Our Bankruptcy ordeal - Part 2

Spending that $12,000 was the last thing I wanted to do! I had settled on the accident claim one week before we were served on the repossession.  If I had known that was coming so soon and what effect it would have on our bankruptcy I would have not settled until it was all over.  I was just so tired of that issue dragging on for 4 years and we really needed the money, of course.  We certainly didn't want to spend it all within a month or so - it was crazy. Our attorney basically said you can't have any money in your bank accounts when you file - you need to spend it.  I paid all our bills a month in advance, we went to eye doctors, got new glasses and contacts, got the pets into the vet, did some small house repairs.  We would have rather put it towards our home equity  loan, but that would've increased our equity/asset level by that amount. We were afraid to spend it on a major house repair(s) thinking it would increase the value of our home and we didn't know at that time where we sat on whether we still had any equity or not. We spent some extra on Christmas presents for ourselves (needed stuff, like clothes, etc) and I wrote it down as gifts for extended family members.  We took a little here and there out in cash withdrawals (which I saved) and I just listed that I'm not sure what it got spent on. Not ethical, but spending it like we were just seemed SO STUPID and not financially responsible.  At least having a month's bills paid ahead of time helped out when all was said and done and I really didn't have to make payments for a month - so it was like we got some of the money back after we filed.  That money was supposed to be because I still continued to have to go the the chiropractor regulary - with a copay and who knows if I'll always have insurance to cover it? I didn't want to just blow the money.

Of course, by this time, we had gone over what her initial fee covered, so now we were paying her hourly - at something like $200 per hour (how convenient for her!).  I think we paid $2200 in total when it was all said and done.  All this time we still had no idea if we were going to be able to keep all our assets (the housing market plunge making our house being so far underwater helped the situation, in the end) - namely our vehicles. Dh was freaking out he might lose his pick up (he's obsessed with his vehicles) or our race car stuff.  We didn't find out until a few days before she actually filed that we fit under the threshold amounts for assets allowed based on our family size (it's not like we have a lot, really - it just felt like we were under a microscope analyzing every little thing) and would most likely keep everything. Looking back, I don't see why the attorney just couldn't have just run the numbers, like she did that day at the end (it only took her a few minutes), and tell us that! It would have made it all so much less stressful all those months we were waiting.

Finally, at the end of July she called us in for our final instructions before she would file it.  She was leaving for 6 weeks to go out of the country, at the end of September she said, so she wanted to include us in her filing the first week in August - to ensure that our 341 hearing would be before she left..  The day in August finally arrived and we had to show up with printed out letters from our banks stating what our balance was on that date. What a pain and embarrassment to go in and have to explain why I needed these letters from 2 banks we had accounts with. I couldn't just print out my online statement. It had to be on bank letterhead.

My mind is fuzzy regarding this appointment, but for some reason, she had to cancel our filing. I forgot one little piece of info or something like that, so meeting was canceled by her right then and there and rescheduled. It was something like she needed a printout of our mortgage balance, that day, which hadn't changed from what I gave her the week before.  I said I'd be home in 15 minutes and would fax it to her. Nope! By then, I literally hated this attorney! I had gotten these bank letters for nothing. We were now re- scheduled to go in and sign the filing papers the next week.  I had to go to the banks again and request them to write the letters.  Finally we get into our appointment with her at her office to sign and then she files electronically with the court.  There was construction going on on her street. Right while we were sitting signing the papers her power goes out. A dump truck had ripped out the power line going into her building! She now had no way to file! She made phone calls and talked to the construction crew boss. They didn't know how long it would take to fix.  We left not knowing if we'd get filed that day or not. If not, we were going to have to do the bank letters a 3rd time.  She called us a few hours later saying she went and bought an air card for her laptop and got all her clients for that day filed! Finally!

It was basically all over except for the 341 hearing at the courthouse that got scheduled for the 3rd week in September. Everything I had read about on these were that for the most part it went easy and quickly. We were still balls of nerves, though, of course. We had to meet her at the courthouse an hour before for some last minute instructions on what to expect how to act/what to say and not say.  It was an open court - all the hearings done one after the other, waiting for our case to be called up. I couldn't believe all the people there just for bankrupcty hearings! There was a list on a board with all the names - for 2 or 3 courtrooms. Filled.  I judged by that many people and the time available, it shouldn't be more than 10 minutes per person/couple.  We felt like such low life's sitting there in the courtroom with all the others in the same situation.

We got to hear quite a few before we were called up.  A few were also custody type hearings.  No one from our creditors showed up (as is normal). We were asked a few basic questions by the judge, she approved it and it was done. We were literally up there for only a few minutes. It was such a huge relief to walk out of there!

So, now we live a much quieter, simpler life. Our phone hardly ever rings and if it does it's certainly not creditors!  We have to save our money for whatever we want to buy and it's all less stressful that way. The only thing we have left "unresolved" from this was reaffirming our mortgage and home equity loans. The way our attorney explained it is those loans were included in our debt discharge, but as long as we make our payments on time each month, there is nothing either bank can do to take our home.  We have never been late on a house or home equity loan payment in our life, so that wasn't a concern. If we wanted to reaffirm it would cost $400 per loan for her to file the paperwork. She really wasn't very helpful in advising us what to do on this, other than to give us the options either way. (Of course, she'd surely like the $800)

This has been one of my nagging decisions. To reaffirm or not.  With the economy and house values we are still seriously underwater - like $50,000 or more.  We can make our payments, but if something were to happen down the road where I can't (such as a job loss for me - or dh having some huge medical bill) I don't want to be reaffirmed to 2 loans I can't pay and something I have no equity in.

I just went online and did a little more research into this and it appears my decision to not reaffirm is the right decision, according to several bankruptcy attorney's advice.  With not reaffirming we could walk away from this home, at any time, and not be liable to the banks after foreclosure. If we reaffirm and had to foreclose down the road, with a deficiency in what the bank could sell it for, we'd be liable for the difference.  I'm just too scared and realistic to think that now our lives are going to go perfect and we'll never experience financial troubles again.  Like I said, a job loss for me - the income earner - would devastate us and that's always a possibility. Nothing is guaranteed. On the flip side - with not reafirrming we do not get the on time mortage payments reflected in our credit report, to help rebuild our credit. If we had equity I wanted to protect I would strongly consider reaffirming our mortgage loans.