as cut and dry as it sounded with it being a set 30-60 days for BofA to determine payment schedule (assuming eligibility) and then doing the 3 months of trial pays. Sounds like many have stories of it taking upwards of a year or longer.

So....... hubby tells me he thinks we should file within the next 30 days. Except we wouldn't even get a prelim eligibility and work in to HAMP by then of course. And I am incredibly confused about it all (and he's more confused and I'm the designated researcher for all this). Main driving force for that "within 30 days" concept is his fear of the CC defaults getting to the point where they will start suing. We both haven't been paying on almost all since August (some are in the 60-90 days past, a couple like my one default might be just past 90 past). And these are pretty big balances too. $15-25K on most, lowest one in default I think is $8K. Seems like everything I've read is they won't generally try to sue until more like 150-180 day range, but I've never done this before and it's hard to convince my spouse since he knows I'm no expert.

Ack. I know it's not legal advice here, just trying to see what others experiences are. Oh, and if this is all in some sticky and my newbie self just hasn't seen it, steer me to it and accept my apologies for asking redundant questions.

[free2breathe]

Resigned, try searching "HAMP" or "Mortgage Modification" in the search line. You will find all sorts of threads regarding this subject. I know nothing about it, as at the time of our foreclosure, we were both unemployed, so loan modification wasn't even a consideration.

[keepinitreal]

Resigned2BK, I believe you have a $125,000 homestead exemption in Washington, so your $5,000 in equity would be safe. Make an appointment with a bankruptcy attorney for a free consultation and see what he/she recommends that you and your husband do. This is a once-in-a-lifetime situation for you, but a bk attorney sees these situations every day. Good luck!

[tobee43]

So we (hubby and I) have not filed Chapter 7 yet. We are completely certain we will pass the means test as even at our best gross numbers ever we never hit the WA state income limitation.

At this point, the main stumbling block is our house. We aren't upside down on it, at least that's if I'm interpreting that correctly. Zillow puts us at an estimate of $7-10K more than the combined of what we paid (did the Countrywide ARM and HELOC 6 years ago). We only have around $5K or so of equity -- IF, and big if, we were to get at least what we paid. With so many short sales and foreclosures rampant these days, good luck to anyone on that I think.

So we are waiting for paperwork from the bank regarding HAMP. That was from Tues last week and BofA said it'd take 7-10 days for that to get to us by FedEx. Of course, I've been reading here that the HAMP process is not quite as cut and dry as it sounded with it being a set 30-60 days for BofA to determine payment schedule (assuming eligibility) and then doing the 3 months of trial pays. Sounds like many have stories of it taking upwards of a year or longer.

So....... hubby tells me he thinks we should file within the next 30 days. Except we wouldn't even get a prelim eligibility and work in to HAMP by then of course. And I am incredibly confused about it all (and he's more confused and I'm the designated researcher for all this). Main driving force for that "within 30 days" concept is his fear of the CC defaults getting to the point where they will start suing. We both haven't been paying on almost all since August (some are in the 60-90 days past, a couple like my one default might be just past 90 past). And these are pretty big balances too. $15-25K on most, lowest one in default I think is $8K. Seems like everything I've read is they won't generally try to sue until more like 150-180 day range, but I've never done this before and it's hard to convince my spouse since he knows I'm no expert.

Ack. I know it's not legal advice here, just trying to see what others experiences are. Oh, and if this is all in some sticky and my newbie self just hasn't seen it, steer me to it and accept my apologies for asking redundant questions.

first let me welcome you to the site resigned. we all understand this can be a very confusing and emotion roller coaster ride...and one tha ist difficult without support and a the least a bit of knowledge in your back pocket.

firstly, i would like to clear something that many people do not understand....a bank holding your mortgage cannot force you into a loan modification. many times the loan mods....if ( and actually i don't really know anyone that rec'd a REAL ONE), you get one, you must think realistically as to whether it's the best thing for your future.

many of the mods are designed to tack on arrears at the end of your loan. many lower your payment for a while and then increase as they, the bank believe you will somehow keep getting those big raises and your income will go up. or worse yet, many people do get a payment lowered, only to find a few months later it is impossible to to maintain even those payment.

