Is Chapter 13 the right move?

[clams09]

Hi, my name is Carol, I'm from TN and this is my first post. I'm so lucky to have found this site, it's loaded with information and everyone seems very helpful.

My mother re-financed her home a few years ago with Country Wide. In order to simplify matters in the event of her death, we added my name on the title/loan. Unfortunately, in April of this year, she succumbed to cancer. Matters have been everything but simple since.

I never put a lot of thought into the cost of maintaining a house with mortgage (albeit very reasonable), utilities and such. Realizing I cannot meet the additional financial requirements, it was my credit that had to suffer. After her initial diagnosis, I took FMLA but when it was time to return to my job, 62 miles away, I found I needed to stay home and lost my job of more than ten years (this seemed to have occurred right before the economy started the downslide). On unemployment, I was able to pay my bills, but nothing more. So after her death, I had no choice but to make payments on this modest home, along with other related bills.

My sister is on a fixed income, but gave up her apartment to move in with me so we could pool our resources. I am on my 3rd extension of unemployment, and it should be ending before the end of the year. The paralegal with my attorney informed me that I could only file Chapter 13 since I (who have never managed money well) filed Chapter 7 about eight years ago. She also told me not to worry about the fact that my income could completely stop, that we'd deal with that when the time come. When I got cold feet and told her I'd decided against filing, she told me the wolves would be at my door, I could have liens against the house, etc., so I waffled and decided to proceed again. At the time I initially visited the lawyer, I figured I had $15,000 in equity, was told that there was basically no equity with the housing market as it was. It could be even less now.

Although I haven't been to court or met with the trustee, I have received a copy of the letter sent to Unemployment, ordering them to start taking out money from my checks. I thought I had about 10,000 in unsecured debt with $4,000 in legal costs, but was told I had $17,000 in debt. She originally said I had to pay back at 100% but later stated she got them down to 60%. My last e-mail to her was to stop the process again, she said we'd talk when she got back into town, which was 3 days ago. This matter is still in limbo, which is why I've decided to ask you folks.

Since there is basically no equity, and I have no intentions to sell the house, am I better off filing BK not knowing what my financial future holds, or should I indeed stop the process? As long as my sister and I are making the house payments, am I in any danger of losing the house? It's a very gloomy scenario to me, but I need to know if it's the right decision. As I've stated, the mortgage payments are very reasonable, much more so than an apartment and the idea of losing the home my mother loved so much for more than 40 years, as well as a home to my sister and me.

I'm sorry if I've rambled, I'm also sorry if this type question has already been discussed ad nauseam. I have read many of the suggested posts as to not bother folks, it's not been a good year for me. I also lost my 14 year old Dalmatian 2 months ago, who's buried in our back yard.

Thank you in advance, I look forward to any and all advice you have for me.

[Denita]

Welcome to the forum.

I am sorry for your loss. It is especially difficult to have to deal with the financial issues while you are grieving. Fortunately you have your sister with you.

Can you clarify a couple of things in your post? Did you actually file a Ch 13 recently?
If so, when did you file it?

I don't understand how you can be in a 100% repayment plan if you have no employment. How is the Ch 13 being funded? You sound like a Ch 7 candidate to me. The time period is 8 yrs between FILING your last Ch 7 before you are eligible for a new Ch 7.

If you have not filed yet, please don't use this attorney. Interview several (at least 3 or 4) attorney's that specialize in bankruptcy. The interviews/consultations are usually free. Some attorney's know there stuff....others clearly don't! Most attorney's make substantially higher fees in a Ch 13 than they do in a Ch 7...so make sure you carefully interview the attorney to make sure the information is correct. Read the stickies in the BK forum here.

Is the debt that you have your debt or is it your mother's debt or both?
Some OC's/CA's actually try to collect on debt that is not your debt. If you can provide a little run down of the debt and assets you have we might be able to help you formulate a plan that will work for you.

[clams09]

Thanks for your response Denita. As I mentioned, I've never been good with money and have filed chapter 7 and 13 in the past. I'm assuming the last BK, chapter 7, was in 2003 as the paralegal informed me I couldn't file 7 until 2011. (always used this attorney in the past, but this time all I get to see is the paralegal, I've not met with the lawyer once, but his only practice is BK)

I've been to his office twice this time, first time was the initial consultation (no charge), the next time was credit counseling, for which I paid $50 (but received no counseling).

Yes, I have no income other than unemployment, which will end in a couple of months. My mother's creditors are calling me, but I'm so overwhelmed, I haven't dealt with them. There is no executor, I've had nothing but bad news since my mother's death, so I suspect this will be the next major ordeal I'll have to deal with.

My assets include the house, my paid off 13 year old car and my mother's 9 year old truck (which she signed over to me on the title, but I haven't been to change the title yet). I consider the truck as my sisters (as well as half the house too, although nothing is official). I have no retirement, no insurance, no job but know I have to find a job. Right now, I doubt I can find a job which will be as much as unemployment (which pays the max). I'd like to bury my head in the sand until everything is settled, but I can't, so need any expertise I can get. Have I given you the info you need? Anything else I can tell you? I truly appreciate any and all help I can get.

