Mortgage, debt, bankruptcy help appreciated

[Babina's Mommy]

I've always loved the frugality and finance forum here on MDC, it's provided me with a lot of answers in the past and tips I can use every day. This is kind of complex...I need a little help trying to figure out what to do here as far as our debt. I'll explain my situation but asking first, please no judgement this is all very hard on us

Back in 2005 I was working and so was my husband and everything was fine, we didn't have children yet. I was struck with a chronic illness, Lyme disease, and it went undiagnosed and I was sick and it was unexplained for about a year. I tried going back to work several times during the illness and was just too sick and kept having to stay home sick, due to being constantly fatigued, having aching joints, headaches, fevers, etc. Finally my illness was found and treated and after starting to become a little better I became pregnant. I tried twice to go back to work while pregnant and found I was too exhausted from my battle with the illness and the best I could do was try to grow the baby every day. My temporary disability benefits had run out and we moved into the house we had just built. During the whole time of being out of work and building he home we had used the credit cards. We thought we could pay them off but then the cost of our mortgage each month was so overwhelming there was no money left for food. People marveled about how good shape I stayed in while pregnant with my daughter, it was because some days there was absolutely nothing to eat. Creditors started calling. We realized we were in a mess. The mortgage, we have really high taxes, everything...we had someone advise us that the best thing for our situation was to claim banktruptcy. We consulted with the lawyer and husband gave him a down payment. We were getting the process started.

That was three years ago. We still haven't finished claiming bankruptcy. That is because three years ago when we were in very very rough shape we fell behind on the mortgage. 90 days. We were claiming Chapter 7 and to claim we have to be up to date on our mortgage. We've been that far behind for 3 years. Now today, we can make our monthly mortgage payment and we do, but it's steadily behind. We can afford our mortgage and utilities but nothing else, no extra mortgage payments. How do we complete this? I'm at a loss for what to do here. I'm stuck. We have creditors calling us and we give them our lawyer's number (who said we could do so) but it doesn't work for too long because we have not officially claimed bankruptcy. One creditor of mine sends letters delivered by a constaple and it had a court date but the court date was postponed after I talked to the place but they said they're still going to proceed with trying to collect from me. Even though I literally have nothing. We have two children and another on the way, the last two were a surprise, I'm apparently very fertile even while trying to avoid...but anyway...that creditor's lawyer advised I get on the bankruptcy and complete it. He sounded confused saying how I didn't even owe all that much...and I explained that it is not the only account, I had two other cards and my husband has two. We have borrowed money and owe money to brother in law, and my parents. I hate it. Me working makes no sense right now, being pregnant and it would never even justify the spending of daycare of my 2 other children ages, 1 and 3, and I just cannot leave them. For assistance, we are on WIC.

My husband works a lot this time of year due to the harvest season (he's in agricultural, been there since he was 14) and the whole month of Oct and the end of Sept, he'll work weekends and all week too, sometimes 12 hr days. He says he will try his hardest to come up with the rest of the mortgage money, and the rest of the bankruptcy lawyer money, and we also have to pay my parents back...I still see it as impossible to do 3 mortgage payments, he does not make that much. I already do my best at cost cutting solutions and we do not spend a lot. I try to make and sell some things myself but it is hard with the two kids to get anything done.

We don't want to move or lost our house, downsizing won't even help, our house is small and we built it, so the mortgage is smaller than most peoples' anyway but we do have a little land and were given the land by relatives.

Back when we had our car loan (we paid it off) that was also late a few times and they had called me and offered to put a payment or two at the end of the whole loan to help me get caught up...so in the end my car loan was a couple months longer due to this, and it was fine...do banks do this at all? Husband said not to even bother asking our bank, and I don't want to sound stupid...I know absolutely nothing about financial things, that's why I'm posting...or should we do the other form of bankruptcy? Without losing our house?

Anybody who knows anything about any of these subjects, any advise will be appreciated....thank you

[pitter_patter]

Have you tried to work with your bank to add the payments to the end of the loan or pay a little extra for a few months to make up the 90 days past due balance? That would be my first step.

I think you'd be better off doing Chapter 13 versus Chapter 7 if you decide you want to declare bankruptcy. The attorney's fees should be rolled into a 13 and paid as part of your monthly payment to the bankruptcy trustee.

Have you applied for WIC and food stamps? It sounds like you need to generate a little more income, can you babysit in your home?

[Babina's Mommy]

Thank you for the advice...I'm going to speak to my husband about the Chapter 13 bankruptcy...we really need to just put this all behind us...and I have terrible fears about going to prison over the whole thing or something. We never wanted this for ourselves and before this whole thing happened, we both had perfect credit and perfect payment history on all of our bills.

I haven't spoken to the bank because my husband thought it was a good idea to see about deferring those payments until the end, but said they'd never go for it. I guess I should give them a call. He's been trying to pay more on each mortgage payment but it's so frustrating as we have almost no wiggle room per paycheck. Ugh!

We do have WIC, haven't tried for the foodstamps. The WIC helps and, well I know this is unrelated, but we still do the check system here and it's so humiliating every time we shop.

I have considered the babysitting, I actually really wanted to do that! The only hitches I ran into, was that our home is in a rural area and not really on the route to anywhere so I thought that it would be hard to gain a client who wants to drive way out of their way to drop off at my home. I thought, well, I could pick up a child, but right now with driving a Neon, only my two children fit in the car...and I wondered if that's unsafe, me having 3 or more children at my home but no way to transport anyone. Not sure...but now that we are expecting a third, we are looking into a van. I don't know how or which way we'll afford that, except for selling the Neon, but it won't generate much money!