we went through loan modification for a year, we ended making having to put all our emotions on the sidelines and take a really serious look at our future and shelve the fears and tears and after 33 years decided to give up on our house. this was a business decision.

during the year we worked with a loan mod officer who kept us on a string. chase had all our paperwork, that was never an issue, however, while in the mist of working with chase, i was told i would hear the results of our mod weekly, only to hear nothing until one saturday morning a knock on the door serving us with a summons of foreclosure. let me also add at this point, we had NEVER been late in those 33 years but was told by chase that if we NOT at least 3 months behind in payments we could NOT apply for the loan mod. that was a really tough one for me.

zillow. com is evil.......and unreal...you need to actually have a realitor do actual REAL LIFE comps....they are so far off...as i looked at my house the other day and they don't even have the number of bedrooms or bedrooms correct....really.....they have our old house something like 2 bed/2 bath......1500 sq st....and it's really 5 bedrooms 3 bathrooms....approx 4500 sq feet...they are OFF the wall.

i don't know what washington state's exemptions are...or if you are a homesteaded state, i think they are....check here to see: http://www.bkforum.com/wiki/Washington

we did leave our home voluntarily after rec'ing the summons because we knew winter was setting in, and there was no way after losing both our jobs after 33 years that we could even pay for the heat....we did stay approx 9-10 months without paying the mortgage...we put that away for our move...thankfully. we left the state and everything we knew and loved...and packed all our memories in a suitcase....and it was absolutely, in retrospect the BEST thing we ever did....ever.

the "moral" of the story here is this....sit down and try to put your emotions aside and see if actually keeping the house is in your best interest. while it's a difficult decision, i promise you, it's not the end of the world...but a new beginning for at least us. (all i can relate to on this subject matter is our own experience). it is NOW going on 2.7 years and the bank STILL Has not foreclosed on our house! our names remains on the deed, however, we have no legal or financial responsibility for it.

most likely your atty will not have or should NOT have your reaffirm you house anyway.....so your bank will be put on notice. nowadays the banks really don't want the house back. so, if you decide you want to keep it, you should be fine...after you figure out how much is exempt in the homestead allowance.

it is up to you whether you want to go through with the paperwork for the loan mod....it will not stop you from filing bankruptcy....and i caution you, the only danger is accepting what you may believe is a good deal from the bank....keep your house, go through the bankruptcy, get discharged and then find out you can't manage the house payments. in some states it doesn't really matter if you have a foreclosure after bankruptcy, in the state i have my property there is or was NO cap on foreclosure fees....and it was a deficiency state...which means......not only can the bank go after you for the actual amount owned on the mortgage, but they can tack on fees and the difference from what was owned on the mortgage and what the bank sold the property for...i.e. you have 400k mortgage...the bank sales the house for 200k....they come looking for you for the difference. however, i do NOT Know if washington state is like that....once again the state my property is in is known to have foreclosure fees in excess of 50k-100k BESIDES the deficiency...YUCK!! so we moved 1700 miles and are finally living happily ever after...

do NOT go crazy with the bank....now to your important question of time tables....all banks work differently, the cc cards....you can buy yourself some time while your exactly deciding what to do by calling them and saying my payment is 100...but you will not be getting it this month because of blah blah.....it really will not get bad with collection calls until approx past due of 90 days or more...secondly....if you in fact do get sued by any of the cc companies.....and you are IN FACT filing it wouldn't even matter if they did get a judgment because you would just move to vacate those judgements after your bankruptcy was discharged. that means....after discharged they disappear along with all the other unsecured debt.

additionally, if you file within the next 60 days or so, all of the cc's and even your mortgage company will be order to cease and a stay will come into effect...they are not allowed at that time to attempt to collect anything...and if they do they are in violation of the court as well as the ftc.

sorry for going on an on, but there usually is quite a bit to think about....best of luck to you...and keep us posted!!!!

[Resigned2BK]

Thanks for the links Tobee.

I guess it's hard to condense it all down so I'll try to just throw out some bits.

