Should I sell my house or file for chapter 13?

Question

My husband and I are in a situation that it looks like we cannot get out of. We stopped paying credit cards 6 months ago, the interests went up the roof. We had a child 6 months ago. the gas prices went up too and there was a reduction on our income. We have already called the consumer credit counseling .... and they told us they cannot help us because our expenses are more than what we make. our lender told us they cannot help us either. we are 2 months behind on our mortgage. Should we file for chapter 13th or do the homeownership Hope program or sell the house? please help!!!

Answer 1

You would need to contact a bankruptcy attorney to see what your options are. Most will see you on a free consultation. You will need to provide your last six months of income, your assets, list of your debts and last 4 years of taxes. After reviewing your information, the attorney should be able to tell you what you qualify for. Chapter 13 is a payment plan into the US Bankruptcy Trustees and runs either 3 or 5 years with payment taken directly out of paychecks. Leaves you with not much money left over, but pays the bills thru the courts, they will pay the secured debts first, unsecured last. After the plan time frame you would get a discharge similar to a chapter 7 filing. In a chapter 13, while in the plan, if financing should be needed, ex: new car, etc, you would have to get approval from the courts first. Usually takes about 30 days to approve. Bankruptcy should be your last resort. You need to see qualified legal advise in order to find out your options. Good Luck!

Answer 2

DON'T SELL YOUR HOUSE. I remember read somewhere before that if you file for bankruptcy, you are allowed to keep 1 house when filing for bankruptcy. Searching the web, I found this...

"Question: Dear Bankruptcy Adviser, If you own a home, can you file bankruptcy to avoid foreclosure? In other words, file and keep your home?

Answer: Yes, you can. It's called Chapter 13 bankruptcy, also known as personal reorganization bankruptcy. This is different from Chapter 7 bankruptcy (liquidation bankruptcy). Each has different merits. In Chapter 7, you liquidate your assets, distribute the cash to creditors and have your debt erased relatively quickly -- usually within four months. In Chapter 13, you keep your home, but it takes three to five years of faithfully conforming to a payment plan before getting your fresh start. In that three- to five-year plan, you will be able to catch up on your delinquent mortgage balance.

If you have a home and you are behind on payments, then you will almost definitely want to opt for Chapter 13. When you file, it is important to include all credit card debt, personal loan debt, student loans and your car loan. DO NOT save a credit card for "emergencies." That could jeopardize your ability to obtain bankruptcy protection under the law, and moreover, you won't be able to refile. Be honest about ALL of your debt.

Once you've done that, the key is to make your monthly payment as low as possible. Even if this means accepting a full five-yearlong payment plan, having a low monthly payment is crucial to maximizing your chances of success. A low payment means you're more likely to be able to demonstrate to the court that you have the capacity to make such a payment, which means it's more likely you'll be granted Chapter 13 bankruptcy, which means you'll keep your house.

After you complete your three to five-year plan, the company that financed your mortgage and your car loan will have received the money owed; unsecured creditors such as a credit card issuer or a department store card may not have received anything. But it doesn't matter -- execute your Chapter 13 bankruptcy plan and all debt balances are eliminated. Once that happens, your financial life begins all over again."

GOOD LUCK