BK or tough it out?

[lmstalnaker]

I have been getting my financial info together in order to file Chap 13. I am 4 months behind on my mortgage, currently being garnished, behind on almost everything else & feel like giving up. I know that feelings lie, so I am not about to quit! My mortgage has been accelerated because I was not able to pay the double payments as previously agreed. As it stands, they have not started foreclosure proceedings. I received a letter from the mortgage co. today stating that I have several options. They want a full financial disclosure to see what, if any, arrangements can be made.

I work all year, however, I make most of my income from March - June. My family experienced some unexpected financial losses this year, hence I was not able to catch up on bills. I would like to be able to tough this out & get caught up without filing BK. It has just been working out that instead of catching up, I am getting further behind.

I talked with a credit counseling agency (CCCS of MD & DE) last month. They suggested that I should hurry up & file before things get worse.

Because they use the past 6 months income in order to calculate income for the repayment plan, I need to wait until Dec or better yet Jan in order to file. I want to be honest with the mortgage co & am hoping that I can work this out with them. I am afraid that if they see my current pay stubs they may tell me that they can not work with me & speed up the process. ( In the past, they have said just this.)

I would appreciate any advice or personal experience that may help me wade through the confusion. Thanks!!!

[ghacorp]

It's hard to decipher your situation based on the information you provided. I'd go with CCCS and file a 13 fairly soon. The income calculation you mention is actually a guideline used by bk districts and not absolute. When filing any form of bankruptcy there will be full and complete financial disclosure and the Trustee along with your attorney, if you retain one will work out the amount of your payment plan. In a 13 filing unsecured creditors are entitled to receive at least what they would gotten pro rata had a Chapter 7 been filed. Trustees at the 341 meeting will require four years of tax returns and at least two months of pay stubs detailing year to date information. From all of this information they will be able to determine your overall situation.

[lmstalnaker]

What I kept overlooking was the fact that I have more home equity than debt. I called my mortgage co & they are going to accept one months payment. I have to fill out the financial disclosure & they are willing to make a repayment plan. I was not able to stick with the last one, so I am grateful to have another chance!!

As I see it, as long as I can keep the house out of foreclosure, I have a better chance of continuing to tough it out. I am going to use the info from this web site in order to clean up my credit & seek debt settlements.

[LNY]

That is good news!!

[Methuss]

The new BK laws make for tough dealings when you're talking about a house. Ride-through is gone, and a mortgage company can break the stay relatively easily if you don't reaffirm the mortgage.

But, if you have medical bills, unsecured debt and/or a car that you've made payments on for more than 2.5 years, a BK may still be a good way to clean things up and start fresh.

Now you probably just went "car that you've made payments on for more than 2.5 years"? If you owe more than the car is worth, and you've had the loan more than 2.5 years, you do not have to reaffirm or pay the full balance on the loan to keep the car. You only have to pay the NADA "black-book" trade-in value. That's called a cram-down.

Your equity in your house is probably protected under your State's homestead exemptions. For example, Illinois has a $15,000 exemption which doubles if husband and wife joint-file the bankruptcy...which would protect the first $15k or $30k of the house equity from creditors. I'd have to check your State's specific exemption amount, but it's probably similar.