1. We saw a HUD certified counselor about the housing (and he basically did a credit/debt overview) about a month ago. He told us Ch7 for certain but not until we get jobs to have stable income (we're both self-employed). I will probably have factory work lined up tomorrow as I'm going to a seasonal interview where the HR person told me they have more spaces to fill than people being interviewed in any given class. Housing counselor also told us what we'd need to make to stay in the house -- assuming no loan mod which he thinks is highly unlikely as in his experience in the mortgage industry, he's only seen 1 in 30 people actually get loan mods. The other 29 get short saled or forced foreclosures (sounds like Tobee's experience there). We actually turned down BofA's first attempt at in-house mod this summer because we suspected they'd just force us into short sale. At this point, we're ok with that as we could still get the HAFA version to go to make it so short sale shouldn't turn into foreclosure.

2. We had an initial consult with a BK atty 3 weeks ago. Actually, it's kind of stretching to say he's a BK atty as his area is more like estate planning, but he's been handling a lot of BKs recently. The counselor said BK is very procedural and it was important to get an atty who doesn't talk down to us and doesn't act like this is a PITA waste of time for him. This atty doesn't even trust his paralegal to do much on BKs at this point and he pretty much does all the work himself (not that paralegals can't be pretty knowledgeable). Seemed conscientious. So anyway, he agrees, it's Ch7 for sure, he pretty much left it open, way open, for us to figure out how we're going to figure out the housing angle and the timing. He told us he has a Ch7 client who is making mortgage to keep that house but that it's a huge risk as we won't be able to turn around and roll it in if it's goes foreclosure. And therefore he doesn't recommend that unless we're 110% sure we will be able to afford staying.

3. We are behind on the house, but only 60 days at this point. We actually were going to be 90 days past and then BofA collections operator told us as long as we make a payment for one of the months, it slides back in time. So in other words, the acceleration letters are big fat lies. Oh, we have a 2nd acceleration letter that puts our doomsday in mid Nov now, but our account online also shows August was now paid and we'd paid enough extra to cover the $103 late fee too. And that's our plan for now -- just keep paying ONE monthly payment with $100 extra kicked in and slide it back each month. Makes us still behind to qualify for HAMP but we aren't getting foreclosed on doing that. (We are a non-jud state and it's 160 days).

I think we should be able to keep the house, but there's too many variables. Like if I do this factory work and the factory continues me on permanent after the holidays at hopefully a couple dollars an hour extra, I know that I'll be making almost half what we need between housing, utilities, food, gas/incidentals, and hubby's business costs. However, his business income has royally tanked since August and he did not get the usual business uptick he gets (he makes money during the school year and summer is the lean time for him). Also, the BK will wipe out his ability to make money as usual for half of his business. We'll have to make it off his services side of the biz essentially, and that would make me more comfortable except for the ugly fact that we're in an economic depression with South Park Timmy leading the Treas Dept.

[Peeps]

I've looked into this a bit and from what I can tell (uh... take it at your own risk) is that the new rules that came out in 2010 for HAMP help people file BK before the HAMP and the BK can't be held against them. That's a big change and it makes it difficult to compare people's approval experiences before the new requirements as opposed to after. Also, once people go through the BK, their debt-to-income ratio changes, making them more attractive to the banks for allowing a modification. It appears that with the new rules, there's a benefit to waiting until after debts are discharged through BK without the downside of the BK counting against you when the loan-approval-people review your HAMP at the bank.

The point made earlier about an unpleasant surprise tacked onto the loan is true. From what I've seen, the most unpleasant surprises happen to people who take a forbearance option. People who work with the lender to get the interest rate adjusted or the prin reduced have better luck avoiding surprises, but it seems prudent to keep a close eye on the loan terms no matter what. Also, the time limit is 5 years. During that time, if you make every payment on time and without fail, the government actually gives you $1k/yr to apply to your prin. $5k max. Your tax dollars at work. After the 5 years are up, the bank can revert to the original loan terms or whatever terms were outlined in the modification. So keep an eye on that too. Oh, and I guess the program is supposed to expire at the end of 2012, so place your bets before then.

