Already filed Ch. 7, would a Ch. 20 be worth it at this point?

[sealpup]

We filed Chapter 7 in April and the final date for objections to discharge is 7/19. We are a pretty straight forward case, no objections have been filed. However, 3 days before we filed I had to have emergency medical care and from that was off of work (unpaid) for 6 weeks. Because of that and some unexpected car expenses, we got behind on our first mortgage again, and our 2nd. I also incurred another $500 medical bill from care I received after we had filed (all other bills were in our Ch. 7 petition). Thankfully we now have medical insurance.

Our first mortgage lender filed for relief from stay. Our lawyer spoke w/them and we were told they would not procede with forclosure as long as we didn't fall 3 months behind and got caught up in 60 days. We called on 7/1 to make a payment over the phone (first time we had called to make a payment since they had filed for relief), and we were told we could not make a payment over the phone b/c they were waiting to hear if they had gotten relief from stay. (Well I knew it had been granted the day prior b/c of pacer, but they hadn't gotten it in their system yet). What is this about? I don't understand why they couldn't take a payment based on that. We had made 2 other payments over the phone since had filed bk w/o problems. Financially, we could not have made a payment prior to 7/1. So, as of right now we have not paid the payments due on 5/1, 6/1 or 7/1. I'm assuming the answer is yes, but are we officially 3 payments late now (just wondering since we are still within the grace period)? They told us to call back late next week to see if we could make a payment by phone. Or that we could mail a check, but w/the holiday weekend, we didn't figure they would get it til late next week anyway. I'd consider overnighting a check or Western Union, but at any rate, the payment will be after 7/1.

Between this, and other debt that still remains (see below), I am starting to wonder if we should attempt a Ch. 20 and file a Ch. 13 as soon as we get our discharge from Ch. 7. Would this be possible and worth it? Would it be considered in bad faith?
What determines whether you are on a 3 year or 5 year re-payment plant? Right now we are in a payment plan with our HOA to make up arrears and that is $175/month. If those were rolled into a Ch. 13 payment plan, our payments wouldn't be too much more than that (depending on 3 or 5 yr plan). According to our budget, that's doable. I am feeling like we are not getting the fresh start we wanted, and that maybe doing a 13 now would help. I really don't think we can get caught up on the mortgage within 60 days.

Remaining debt:
HOA arrears approx $2900
1st mortgage arrears $7k
2nd mortgage arrears approx $1500
medical bill $500
State Taxes for 2010 $500

Any thoughts or words of wisdom would be much appreciated I wanted to makes sure I wasn't missing anything before I discussed it with our lawyer. TIA!

[helpmeout]

It sounds like you can't afford the house. If you filed for a Chapter 7, you don't have arrears with the HOA. Those will be discharged in the BK. If the arrears you are talking about came about after you filed, again, it sounds like you can't afford the house. It would probably be a good idea to walk away from it.

Filing a Chapter 13 isn't going to help you if your income is not enough to afford the house plus living expenses.

[sealpup]

In Colorado HOA's have a superlien- so they can and will forclose and get paid a certain amount before the 1st mortgage gets a dime. I've been over this with my lawyer, and we have to keep paying them. Our personal obligation to the debt is gone, but they can forclose.
I missed 6 weeks of work w/o pay due to my medical issues. The time I missed equals just under the amount we are in arrears. We know we can afford the house, have been over that w/the lawyer too- it's just we are behind due to these circumstances and need to get caught up. Since we filed a Ch. 7 my husband is now in a permanent position, with a bit higher pay and health insurance (after being unemployed and in temp positions for nearly 2 years). So we are now in a bit better spot than when we filed- now that I am back to work and he makes more.

