My husband is 66 and I am 57. My husband lost his job soon after we bought our house in 2009. He is now on social security and was working part time until he became ill and has been in and out of the hospital ( 4 times) since October 2012. He is much better but contracted MRSA while in the hospital the first time and it affected his knee joint and now he needs a knee replacement.
I believe his Medicare plan will cover most of the expenses. I work full time and make $12.36 per hour. We have fallen behind on the mortgage (we haven’t made May’s payment yet) and we also have over $10,000 of unsecured debt (some of that is medical bills) as well as two vehicle payments with high interest.
We tried to buy beater vehicles in the past but they were costing us a fortune in repairs so we bought a new car and a used truck. We are not behind on those payments as of this time.
My question is that we are considering bankruptcy as the creditors are getting aggressive but will we have to file chapter 13 because of being late on our mortgage?
We do not have the money to pay an attorney upfront for a Chapter 7. I also read where a chapter 13 can help reduce the interest rates on vehicles. Can we convert to a chapter 7 at a later time?
Thank you for any input you might have. We don’t have any savings and I am very worried about our finances.
At this point my primary concern is if you will be able to afford the chapter 13 payment and make the regular mortgage payment plus some to get caught up. Depending on how much you owe on the cars and what their value is there may be some provision to reduce those loans in the amount you owe plus the interest rate. You’d have to talk to your local bankruptcy attorney about what the local formula is but it is probably the prime rate plus a bit. Keep in mind there are some limitations and restrictions so you need to discuss your specific situation with your attorney.
You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.
You could convert your plan to a chapter 7 later but that might alter the cram-down on the car loans. That is not available in a chapter 7.
Before you embark on this journey the number one question you need to be confident in answering is if you can continue to afford the house, even in a chapter 13 bankruptcy.
Your situation may have changed to the point where your life no longer fits within your income. In that case you will need to make some changes, like selling the house, or getting rid of one of the vehicles.
Considering the fact you most likely qualified for the mortgage based on two incomes and then he lost his job and then his part-time income. I would imagine things are really tight and it is likely the mortgage is just more than you can afford now. It’s a hard thing to face.
It would just be a shame to file a chapter 13 bankruptcy only to realize you are still limping along and not getting a fresh start to do better.
Unless we get you into a position where you can live within your income, meet your expenses, and save money each month, then you will be unprepared for future medical bills and surprise expenses. And they will come. They always do.
It’s time to put everything on the table and create a life that lets you be safer financially within your real income instead of just barely making it. I want you to be able to find joy and happiness in the days ahead and not just financial fear.
Does that make sense?
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