Spoke with an attorney today

[trappedincali]

Well, since I am on the cusp of missing my first payment, I took the oppeortunity to speak on the phone with an attorney. His pitch was as such:

He charges $3500 for Loan mod negotiations, which is fully refundable should it not get approved. Another $3500 for Ch13 filing. He suggested going for the loan mod attempt and Ch 13 to strip off the second. He also mentioned that although the refinanced mortgage was in my name only, we should file BK jointly since the second could potentially come after both of us due to our marriage.

My questions:

1) Doesn't $3500 seem excessive for both services?

2) What exactly happens to the second after filing Ch13? What if they sell it off to a coll agency becoming unsecured. Do I have to structure payments to them under the BK?

3) Are there any advantages to filing Ch13 with regards to the 1099 I'm surely going to get?

4) Wouldn't it be easier attempting to settle with the second (or collection agency that gets the second) rather than file Ch13.

-Lee

[chefette]

Trapped,
$3500 for a ch. 13 may be a little high, but if he is a good lawyer, it is worth it.

Answer to #2 The second gets thrown into the bk, that is the point of doing the bk, no matter who they sell it to, it is a debt and goes into the 13 plan. Its stops them from making your life miserable.

As for bk and 1099s I would think that a good cpa would handle that.

I have a second lein that I will have to face as well. I will try to do a short sale before going into foreclosure. If it works and my second gets enough to go away, great. But my gut tells me (from many experiences) that they will sell it off to collectors. At that point I will make an offer. If they do not take it, well then they will have to pursue a judgement. I have no assets so that judgement will just sit there. There is nothing they can do to me.

Texas

[trappedincali]

Thanks for your response chefette.

My concern is the amount paid back in the BK. Will it be the full amount of the second? If that is the case, I'd rather try my hand at negotiating a reduced settlement, rather than have the court dictate my finances for the next five years.

-Lee

[jdsd21]

Trappedincali, the amount that you will pay back in BK is a percentage of your disposable income over the period of 3-5 years depending on your current income. After the period of payback expires, the remaining balance of the unsecured debt will go away. I haven't filed for BK but have researched it in the past, from what I learned, during the process you will develop an account of all your unsecured debt, once that is complete, a budget of somesort will be put together with the help of a BK attorney, this will be submitted to the courts for their acceptance. I have read that payback can be as low as 1% of your unsecured debt, but can not confirm that...

[cdmosaic]

I suggest you google means test That will give you an idea of your disposalbe income that would ne used in the repayment plan.

[chefette]

Trapped
Jdsd is correct. The 13bk collects all of your debts into a pool and then a repayment is worked out depending on what you can afford. If after the time period alloted (3 or 5 years) The rest is forgiven. The decision you have to make is "Do I get myself into a bk for 3-5 years and deal with the paper work and trustees OR do I take my chances and deal with the one big hickey second loan on my own?" Take you time on this one, only you can answer it, it depends on the kind of person you are. I have been through one myself. It takes time and effort to get it done.

Let me ask you one other question. Other than your concern over the second lein, do you have a huge amount in credit card debt?

Texas

[trappedincali]

chefette,

Thats the thing, I have only $3000 in credit card debt, the rest is secured (2 car loans). I have a substantial income but no assets of real value.

-Lee

[chefette]

Trapped,

Then I don't think a bk is for you, but again its up to you. If your income is good you may not meet the median test. Did you go into details with this lawyer? He should have advised you one way or the other.

[jdsd21]

Chefette, Trapped is talking about CH 13 BK, which is a reorganization of debts, not a full liquidation. They sometimes call this chapter the working mans BK, you can have an income, and a good one at that. the 3-5 years of payback is determined off your income, I do not believe that there is a median test involved...

[trappedincali]

Well, I'm hoping it doesn't have to come to bankruptcy filing. I have a Ch 7 on my record from 8 years ago, so hopefully I can use that as leverage of the fact that I'm not afraid to file again should it come down to negotiations.

Perhaps I'll keep paying the second until I have enough saved up to offer a 20% settlement. That's probably better than they will get from a collection agency. Just not sure how long they will hold out. I'm sure the foreclosing from the 1st will make them nervous.

-Lee

[chefette]

ooops. Of course you are right jdsd, I shouldn't write posts before I have had a couple of cups of coffee.