[StartinOver]

The time you missed equals just under the amount you are in arrears. Think about that. If you hadn't missed the time, you'd still be a tiny bit in arrears from the sound of it. If you're able sort this out with multiple


If another thing happens to you or your family, you'll be right back in the same soup again. Really think this through carefully. We insolvent people are so used to being so tight we can't even squeak, that we don't recognize living paycheck to paycheck as being broke anymore. If you walked away, and got into something where your housing expense was 2/3 or less than what you're spending now, you'd be putting that other 1/3 in savings and the next time you have something happen to you or your family that either cuts income or increases costs or both, you'd pony up from that savings and just keep on keeping on.

Your lawyer isn't a financial advisor, either.

[helpmeout]

In Colorado HOA's have a superlien- so they can and will forclose and get paid a certain amount before the 1st mortgage gets a dime. I've been over this with my lawyer, and we have to keep paying them. Our personal obligation to the debt is gone, but they can forclose.
I missed 6 weeks of work w/o pay due to my medical issues. The time I missed equals just under the amount we are in arrears. We know we can afford the house, have been over that w/the lawyer too- it's just we are behind due to these circumstances and need to get caught up. Since we filed a Ch. 7 my husband is now in a permanent position, with a bit higher pay and health insurance (after being unemployed and in temp positions for nearly 2 years). So we are now in a bit better spot than when we filed- now that I am back to work and he makes more.

So what happens with the next emergency? You clearly weren't in a position to take care of the last one without missing mortgage payments. It still sounds like you can't afford the house. I used to think like that: Hey, I can keep the house, I'm getting a bonus in March, it will help me get through the summer. Hey, I got a raise, it will help pay the bills.

The bonus didn't help and neither did the higher pay. Reality is, the house just wasn't worth keeping when it meant living paycheck to paycheck. Like what you are doing.

[newbie2]

You asked the question, so I hope you were prepared for honest answers. It's time for you to do a gut check: Is your home worth having 2 bankruptcies on your record???

[Drazil65]

Part of the process of getting that fresh start is giving up the burdens that put you in this position to begin with. With the fresh start you may need to go into a rental situation so that you can start saving money again and get that built up. Create a timeline of perhaps 2 years (or whatever will work for your goals) where you rent and put money away. Its not just the mortgage in question but its everything that goees along with homeownership, the repairs, the upkeep, the utilities all the stuff that can make you house poor to say the least. If you release yourselves from that burden it will be a big weight off of your shoulders and you will not be worrying about if someone is going to foreclose during the next family crisis when you have a hard time paying the mortgage payments. Take a step back and re-evaluate the decision to keep the house and how that helps you get that fresh start in your situation.

[despritfreya]

Filing a Chapter 13 on the heals of a 7 is not “bad faith” and will help you "cure and maintain". It will allow you to cure the default (HOA and mortgage) so long as you maintain the going forward payments. In addition, you may be able to strip the 2nd, assuming there is no equity after the 1st and also assuming your district has not ruled that you can't strip since you won't get a 13 discharge. Further, since you won't get a discharge the medical bills will still be owing (unless paid in full through the Plan) after you complete the Plan.

The question is - Are you better off walking from the home, working it out with the lender(s) or filing the bk? Only you can decide. However, Helpmeout is not wrong. If you cannot afford the going forward mortgage payments you won't be able to afford the court payment and will lose the home anyway. You need to decide what is in your financial best interest.

Des.

[sealpup]

Thanks so much for everyone's input. You all have valid points. My husband and I have talked this over and since he is making more than he did when we filed and fell behind he wants to keep the house. I don't want to be looking for a divorce lawyer too, so we are going to talk to our lawyer late next week and see what happens.
We are paying $175 month now for HOA arrears, and our mortgage is temporarily $200 more to account for a negative escrow balance- rolling both of these into a Ch. 13, along w/the arrears on mortgages, and state tax owed our payments in a 60 month plan would be less than the $375 we budget a month for those things. In a 36 month plan it'd be approx. $73 more a month, which is doable (especially since we just got a better rate on car insurance!). I've looked at some calculators and all that includes lawyers costs and admin fees.