Anyway, just so you know, I'm in the same boat too. Not behind on mort payments at this time, but I've been trying to find info about HAMP and the right timing when there's also possibly a BK in the picture. It's really hard to find info on how the two interrelate, which is crazy because in real life the two are very connected! I don't relish the thought of trying to find BK lawyers who can consult on a BK plus have the knowledge to layer in HAMP. Not sure if that's even possible yet. It's a big icky mess, but think of how nice it'll all be when it's done! Good luck and keep us posted with what you find!

[LadyInTheRed]

Whatever you decide about timing, do not let fear of credit card companies suing you be what causes you to file. There's no way to know when and if they will sue. You will have time to file BK after you are served with a lawsuit.

[Resigned2BK]

Peeps, LOLing at your signature. Yes, "financial train wreck" describes it perfectly for us all, doesn't it?

[Peeps]

Aw drats...

I found some more info that seemed useful but I couldn't put the link up because I'm too new to the forum and don't have enough posts to pass inspection. Drats. The whole reply... gone. And now I've just realized that my morning coping skills are more dependent on caffeine than I'd previously realized.

Thanks for the signature lolling... I think it's always better to laugh when the only other alternative is to cry!

So anyway, about those little tidbits of interesting stuff... here's the recap (sans links)

1. There's a good presentation prepared by BK trustees to help train other trustees on HAMP. It's out on the web and I think I googled something along the lines of "Bankruptcy Trustee HAMP" to find it. It's a pdf. Anyway, it gives some interesting perspectives for both 7s and 13s and also includes some helpful contact info for more resources.

2. Also saw somewhere (not sure where) a good tip: send your BK schedules with your HAMP application. If the HAMP is already in progress when you file BK, then just send the schedules with the other updated documents that get sent in routinely to the lender. There was a recommendation to send all critical paperwork every 30 days to help avoid the "oops, we lost your paperwork and the stuff you already sent is more than 60 days old so we closed your case" problem.

Hope it helps. Good luck.

[tobee43]

Thanks for the links Tobee.

I guess it's hard to condense it all down so I'll try to just throw out some bits.

1. We saw a HUD certified counselor about the housing (and he basically did a credit/debt overview) about a month ago. He told us Ch7 for certain but not until we get jobs to have stable income (we're both self-employed). I will probably have factory work lined up tomorrow as I'm going to a seasonal interview where the HR person told me they have more spaces to fill than people being interviewed in any given class. Housing counselor also told us what we'd need to make to stay in the house -- assuming no loan mod which he thinks is highly unlikely as in his experience in the mortgage industry, he's only seen 1 in 30 people actually get loan mods. The other 29 get short saled or forced foreclosures (sounds like Tobee's experience there). We actually turned down BofA's first attempt at in-house mod this summer because we suspected they'd just force us into short sale. At this point, we're ok with that as we could still get the HAFA version to go to make it so short sale shouldn't turn into foreclosure.

2. We had an initial consult with a BK atty 3 weeks ago. Actually, it's kind of stretching to say he's a BK atty as his area is more like estate planning, but he's been handling a lot of BKs recently. The counselor said BK is very procedural and it was important to get an atty who doesn't talk down to us and doesn't act like this is a PITA waste of time for him. This atty doesn't even trust his paralegal to do much on BKs at this point and he pretty much does all the work himself (not that paralegals can't be pretty knowledgeable). Seemed conscientious. So anyway, he agrees, it's Ch7 for sure, he pretty much left it open, way open, for us to figure out how we're going to figure out the housing angle and the timing. He told us he has a Ch7 client who is making mortgage to keep that house but that it's a huge risk as we won't be able to turn around and roll it in if it's goes foreclosure. And therefore he doesn't recommend that unless we're 110% sure we will be able to afford staying.

