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Considering filing Chapter 13


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I am considering filing for a chapter 13 bankruptcy, had a chapter 7 in 2002, so I am not at all thrilled to be in the circumstance I am in, but I "made the bed" if you will and gotta answer for it. A little background, lived high on the hog cause ample overtime was available, economy struck and now it has caught up with me. Well here I am from a financial perspective as of 11/03/2009...

All numbers are approximate

Net income: $4600

1st Mortgage: $2280 (350k balance)

2nd Mortgage: $330 (84k balance)

RV: $370 (33k balance)

Motorcycle: $392 (15k balance)

ATV: $254 (11k balance)

Credit Card 1: 250 (9100 balance)

Credit Card 2: 250 (5500 balance)

Left over per month: $470

I still need to pay living expenses, such as: utilities, food, clothing, etc.

Multiple Questions:

1.) 1st mortgage: I am currently in the process of a loan modification and paying a "trial" payment until a decision is made to approve/disapprove the modification. I am 3 months into the "trial" payments, so I hope a decision will be made soon. What will happen to the modification process once I file the BK? If the modification gets approved before the BK filing happens, will the new mortgage payment stay? I would really like to keep the house, so i am willing to re-affirming this debt.

2.) 2st mortgage: Not paid since about April. Found out that even if I do get a loan modification approved on the 1st, the second can foreclose on the house. What happens to this loan, will it go in the same category as the 1st or as a secured or unsecured creditor? I do not want to re-affirm this debt, is a cram-down possible? My thinking is, if I am taking such a HUGE hit to my credit then...

3.) RV / Motorcycle / ATV: This afternoon I voluntarily turned in the motorcycle and plan to do the same with the RV & ATV. This more than likely will happen at some point before/during the BK filing. I understand these items will be sold for an amount way under their actual value and I will be gone after for the deficiency of each item. The deficiency amount(s) will not be known for the BK filing so I do not know what will happen once the deficiencies are known. I do not want to re-affirm any of these debts or be gone after at a later date.

4.) Credit Cards: Do the credit cards get what is left over if any in terms of the repayment plan?

I have already contacted an attorney who has asked me to collect all my information for a consultation. I would appreciate any helpful suggestions.

Edited by joecitizen
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What is the current value of your home? Don't use Zillow or any of the automated valuation methods as they are usually on the high side. If you don't know your current value, get a CMA from an experienced Realtor (usually free). Make sure you let the Realtor know you want a value based on a 30 day sale.

If your homes value is less than the outstanding FIRST mortgage (less than $350k), you can then strip the 2nd lien in your Ch 13. There is a couple of extra steps for the attorney so it may run you a little more, but it is certainly worth it if you are trying to keep your home.

It is best to surrender the ATV/Motorcycle and RV IN the Ch 13 because then you only have the 13 on your report, rather than a voluntary repo before the filing and a Ch 13, but...you have to do what you have to do. That is a personal decision.

Your repayment plan with be based on your disposable monthly income. Your schedules I and J in the Ch 13 are critical to having a successful Ch 13. You will want to determine exactly what your expenses are...including all those things you pay for one time a year that we sometimes forget. After you have carefully planned your expenses and had your attorney review if you have $160 DMI/month then your plan payment will be $160/mth - unless the trustee disallows some of your expenses. Most plan payments are 60 months unless you are under median income for your state, then they can be as little as 36 months.

Read the stickies on here for Ch 13. Also go to www.bkforum.com and read the stickies there to get an idea of the allowed expenses.

As to the modification, make sure your modification is accepted and finalized before you file. If you file 'during' the modification process your modification is terminated.

REGARDING THE CONSULATION: Interview at least 3 to 4 attorney's. Have all of your expenses listed, ALL of your expenses. This is the only way the attorney can help you is by reviewing your actual personal situation. My opinion is to stay away from a mill type attorney as once you pay them they dissappear. Write down all of your questions. Read the stickies so you know what to ask. Good luck.

Edited by Denita
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