AboutTerry Leeders Expertise Handles Chapter 7 and Chapter 13 bankruptcy cases.
10 years of extensive bankruptcy experience. Filed over 3000 cases
Chicago Bankruptcy Lawyer website "One On One Personal Service You Deserve"
Experience I have been practicing bankruptcy law for 10 years. I have helped over 3000 consumer bankruptcy clients in that time.
Organizations Chicago Bar Association
Illinois Bar Association
Question QUESTION: Hi, I believe I need to file for Ch.7? I cannot afford to pay my second mortgage. My mom was paying it for me but I lost her at the end of March. Her life insurance paid out 8,000 U.S. but I have split that with my sister. I have also received a check from the state of Colorado victims services for 2,300 U.S. as my mother was the victim of a violent crime.
My situation at present is I am an unemployed senior at college living off of student loans. Yes, I received 6,400 dollars but I also have to pay rent and eat.
My second mortgage is 275.00 per month and I owe a total of 25,000 on it and my house has depreciated by 30,000 with the economic downturn.
Is chapter 7 the best option for me? Will the bank expect me to part with the paltry 6,400 dollars I have received in exchange for my mothers life?
I have no other asssets.
Thanks in advance.
-Jason
ANSWER: Hi Jason,
The second mortgage cannot be discharged in a chapter 7, unless you want to surrender the whole property. You can choose to reaffirm the 1st and 2nd mortgage debts, and discharge the unsecured debts (credit cards medical etc) to make it easier to pay the mortgages. Student loans are not dischareable generally either.
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QUESTION: Hi and thanks for your reply.
What does reaffirming the 1st and second mortgage debts mean?
Although I have tenants in the property at present I thought that the bank would end up foreclosing on it because I cannot pay the second mortgage.
If possible I would like to consolidate the loans into one payment but I think that would make my mortgage go up and then I would not be able to afford it. Additionally, refinancing usually requires credit and a steady job which I donīt have.
I have no idea how I can get myself out of this bind which was why I considered losing everything but freeing myself up from the financial responibility. Obviously I do not want to loose the property and still owe a creditor money.
The mortgage and second mortgage are my real worries. I am not trying to eradicate my student loan debt through claiming bankruptcy. The only reason I am considering some type of bankruptcy is to be released from the property/credit debt which I cannot afford...As things stand I can afford one or the other but not both...Its a catch 22.
Any advice would be greatly welcomed.
Thanks,
Jason
Answer reaffirmation, is signing a document to let the debt survive bankruptcy. You need to stay current on the loan, and you are on the hook for the payments and balance due. You can talk to your lenders to see what refinance options may be available, otherwise, you can walk away if you want and file chapter 7, if you owe more than it is worth and you can't afford both loans. Meet with a local bankruptcy attorney to review the matter.
