Chapter 13


H

HP

I have been in a Chapter 13 for 2 1/2 years.

I am in my late 60's and draw Social Security.

My Chapter 13 payment is $825 and my house payment is $500.
My income is $2400 per month.

With rising medical cost (My wife has Lupus), rising gasoline prices, etc. I
will not be able to keep up the payments much longer.

What are my options? Can I just default on the Chapter 13, sell my house
and
pay off the Chapter 13 accounts? What will happen if I just quit sending
the Chapter 13 payments and put my house on the market.

I don't mind losing the house but if the court sells it they won't try to
get top
dollar for it will they? I think if the house sells for appraise value it
will pay off
the debts plus maybe $35,000. My debts on the Chapter 13 are approx.
$28,000.
I owe $15,000 on the house.

My attorney just says, "better keep the play payments up....."

Need advice. Thanks

PS: I live in Georgia
 
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F

Frank-Z

How long is your Chapter 13 supposed to last? -- 3 years?, 4 yars?, 5 years?
Is the Chapter 13 total payback amount less than the total that you owe?

If the time remaining on the Chapter 13 is short, or if you get to kiss off
enough debt by comleting the 13, you may want to try to find a way to
complete it. Maybe even take on a part-time job until you can get it all
paid off.

If the payments are too high due to the short payback time frame, maybe you
can refinance your house and pay off the 13. The part-time job idea might
even help you qualify for the refi. Then you will have a lower monthly
payout on the 30-year mortgage.

Don't sell your house. You will regret it if you do.
 
H

HP

It is a five year. It is at 75% payback I think.

I can't take a part time job. I have health problems along with having to
take care of my wife full time.

Not sure I could refinance at my age...you think?

There are other issues with the house. It is a split level and we can no
longer
walk the steps very will plus it is a 3/4 acre lot that I am not able to
keep up.

I have had this loan for 22 years. Do you think they might refinance me?
With a bandruptcy on the books?

Thanks for your help.
 
B

brianlanning

My mother is almost 60 and just got a 30 year mortgage within days of
her bankruptcy discharge. She's on disability with a fixed income
also. I think what really helped her is that she has a fair amount of
equity (she's in florida where they can't take your house equity). If
the bank thinks they'll make money if you default, there's not much
risk in it for them. Also, if you recently filed, then you're barred
from filing again for 6 years (if i remember correctly, that was the
old law). The bank knows this also. It wouldn't hurt to shop around
for a mortgage refinance. A good mortgage broker can do the legwork
for you.

If you stop paying on the 13, the courts will throw your case out. It
will be like you never filed. And the creditors will start trying to
collect again. I'm not sure what happens to the money you've already
paid in. If you're not too attached to the house and considering
moving into something lower maintainance anyway, maybe that's the best
solution. You should talk to your bankruptcy attorney before you do
anything.

brian
 
F

Frank-Z

HP said:
It is a five year. It is at 75% payback I think.

I can't take a part time job. I have health problems along with having to
take care of my wife full time.

Not sure I could refinance at my age...you think?

There are other issues with the house. It is a split level and we can no
longer
walk the steps very will plus it is a 3/4 acre lot that I am not able to
keep up.

I have had this loan for 22 years. Do you think they might refinance me?
With a bandruptcy on the books?

Thanks for your help.
That's a lot to have to take into account, but I think there are probably
some ways to work through this successfully. Unfortunately, your bankruptcy
attorney doesn't seem to be too helpful.

Here are some of my thoughts and ideas. Maybe one or more of them will work
for you.

In your original post, you wrote:

"What are my options? Can I just default on the Chapter 13, sell my house
and pay off the Chapter 13 accounts? What will happen if I just quit
sending
the Chapter 13 payments and put my house on the market."

You owe $28,000 in debts through the Chapter 13 bankruptcy. I don't see why
the bankruptcy trustee wouldn't allow you to sell your house and use some of
the money to pay off the the $28,000 all at once and complete your Chapter
13 obligation. That would end the Chapter 13 (and the $825/month Chapter 13
payments), and you would get a discharge from the bankruptcy court. So,
there would no reason to default on the Chapter 13. On the other hand, if
you were to default on the Chapter 13, instead of owing only 75% of your
past debts, you would owe 100%.

