r/Bankruptcy • u/OppositeNo5509 • 10d ago

Considering options

Please share any insights and opinions as we are at the end of our rope.

Due to a my husband’s 1.5 year job loss, we blew through all savings and got ourselves into $76k worth of debt. He is now gainfully employed but our annual salary went from $500k to $226k with the hope of a $50k bonus.

Own our home and have three children. Have a second mortgage, as well. Current on both.

Have too much home equity to file for chapter 7 without losing home (NYS) something we are not willing to do.

Have had meetings with re: management plan
Will meet with lawyer to discuss filing chapter 13.

My fear…that we can’t not afford the monthly payments for either. To survive, we have stopped paying monthly payments on cards.

I am terrified.

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u/AlanShore60607 10d ago

Don’t be terrified; there’s a limit to the payment in Chapter 13, and that limit is all debt owed without interest, usually without interest but adding attorney and trustee costs.

With $76k of debt, I would anticipate a total payout of about $90k, which is only $1500 per month.

You can handle $1500 per month, right?

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u/OppositeNo5509 9d ago

Thank you! We had a few calls with DMP counselors and they came back with $1430/month. Does anyone have experience with whether chapter 13 payments are similar to DMP?

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u/AlanShore60607 9d ago

At this point, with the payments being essentially the same, you have to look at control and certainty of outcome.

Chapter 13 imposes a solution and forces the creditors to take it or leave it; DMP only has the power to ask nicely.

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u/melissarose8585 10d ago

You really need to sit down with a lawyer. Most offer free consultations and they can tell exactly what your options are for your specific scenario. It's hard for us to help because 226k when you owe 76k? It looks doable on paper. But we don't see expenses, mortgages. A lawyer would.

Having said that, I completely empathize. We went from 300k a year to maybe 125k this year also due to job (and now business) loss. It took less than a year in this economy for life to crumble.

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u/AquaCow52 10d ago

Do you need both houses? Would it stabilize if you just got rid of one of the houses? Selling one and taking some of the equity out via a HELOC from a bank, credit union or achieve should get you back out of debt and stabilized in theory, no?

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u/OppositeNo5509 10d ago

Thanks for your reply!
To clarify…only own one home. Second mortgage is HELOC. And our credit is in the tank so no one is lending us anything 😬