Loan defficiency debt

**wincrasher** · 07-23-2009, 10:32 AM

Who told you you weren't "elegible" for bankruptcy? If you are going to go the bankruptcy, do it before you go into foreclosure. At least while you are in the bankruptcy process, you put the brakes on foreclosure, giving you more time to regroup.

You might not get fully discharged from all your debt because you have income, but they may rework some items.

If you decide to tough it out and just walk away, you may not be better credit wise in 3 years because the debt will still be hanging over you. With the bankruptcy, you at least have your issues resolved and can build it up from there.

Your best course would be the short sale, if you can get it arranged. Otherwise, all bad choices.

**Radiance** · 07-23-2009, 10:40 AM

I forgot the amount, but it seems you need to make a max of "X" to be alegible for bankrupcy?

**Radiance** · 07-23-2009, 10:45 AM

I would need to make "less than the median income in your state" for chapter 7...

**creditcardfree** · 07-23-2009, 11:10 AM

Radiance, you are in territory that I'm not familiar with. I do know there is chapter 13 as well as chapter 7.

Do you know if the mortgage lender would then have an unsecured loan with you for the $100K? What would those terms be? What would the payment be? Is it worse than making the full current payment on your mortgage? How much can you afford to pay each month towards this debt?

I don't have any thoughts on how to handle it other than making sure your spending is under control and that you put as much as possible toward the debt.

**wincrasher** · 07-23-2009, 12:01 PM

You need to get a free consultation with a bankruptcy attorney.

Chapters 11 & 13 are reorganizations - you have to pay a certain portion of debts as determined by the court.

Chapter 7 is a liquidation and you walk away clean - there are restrictions on this.

You can be a millionaire and still file any of these. Insolvancy is owing more than you can pay. Doesn't matter if it's 10,000 or 10 billion.

The key is that filing bankruptcy puts a freeze on all your debts. No more fees or interest added until the court works it out. Foreclosure cannot be filed because you are under the protection of the court. An attorney can explain all this to you and which is the best way to go in your case. But you must act quickly if foreclosure is imminent.

**Radiance** · 07-23-2009, 12:27 PM

Thank you and you are right.
I need to ask fast and I need a consultation with a bankrupcy attorney or a real state attorney. I am looking up one right now and making an appointment!

I am ok if a judge say I have to pay back as long as the payments are "resonable" which means I don't have to eat frozen pizza everyday or live under a bridge.

I really want to get to a decent situation before my son is old enough to realize what is going on. I believe he needs to learn to deal with adversity, but I could have avoided this situation with some education and awareness.

**wincrasher** · 07-24-2009, 04:58 AM

They attorney will go over this with you, but it I think that the court can't actually modify your mortgage - they've been calling this "cram-down" on the news lately because congress was considering giving judges the right to do this.

Most likely they will modify or eliminate your other debts so that your total of payments is affordable.

Good luck and let us know what the attorney says. Don't be surprised that he asks for some money upfront to get the ball rolling - that is pretty customary from what I hear.

**Radiance** · 07-24-2009, 06:05 AM

Thanks, a friend is getting me the name of a good one... he offers free consultation, then 2400 if I "retain" him.
He says the guy is great and offers excellent advise.

**Radiance** · 07-24-2009, 07:05 AM

THis is a link to a free online chapter 7 bankrupcy means calculator.
Courtecy of nolo.com

Online Means test

I failed it by $400. No chapter 7 for me

Loan defficiency debt