I am trying to find out some info. We filed for bankkruptcy with the new laws. Our house payments in chapter 13 are over 920.00. We've had this loan for 5 years and have paid in 50,000.oo in interest during this time. We had a prior loan for the 9 years prior and all tha was interest too. We still owe 82,000 est. on the house. Not worth it! Needs work. We would like to purchse a trailer from a friend of ours and some land and let the house go back since there is no way we can ever pay this mortgage off. The house will be gone before the mortgage is finished. We wanted to borrow from our 401k since that is our money and we would be paying back to ourselves, is that an option or not? We would have this new property paid for in about 5 years. Any suggestions??

When was your chapter 13 filed? Have you been discharged?

We filed a year and a half ago and have not been discharged yet not for another 3 1/2 years. At our initial consultation we were told that we could surrender our house or car any time during the bankruptcy and the balance would be added to the bankruptcy. We are paying 11.3% interest on our house plus arrearages. We borrowed 83,000 five years ago and have paid in almost 50,000 in interest in those five years we still owe 81000.00 for a house that needs lots of repairs and updates. We could buy this other property for 42,000 and the owners will finance for us and we could have it paid for in about 5 years. We just don't know what to do because we have to have money upfron to move the trailer and get it set up and purchase land. We have money in our 401 k that we were going to take out to buy land have trailer moved and have utilities connected but not sure if we can borrow from 401k or not even thought that's our money. Sorry to be so long just long situation. Thanks

Why aren't you asking the attorney who is handling your bankruptcy?

If your 401K plan permits, yes you can take a loan and that would be a very viable alternative.

I'm assuming you have not been able to refinance your mortgage to lower your interest rate.

Does your budget show a house payment of $920? What is your new house payment going to be after surrendering your current payment? If the new payment is less than what is shown on your budget, isn't the Trustee going to ask for the difference? You need to review this with your attorney and determine whether to continue with Chapter 13. An elective modification of a Chapter 13 plan tends to raise some concerns by the Trustee.