We spent an hour and a half talking with a local attorney who has a good reputation and a long history in the area, and overall we have a good feeling about things, but we are going to meet with at least one more if not a couple more. Obviously, he advised us to stop paying on the cards, which I am going to take the plunge on first. My wife has good credit right now, so she is going to keep making the minimums until we finance a reliable used car. Once that is taken care of she will default as well. I set all of my contact numbers to GV with the banks a while ago and just downloaded six months worth of statements to a flash drive to be printed should I need to. It's a little nerve wracking to think that I'm not paying, but I suppose that feeling fades over time. It will feel good to buy gas and groceries with cash again.
During the consult he ran our income and expenses and there is no way to make a CH7 work right now-we have to wait until my wife loses her job in July. He did mention something that I want to run by folks here-I asked about the six month lookback on income forcing us to wait to file until sometime in October after my wife has been on unemployment for a while. He said that there was a Supreme Court case that ruled that future circumstances can be taken into consideration at time of filing. In other words, he thinks we could file a CH7 in July once my wife is on unemployment-can anyone substantiate this?
Since we established that we can't file until July (at least) he advised us to keep him posted on developments with the creditors (harassment and any lawsuits) and he would be happy to answer any questions along the way. He only mentioned a retainer with regard to a creditor bringing a lawsuit. Then we started talking about the mortgage (and this is where I need some advice).
At first he advised us to stop paying, bank the money, let them begin foreclosure, discharge it in the bankruptcy, and walk away with the saved cash/rent until we decide what's next. That's the most cut and dry scenario, but neither my wife nor I want to walk away from the house for a variety of reasons which are unimportant here. What I'd like for some of the more knowledgeable folks to do is pay careful attention to the next scenario he presented:
He explained that if we wanted to keep the house, we could essentially do the same thing-stop paying the mortgage, hoard the cash, and let them start foreclosure. He said that in NJ it takes about eight months for them to get around to starting foreclosure and that the process itself can take years. There is a mortgage modification program run by the state that we would then apply for. During that process, we file for CH7, and are discharged. The attorney claimed that the bank would then be very eager to make a deal since they don't want the house back and they know we no longer have to pay. We would come out with a lower mortgage payment, an emergency fund created by not paying the mortgage prior to BK, and no credit card debt. This way though my wife's employment picture looks bleak, we would be secure for a long time to come thanks to the lower mortgage payment and emergency fund. Finally, if things began to go south again, we would always have the option of walking away as long as the modification didn't come with a reaffirmation.
That SOUNDS great, but can I get some real world feedback? What are the possible pitfalls? Where could it go wrong? Am I being sold a pie-in-the-sky bill of goods here or is this actually a sound way to start over on the right foot? I am going to run this by any attorneys we meet with in the future, but I was hoping that I could get some opinions here as well.
During the consult he ran our income and expenses and there is no way to make a CH7 work right now-we have to wait until my wife loses her job in July. He did mention something that I want to run by folks here-I asked about the six month lookback on income forcing us to wait to file until sometime in October after my wife has been on unemployment for a while. He said that there was a Supreme Court case that ruled that future circumstances can be taken into consideration at time of filing. In other words, he thinks we could file a CH7 in July once my wife is on unemployment-can anyone substantiate this?
Since we established that we can't file until July (at least) he advised us to keep him posted on developments with the creditors (harassment and any lawsuits) and he would be happy to answer any questions along the way. He only mentioned a retainer with regard to a creditor bringing a lawsuit. Then we started talking about the mortgage (and this is where I need some advice).
At first he advised us to stop paying, bank the money, let them begin foreclosure, discharge it in the bankruptcy, and walk away with the saved cash/rent until we decide what's next. That's the most cut and dry scenario, but neither my wife nor I want to walk away from the house for a variety of reasons which are unimportant here. What I'd like for some of the more knowledgeable folks to do is pay careful attention to the next scenario he presented:
He explained that if we wanted to keep the house, we could essentially do the same thing-stop paying the mortgage, hoard the cash, and let them start foreclosure. He said that in NJ it takes about eight months for them to get around to starting foreclosure and that the process itself can take years. There is a mortgage modification program run by the state that we would then apply for. During that process, we file for CH7, and are discharged. The attorney claimed that the bank would then be very eager to make a deal since they don't want the house back and they know we no longer have to pay. We would come out with a lower mortgage payment, an emergency fund created by not paying the mortgage prior to BK, and no credit card debt. This way though my wife's employment picture looks bleak, we would be secure for a long time to come thanks to the lower mortgage payment and emergency fund. Finally, if things began to go south again, we would always have the option of walking away as long as the modification didn't come with a reaffirmation.
That SOUNDS great, but can I get some real world feedback? What are the possible pitfalls? Where could it go wrong? Am I being sold a pie-in-the-sky bill of goods here or is this actually a sound way to start over on the right foot? I am going to run this by any attorneys we meet with in the future, but I was hoping that I could get some opinions here as well.
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