You mentioned that the split level home and 3/4 acre lot is a problem for
you due to health issues. That would be a valid reason for selling your
house and getting something else that would be better suited to meet the
needs of you and your wife.

I'm guessing that your split level home on a 3/4 acre lot is worth about 75
to 80 thousand dollars(or a little more), since you said selling it would
give you enough to pay off the $28,000 Chapter 13 debt, the $15,000 mortgage
balance, and leave you with about $35,000 left over.

I assume that also says something about the prices of real estate in your
area -- a split level on a 3/4 acre lot is worth about $80,000. You could
take a look at http://www.realtor.com and get an idea of other houses in
your area you may be able to buy. You can check out one-story ranch-style
homes on a small lot, or maybe first-floor one-story condos.

With the $35,000 from the sale of your present house, you would have enough
to put 10 or 20 thousand down on a new home, and get a 60 to 70 thousand
dollar mortgage. Or, you could put a little more down and get a smaller
mortgage. But, my vote would be to put as little down as possible -- less
than $10,000 down if possible. The reason is that it would leave you with
more money left over to meet other needs. And, more importantly, if you
later have to file a Chapter 7 bankruptcy to get rid of ever-growing or
unexpected medical debts, you could still keep your new house because the
$10,000 equity you would have in the property would be less than the Georgia
$10,000 homestead exemption. After a Chapter 13 discharge, you only have to
wait 6 months before you can file a Chapter 7 bankruptcy. The only reason
you got stuck in a Chapter 13 this time around is that you had too much
equity in your present home and didn't want to lose that. What you did
worked so far because you kept your home.

As far as getting a mortgage, despite the Chapter 13 bankruptcy, if you have
enough of a down payment and even on a fixed income, you can get a mortgage
these days. When looking for a possible new home, also keep an eye out for
any special housing assistance programs run by nonprofit organizations.
Some of them have a deal with developers which allows them to provide
special assistance to qualified applicants to help them buy a new home.
These are usually new homes in new housing developments, and some of the
programs even provide a grant for the down payment. You have to meet
certain low-income and/or disability qualifications to qualify for those
programs, and you and your wife might both qualify and be exactly the kinds
of clients they are seeking.

Right now, you are stuck in the Chapter 13 with the $825 payments, plus you
are paying $500/month on a mortgage. By doing the above you could end the
Chapter 13 successfully, eliminate that $825/month payment, and probably
have a new mortgage payment of $600 or less.

Good luck.
 
H

HP

Thanks Frank.

That really gives me some things to think about.

I really thank you.
 
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F

Frank-Z

HP said:
Thanks Frank.

That really gives me some things to think about.

I really thank you.
You are very welcome.

I'm sure you'll get this worked out.

Good luck.
 
B

Brett Weiss

A refi is a possibility. So is selling the house through the bankruptcy.
Depending on the details of your case, you may be able to modify your
Chapter 13 Plan to lower the monthly payments.

It sounds as if your attorney has lost interest in your case. You may want
to consult with someone new to get some ideas as to what would be right for
you. I'd recommend finding someone who is a member of the National
Association of Consumer Bankruptcy Attorneys--there's a listing for Georgia
at http://www.nacba.org/dbsearch.htm.

--
Brett Weiss
(e-mail address removed)
www.brettweiss.com

Maryland, DC and Federal bars
Member, National Association of Consumer Bankruptcy Attorneys

--> Read our Bankruptcy FAQ at www.brettweiss.com/faq/br_faq.htm

Justice consists not in being neutral between right and wrong, but in
finding out the right and upholding it, wherever found, against the
wrong. —Theodore Roosevelt

Required disclosure and notice: We are a federally-designated debt relief
agent, proudly helping people file for relief under the Bankruptcy Code
since 1983. Pursuant to 11 USC §§ 342 and 527, we are required to provide
certain notices, which may be found at www.brettweiss.com/faq/br_faq.htm.

*****************************************************************
The Small Print: This response is for discussion purposes only.
It isn't meant to be legal advice and you shouldn't treat it as
such. If you want legal advice, speak with a local lawyer
familiar with your state's laws who can review *all* of the
facts and the law applicable to your situation.
*****************************************************************
 
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K

kuacou241

If the OP gets his Ch.13 dismissed, any new Ch.13 would be under the
new law. Perhaps not so nice. Perhaps an elder-law charity can help.
The OP really needs some competent advice, from someone like Brett,
only local.
 

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