3. We are behind on the house, but only 60 days at this point. We actually were going to be 90 days past and then BofA collections operator told us as long as we make a payment for one of the months, it slides back in time. So in other words, the acceleration letters are big fat lies. Oh, we have a 2nd acceleration letter that puts our doomsday in mid Nov now, but our account online also shows August was now paid and we'd paid enough extra to cover the $103 late fee too. And that's our plan for now -- just keep paying ONE monthly payment with $100 extra kicked in and slide it back each month. Makes us still behind to qualify for HAMP but we aren't getting foreclosed on doing that. (We are a non-jud state and it's 160 days).

I think we should be able to keep the house, but there's too many variables. Like if I do this factory work and the factory continues me on permanent after the holidays at hopefully a couple dollars an hour extra, I know that I'll be making almost half what we need between housing, utilities, food, gas/incidentals, and hubby's business costs. However, his business income has royally tanked since August and he did not get the usual business uptick he gets (he makes money during the school year and summer is the lean time for him). Also, the BK will wipe out his ability to make money as usual for half of his business. We'll have to make it off his services side of the biz essentially, and that would make me more comfortable except for the ugly fact that we're in an economic depression with South Park Timmy leading the Treas Dept.

resigned...i'm a bit confused about what the atty told you with respect to rolling it over..

He told us he has a Ch7 client who is making mortgage to keep that house but that it's a huge risk as we won't be able to turn around and roll it in if it's goes foreclosure. And therefore he doesn't recommend that unless we're 110% sure we will be able to afford staying.

i'm not exactly clear on what he or she meant my roll it if it goes into foreclosure. first you would not reaffirm....sometimes the danger depending on the state you live is this....if you continue to keep your house and do not foreclose, go thru bankruptcy...keep the house...get discharged ....time passes you cannot afford the payment so now the bank begins foreclosure....i know in the state i have my property it is a deficiency state...which means they can collect the difference directly from YOU if the bank sells the property..i.e. you have a mortgage of 400k...the bank sells the house for 200k...thus leaving YOU responsible for the additional 200k or...the shortage...additionally, and once again, depending on where you live...the state i come from as NO CAPS ON FEES...related to foreclosure. in that particular state, even if one has no intention of going bk...but would just like to walk away from a house that underwater the foreclosure fees could run upwards of 50k -100k...and guess who's responsible....YOU....unless, of course you have not reaffirmed and surrendered the house in the bk. now you have a bill of oh let's say 300k.....and you can't file bk again!! not for another 8 years or so...

it's mind boggling to say the least.

you need to sit down....clear your heart and make the best sound business decision for your future while at the same time attempting to put all your emotions aside...it's a tough go of it...but you will do it..i'm sure.

[Pandora]

The point made earlier about an unpleasant surprise tacked onto the loan is true. From what I've seen, the most unpleasant surprises happen to people who take a forbearance option. People who work with the lender to get the interest rate adjusted or the prin reduced have better luck avoiding surprises, but it seems prudent to keep a close eye on the loan terms no matter what. Also, the time limit is 5 years. During that time, if you make every payment on time and without fail, the government actually gives you $1k/yr to apply to your prin. $5k max. Your tax dollars at work. After the 5 years are up, the bank can revert to the original loan terms or whatever terms were outlined in the modification. So keep an eye on that too. Oh, and I guess the program is supposed to expire at the end of 2012, so place your bets before then.

I'd like to clear up a few things and note that under a HAMP modification -the terms stick. Bank must sign and agree, just as you do. Under HAMP (which is what I'm assuming you're referring to) once you are approved for a perm. mod - all the terms are outlined in the mortgage mod paperwork you receive. Its up to you if you sign or not, agreeing to all terms therein. The bank cannot go back to previous interest rate of say, for example, 10% afterwards, they must abide by HAMP rules. HAMP is longer than 5 years max, not sure what timeframe you're alluding to there - the terms can be extended to 40 years. As far as the $5K bonus - you're correct in that it is applied only if you're never late in paying your mortgage payment; you get $1K a year taken off the principle during the first 5 years.

Just want to make sure that people reading this looking into HAMP know how the program works. It goes as follows:


The first thing they look at is are you at 31% for your 1st mortgage only (2nd doesnt apply).

Next they see if its more profitable to foreclose or modify.