[Denita]

Is the house deed in both your name and your mothers name?

How much is your home worth now? Not when your mother refinanced the home, but in this current market. If you don't know, you can get a free market analysis with an experienced agent. Just tell them you need to know the 'quick sale value'. Make sure the comparable sales are no more than 90 days old.

Are you current with the house payments?

How many people are in your household (you, your sister, ...any children?)?
What is your household income?
What is your debt? Total due on your secured assets (house/vehicles) and unsecured.
This info will help clarify things.

[clams09]

A year and a half ago, everything was hunky-dorey, but everything has gone downhill since then.

The lawyer who drew up the power of attorney a day before my mother died told me that he checked at the courthouse and the way it was written, the house just went to me without problem.

It's just a modest little home, in a small rural town, the BK paralegal told me it was worth what was owed which was 60,000. The payments are only 545 a month.

I have been totally up to date with the payments until this month. That's when my unemployment payments started going to the trustee. For 3 weeks I've waited and finally received a payment from the trustee minus three payments, which they kept. Meaning I rec'd 420. I told my paralegal that I didn't want to proceed last week, and asked her what to do. She said, "just don't show up at the hearing". So how long will they continue to screw up my unemployment. I haven't made my mortgage payment this month, I usually pay it at the beginning of the month.

I don't want to sell the house, I doubt I could live cheaper anywhere else. I'm ashamed to list my assets, my mother's (signed to me) 2000 truck which I will give to my sister. My 96 maxima. It's just me and my sister here. She's on disability and gets 1,000 a month. For a few more months, I get 300 a week from unemployment. The lawyer told me my debt was 15,000.

I hate that I lost my job of ten years when my mother was diagnosed, but wouldn't change that, because I was with her.

Due to what is happening with my unemployment, checks have bounced, so we started out in a hole this month and it's hard to get out of it. I don't know what to do, but I know I wouldn't be able to start chapter 13 and continue it, if I don't know what my future employment holds.

[Denita]

Where I am confused is you said that "you know you wouldn't be able to start Ch 13 and continue it" yet the Trustee is getting your unemployment checks.

From your post it sounds as if you have filed a Ch 13 already. If you have filed a 13 then you can not transfer assets back and forth to insiders/family members (transfer the truck from you to your sister without having permission from the Trustee).

Also, I don't know how much your attorney is charging you for a Ch 13...in our area they run $4000 or more. When you file a large part of the monthly payment is actually going toward your attorney fees and toward trustee fees...not toward debt. From your post, it does not sound like you are getting adequate legal representation. Do you have access to legal aid?

Your house payment sounds very reasonable. Hopefully the monthly payment includes your property taxes and insurance. Please keep your payment current - Countrywide will foreclose in a heartbeat. Sell what ever you can to come up with the funds to make your payment current. Then check around for another attorney - this one does not seem to be working in your best interest.

You may consider buying the Ch 7 or Ch 13 NOLO book on bankruptcy and reading that to familiarize yourself with the process so you know how to protect your assets and can ask the questions that you need to ask the attorney before you travel down this path any further. I believe you can order this online for less than $20. Sometimes they have sales on these books for less than $10. Read the sticky's in this forum and also check out this forum www.bkforum.com (its free).

[clams09]

I visited the attorney twice, she said before it went to 'court' that I would need to start paying. A few weeks ago, I told her I can't afford chapter 13 and needed to stop the process and she told me just to not show up in court. I initially told her of my assets, there didn't seem to be a problem. I'm sorry, I've just been going through severe depression and am overwhelmed by everything.

[Denita]

The attorney filed your Ch 13 petition for you. You would have had to sign a stack of paperwork and provide the attorney your financial information. Yes, the Trustee gets the money from you within 30 days of filing. Most likely the 'court' she is referring to is the 341 meeting (also called the Meeting of Creditors). If you don't show up, then your Ch 13 will be dismissed, not discharged. All of your debt will come back plus interest plus penalties etc. Now that you are in a Ch 13, there are ramifications for you if you do not show up to the 341 meeting. Don't take this step lightly. Please get that NOLO Ch 13 book (you can buy a pdf version on Amazon.com).

[debttaxguy]

There is always two sides to the story. The look back period on filing a new bankruptcy starts from the date you filed the previous case that you were discharged in. Dismissals don't count. To file a new chapter 7 it is now eight years, unless the previous case was a chapter 13 and you paid the creditors at least 70 percent of what they were owed. You can't file a new chapter 13 that will get you a discharge of your debts within 4 years of filing chapter 7, 11, or 12. You can file a new chapter 13 if you filed a prior chapter 13 and completed it within 2 years of the first case being filed which makes since since the min is 3 years. You can file a new chapter 13 after chapter 7 after two years but no discharge, you must pay the creditors 100 percent of what they are owed. Work your dates out and see if this is why you are in chapter 13. If you miss the 341 meeting twice case will be dismissed. You have a right to dismiss a chapter 13 at any time or convert the case to 7 if you have not exercised that right previously during a case. After the first time it must be decided by a Judge.