Mr. and Mrs. #654 came into the Law Offices of Chang & Diamond with their 3 small children because they were severely upside down in their property. They owed more for their cars than they were worth and they owed a lot more on their home than it was worth. We saw a lot of ways we could help this family!
With the Lady of the house staying at home with their young children and Mr. #654 being the only breadwinner, it was clear from the analysis of his income that they qualified for Chapter 7 bankruptcy.
Chapter 7 would allow Mr. and Mrs. #654 the ability to get out from under their home and their cars. They still needed two working cars that fit car seats though, so we let them know that AFTER their bankruptcy is complete that they can still get financing from some of the local dealerships. Of course the decision of lending and interest rates would ultimately be up to the dealership, but since they could not file for a Chapter 7 again for 8 years, the lenders must feel safe lending to them. (We have had several calls from Dealerships confirming this information.)
Since Mr. and Mrs. #654's home loan was an ARM (Adjustable Rate Mortgage) and their mortgage had adjusted, they had been paying almost all of their income to the mortgage company. After making the decision to walk away from the house the were able to rent for a fraction of the cost. Leaving more money for the raising of a young family.
Because the debts from their home had been incurred before they filed Chapter 7 bankruptcy they were able to have that debt discharged through the bankruptcy. There were no tax liabilities from the deficiency.
All in all it was a happy ending for family #654. I guess I should say rather, that it was a HAPPY BEGINNING!
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