Clients are a married couple with one child at home. They own a home together with two mortgages. The value of the home is $120,000.00. The balance owed on the first mortgage is $124,650.00. The clients are four payments behind on this loan. The payment amount is $1,090.00. The clients are roughly $5,038.00 behind on this loan, including late fees and attorneys fees for the foreclosure proceeding which has been filed. The balance owed on the second mortgage is $12,539.00. The clients have not made payments on this loan in 12 months. The payment amount is $208.00. The clients are about $2,851.00 behind on this loan, including late fees.
The clients also have two automobiles for which they are have been making monthly payments for nearly three years. The first automobile is currently valued at $7,175.00, and the clients owe $10,766.00 on that automobile. The monthly payment is $289.00. The clients are current on this payment. The second automobile is valued at $3,000.00, and the balance owed on that loan is $3,230.00. The monthly payment is $150.00. The clients are current on this payment. The interest rate on the first automobile loan was 18.9% and on the second was 23.9%.
The clients owe about $4,000.00 in medical bills, $5,400.00 in credit card bills and $1,300.00 in unsecured installment loans.
The clients are also behind on their property taxes in the amount of $4,103.00 and owe income taxes for the year 2009 in the amount of $3,228.00.
The clients filed a chapter 13 case with our office to stop the foreclosure. We were able to create a Plan of Reorganization wherein the clients were able to make their ongoing regular first mortgage payments, plus catch up the amount they were behind on the first mortgage, wipe out the second mortgage completely, wipe out all of the medical bills, credit card bills and unsecured installment loan. The clients were able to modify their automobile payments and include those in their Plan payment. They agreed to pay only the current fair-market value of each vehicle at 5.25% interest over the length of the Plan, 60 months. The clients were also able to pay their property and income taxes over the length of the Plan.
The total amount of the clients payment before the bankruptcy were as follows:
Second Mortgage: $208.00
Car 1: $289.00
Car 2: $150.00
Credit card payments: $480.00
In the Chapter 13 Bankruptcy, the Plan payment was $1,713.00, which included all debts listed above. The second mortgage was wiped out, as were all the unsecured debts, except taxes which were paid in full through the Plan as well. These clients were able to reduce their monthly cash flow requirements by $504.00, while catching up on the mortgage and their taxes, and eliminating their unsecured debts.