From there its the waterfall effect of the interest rate (2% years 1-5, 3% year 6, 4% year 7, and 5% years 8 onward) - however the max interest rate will be the "going rate" as of approval. In our instance it was 5%.

If that still doesnt work to get payment to 31% (PITI and HOA fees only - PMI is separate and not included) - then they extend the loan out for a max of 40 years.

If the extension doesnt work - then forebearance and/or a balloon will be done, interest free - for the life of the note, payable at the end of whatever the terms set forth are.

If all of the above have been tried but they still cannot get you to 31% - then it will be more profitable for them to foreclose.


As far as in-house modifications and/or if you're talking about a regular forbearance with a partial % rate cut for X amount of time, then at that point, yes..the bank can revert to org. terms, however HAMP is a totally different ballgame.

When doing a mod (HAMP) - its best to look at everything long term to ensure you can afford the house for the life of the loan terms. In our case, even at year 8 when our interest rate caps at 5% our mortgage payment for the remainder of our loan will still be less than it was before the mod, including adding in a 5% increase in taxes and/or insurance premiums yearly.

[Resigned2BK]

resigned...i'm a bit confused about what the atty told you with respect to rolling it over..



i'm not exactly clear on what he or she meant my roll it if it goes into foreclosure. first you would not reaffirm....sometimes the danger depending on the state you live is this....if you continue to keep your house and do not foreclose, go thru bankruptcy...keep the house...get discharged ....time passes you cannot afford the payment so now the bank begins foreclosure....i know in the state i have my property it is a deficiency state...which means they can collect the difference directly from YOU if the bank sells the property..i.e. you have a mortgage of 400k...the bank sells the house for 200k...thus leaving YOU responsible for the additional 200k or...the shortage...additionally, and once again, depending on where you live...the state i come from as NO CAPS ON FEES...related to foreclosure. in that particular state, even if one has no intention of going bk...but would just like to walk away from a house that underwater the foreclosure fees could run upwards of 50k -100k...and guess who's responsible....YOU....unless, of course you have not reaffirmed and surrendered the house in the bk. now you have a bill of oh let's say 300k.....and you can't file bk again!! not for another 8 years or so...

it's mind boggling to say the least.

you need to sit down....clear your heart and make the best sound business decision for your future while at the same time attempting to put all your emotions aside...it's a tough go of it...but you will do it..i'm sure.

Talking about rolling the deficiency into the BK. To my understanding when you file, it's a snapshot of your finances on that day, not after, not before. If you don't specify the assorted debts, they aren't included and you're on the hook for them, period. So a deficiency from short sale or foreclosure would need to be rolled in when filing, not a few months later as an after thought. It might be WA is a lot like yours where the consumer is on the hook for paying deficiencies and that's why we have numerous people telling us about that kind of stuff in our consultations.

[tobee43]

Talking about rolling the deficiency into the BK. To my understanding when you file, it's a snapshot of your finances on that day, not after, not before. If you don't specify the assorted debts, they aren't included and you're on the hook for them, period. So a deficiency from short sale or foreclosure would need to be rolled in when filing, not a few months later as an after thought. It might be WA is a lot like yours where the consumer is on the hook for paying deficiencies and that's why we have numerous people telling us about that kind of stuff in our consultations.

this is another one of those miss information rumors...it's not a snapshot of the day of filing...actually MOST all my creditors i put amounts as "unknown"...because and i have given this example before...if...i.e. your chase bill on the date of your filing was 3k....and you have used that amount on your petition because it clearly stated that amount was in fact owned on that date....but as you were filling the paper work out and reading the amount due right off the chase god's piece of paper that states that is what you owe...chase just charged your account with late fees, and this fee and that fee..took out a few of their cousins out to dinner and now that card of yours has a balance when all is said and done of over 4k...

no..you need not even list the amount...what is far more important is the account number and notification address so the creditor is properly served notice. and to the other extreme amex had us listed 4 times on one account...we listed all four separately...the trustee even asked why...i said because i just wanted to make certain..it was surely and truly overkill.

the deficiency i was referring to only is during a foreclosure procedure and varies state by state.