Chapter 7 not final chapter

Life as Renne Fortier knew it changed in January 2009.

Her husband, Mark, was diagnosed with CNS lymphoma, a brain tumor, while he was working in Hawaii. By March, he was gone and she was a 38-year-old widow with one income and two daughters, ages 16 and 11, to support.

"He was in perfect health before that," she said.

Fortier was unprepared for the loss of her husband. She said the family had "no life insurance, no will, no savings, nothing."

Fortier became a candidate for bankruptcy, an increasingly common financial solution for Southern Nevadans.

Nevada led the nation in the number of bankruptcy filings per 1,000 people in June at 11.7, far ahead of second-ranked Tennessee at 8.3, according to the Administrative Office of the U.S. Courts. Bankruptcy filings soared 20 percent nationally for the 12 months ending in June, but skyrocketed 27 percent in Nevada as unemployment rolls swelled and the economy slipped farther into recession.

"Personal bankruptcy is fast losing its stigma and becoming as acceptable for the consumer as Chapter 11 is for corporations," Tisha Black Chernine, a founding partner at law firm Black & Lobello, said in an e-mail. "It is just another financial tool for consumers, just like companies."

Because Fortier said there was "stigma attached to (bankruptcy) in my mind," she started looking for other solutions.

The new widow still had her job, but her husband's medical bills totaled about $500,000. She was left with about $40,000 in unpaid medical bills after health insurance payments.

In addition, the family lost the 60 percent of their monthly income that came from her husband, a chief engineer at a large national satellite uplink company. The company, which she declined to identify, provides satellite connections for live broadcasts of news, sports and corporate events around the country.

Fortier still works as a logistics specialist who makes arrangements for workers who establish mobile uplinks for companies. But her life was a nightmare.

"I went nuts," she said.

"I'm trying to get myself and my daughters through a sudden death and grief. That would have been enough to keep me awake at night," Fortier said. "My stress level and blood pressure were up. I wanted to do the right thing. I wanted to pay (on the home mortgage)."

Soon after her husband's death, it became difficult to make monthly payments on her Centennial Hills-area house, which had three bedrooms, a three-car garage and a "huge backyard."

The couple bought the house for $375,000 in January 2006 -- the peak of the housing bubble in Las Vegas, according to Randy Creighton, an attorney with Black & Lobello.

"Our average payment is $3,300, which is more than I make in a month by far," she said. "I was not as much mad as I was scared. I wanted to keep my house. What was I going to do? There was no way I can get out of this."

Fortier discussed her predicament with a younger sister who lives in Phoenix. Her sister was also struggling to stay solvent and had tried to get temporary financial relief through payday loans. Don't do that, her sister said.

Fortier asked Bank of America to modify her home mortgage loan so she could afford to make payments.

The bank granted her a temporary loan modification, cutting the monthly bill to $2,200. Fortier hoped Bank of America would approve a permanent mortgage modification.

"About every 15 days, I would call and ask for an update," she said.

She was stunned to learn that the bank reported her to credit agencies while she paid under the temporary modification and awaited an answer on her request for a permanent change in mortgage terms.

Interest rates on credit cards jumped from 8 or 9 percent to more than 20 percent yearly as a result of the mortgage delinquency report. That hurt, because Fortier owed $20,000 on credit cards.

Spokeswoman Jumana Bauwens said Bank of America follows Treasury Department guidelines on reports to credit agencies under the Making Home Affordable program.

In January, the bank informed Fortier that it would reduce her monthly payments to $2,800, with gradual increases over five years. That equaled her monthly take-home pay, excluding Social Security benefits for her two daughters. She has $800 deducted for health insurance from her salary but no other optional deductions.

Bauwens said the bank followed Treasury guidelines that call for mortgages to be reset to 31 percent of gross income. The family's gross income totaled $7,500.

Black Chernine said, "That's an unbelievably bad investment. One of the last things she needs to do is stay in a bad investment. They were restructuring the payments but the debt remains the same."

Fortier asked a real estate salesman to help her arrange a "short sale," in which the bank would agree to allow her to sell the house for less than the amount owed.

"Everything I could possibly do I had done," Fortier said. "And that was not enough."

The asking price: $150,000, less than half the $360,000 owed on the house. Fortier wondered if the short sale would end her liability for the mortgage. In some cases, lenders sue homeowners for any deficiency.

Fortier contacted the law firm to discuss her options and she followed its advice to file for Chapter 7 bankruptcy, which liquidates assets to pay creditors.

The process was less onerous than she thought. While a meeting of creditors was held, Fortier didn't face the crowd of angry creditors she feared would cross-examine her.

She was among a group of individuals going through routine creditor meetings for bankruptcy. She, Creighton and a bankruptcy trustee were the only participants in her hearing.

All of her assets, including clothing and furniture, were exempt and she was allowed to keep them, but Bank of America was allowed to foreclose on the house.

"She can start looking out for her family and stop looking over her shoulder," Creighton said.

Fortier was discharged from bankruptcy in August.

"It's definitely a relief," Fortier said.

She and her children still live in the house, although she knows that is temporary.

"I cannot even get anybody (at Bank of America) to respond to me right now," she said.

Fortier said she's glad she told the newspaper her story.

"I really hope that somebody (in a similar situation) will read this and say, 'I'll find a way through this.' "

Contact reporter John G. Edwards at
jedwards@reviewjournal.com or 702-383-0420.