Scared and worried

[newone]

Hi all, I've been around a few years, mostly stalking and researching. Background: DH and I filed chapter 7 back in spring 2010, discharged July 2010. Everything was rolling along just fine, we were rebuilding, paying the mortgage, etc. Then the bottom dropped out.

In November of 2010 my DH lost his job, he was only unemployed for a few months, but we have taken a 15k per year pay cut. Now we find ourselves worse off than before, using cc to get by, hoping we could hang on until he could draw his retirement from his old job in July 2014.

Unfortunately, that just isn't going to happen, we're over 40k in debt for medical, second mortgage arrears, 1st mortgage arrears, payday loanns etc. We consulted an attorney, and are going to file chapter 13. We know we can't get a discharge of debt, but are hoping to keep our home and then deal with the rest of it in 5 years.

Thing is, I can't seem to get out of the payday loan trap, I keep having to borrow to pay regular expenses, while coming up with the rest of the attorney fees, and they are auto drafted out of our account.

I'm worried if I get another one, and then pay the attorney, the court will consider it fraud and dismiss the case. I wanted to stop paying them, close the account and file on them, but our attorney's paralegal said there may be repercussions from doing that or stopping payment on them.

I've searched the net, can't find a definitive answer, does anyone here have any experience with recent (like a week old) payday loans and then fiing?

[LadyInTheRed]

. I wanted to stop paying them, close the account and file on them, but our attorney's paralegal said there may be repercussions from doing that or stopping payment on them.

Talk to the attorney instead of the paralegal. Explain that you cannot keep paying the payday loan and come up with attorney fees. You need to do what it takes to stop taking payday loans or using any credit at all. I am assuming the repercussions the paralegal is talking about is having a payday loan ruled non dischargeable. If you stop making payments and allow 70 days to pass, then the creditor would have to prove that you took the loan without an intent to pay it back. Making payments on that loan makes it more difficult for them to prove that you never intended to pay. But, continuing to take payday loans when you are planning to file BK only makes matters worse because you may never be able to put the last loan 70 days behind you AND make payments on the loans. If take a loan and file a week later, chances are the creditor will file a complaint to have the loan ruled not dischargeable because it is a slam dunk. But, most creditors are not going to bother filing a complaint for non-dischargeability if the 70 days has passed and they have the burden of proof. Again, talk to your attorney about this. I bet he'll say it is okay to stop making payments.

ETA: Contact your bank to stop the auotmatic drafts or open an account at a different bank and move your money.

and ETA: You need to figure out how to pay your every day expenses without borrowing. If, after stopping payment on all unsecured debt, you can't pay your living expenses, BK is not going to help you. In fact, if you truely do not have the income to cover expenses, you won't be able to propose a feasible Chap 13 plan and your case will eventually get dismissed.

[newone]

Thank you Lady. We do have enough dmi to fund a plan, so I'm not worried about that. It's just coming up with the extra $ for the attorney, while continuing to pay everyday expenses, with the added payday loans. I wanted to pay him in one lump, I think instead, I'll just pay him in 3 payments. It will take a little longer but will achieve the same thing.

ETA: This will also allow us to put more time between the one we have left, without taking another one.

[bcohen]

What are you trying to accomplish by filing for Chapter 13 bankruptcy? Are you planning to keep the house, or is it so far "underwater" that it would not be in your interest to bring the mortgages current again? If the answer is that you're not planning to keep the house, then I am not sure that filing a Chapter 13 now--which would not result in discharging any debts--helps you. In that case, you would probably be best off to simply quit paying the debts "cold turkey", ignore the collection calls, and deal with any lawsuits which might happen. By the time you get sued, it will likely be at least 6 months--probably more like a year--after you quit paying the debts, and then a Chapter 13 COULD get you a discharge.

Now if you are trying to "save" your house, and the bank is trying to foreclose right now, then maybe it is worth filing for Chapter 13, but even that depends on what your plan payment would be versus what an apartment rents for in your area.

[newone]

We are attempting to save our home, so a 13 is in our best interest right now as the second mortgage wasn't reaffirmed in the 7 and hasn't been paid in a while, the attorney is worried they may attempt to foreclose.

[LadyInTheRed]

When I responded, I forgot about the fact that you won't be discharging debt in a Chap 13. So, the 70 days is really irrelevant since the debt isn't dischargeable anyway. Have you tried buying time with a mortgage modification? Or even if not a modification, some kind of payment plan with the mortgage company that will keep them from foreclosing. Let the payday loans sue and get a judgment if that's what it takes. It sure would be nice if you could hold off until July so that your debts can be discharged in the 13.

[bcohen]

Has either bank attempted to foreclose yet? If foreclosure hasn't even started, I'd hold off on filing for Chapter 13, because if you can make it to next summer, then you'll get a discharge, rather than just throwing a lot of money down a black hole and still having your debts to worry about.

[newone]

Thank you bcohen and Lady. No they haven't started foreclosure proceedings yet, that I'm aware of. We make too much to qualify for a modification because go by gross income, not net. I was under the impression that the debt still wouldn't be dischargeable if we waited until July? July 2014 is when my DH is eligible to draw a check from the retirement account from his previous employer, which puts us back thisclose to his previous income. July 2010 is when the previous 7 was discharged so July 2014 would only be 4 years.

[LadyInTheRed]

You can get a discharge in a Chap 13 that is filed 4 years after the discharge of your Chap 7.

[murph996]

I was in the payday trap. Here's what you need to do...Close your bank account and open a new one at another bank--look into changing your phone # on file with them initially to a google voice #. If they are auto-withdrawing, they are likely unlicensed online lenders? My attorney felt the court would not be sympathetic to them, and would consider all the PDLs as being initiated from the very first loan that was taken out..not the renewals. I would not worry about fraud one bit. I had a TON of PDLs, and a very small percentage of them filed claims..even the legal ones didn't file. And there was no threat of fraud.

When I stopped paying my PDL lenders, surprisingly they were very quiet--Id get emails and very few calls. But I wouldnt pay them another penny before filing.