Is is possible for my family to file?

[mommytwofive]

Based on what I have read so far I am thinking we could file chp.7 but I have not researched this much nor have I seen an attorney. I will give a brief description of the situation and ANY advice you could offer would be greatly welcomed.

I have five children all under the age of 11. Two out of the five are school aged. My husband and his father had to sell a business before it went under two years ago. My husband retained his job under the new owner. He took a $30,000 paycut which is why we got into so much credit card debt just trying to keep things going. He currently makes 70,000 and is only guaranteed to make this amount until November of 08 because it was part of the contract when the business sold. We are positive that they will reduce his pay again or get rid of him all together by this time next year.

We have two properties, one is a rental and the other is our home. We have 2nd mortgages on both which has eaten up most of the equity. We had problems for 4-6 mos getting three sets of renters to pay so we were making those mortgages as well and so that made things worse. So, all of that said here are the numbers:

We live in Indiana, income is $4963 net monthly including the rent money.(70,000 gross anual salary)

Non-secured debts are

-credit card debt is 58,000
-medical bills $5000 (bills have not come in yet for my baby's stay in neonatal care for 1 week)
-Utilites owed on rental $700
TOTAL - $63,700 +

Secured debt:

$281.00 van payment ($7000 balance)
$1600 mortgage (balance is $167,000 on our home)
$770 monthly ($70,000 balance on rental)

$500 in monthly utilities

$1700 budgeted items monthly

Our only assets are a truck worth $7000 and a 15 passenger van worth $6000. We hope to sell the truck and pay off the mini-van (the 281.00 payment above) so that we have no car payments.

Basically, when I figure it, we break even w/o making any payments towards our debt!!

My husband has called the credit card companies and has gotton them to reduce interest rates and take off fees and also has made payment arrangements with them. But we can't even make those!

If we are eligible to file a chapter 7 we are hoping to reaffirm on our home and our van although we have both houses up for sale right now. We could still make the payments but we want to downsize to prepare for a cut in pay one year from now.

Are we a candidate for chapter 7? I am desperate for advice....any help would be greatly appreciated.

[road warrior]

you need to do a means test

First and foremost, you need to get a means test done to see if you qualify for chapter 7. Here is a link to an online calculator that is really helpful in figuring out some of the questions you have to answer. http://www.legalconsumer.com/bankruptcy/br_home.php

Type in your zip code and follow the instructions for the means test. That will get you an idea of where you're at. You need to see a lawyer as well, they will give you the advice and info you need better than anything on the internet.

[keepmine]

Without making any payments toward debt you wish to discharge and you're just breaking even, I suggest you are a candidate for a Chapter 7. Get a few free consultations and see what they say.
CAreful about paying off the van. You may have more equity than your state exempts.

[lrprn]

I have five children all under the age of 11. ... He currently makes 70,000 and is only guaranteed to make this amount until November of 08 ... We live in Indiana, income is $4963 net monthly including the rent money.(70,000 gross anual salary) ... Are we a candidate for chapter 7?.

In Indiana, the median income for a family of 7 like yours is $88,487 - http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm . At $70,000 gross a year, you are below the median so it's likely you will qualify for ch 7. The Indiana exemptions aren't the most generous, so you may not be able to protect your rental property. A good IN bankruptcy lawyer can help you sort that out.

Make appointments with 3-4 experienced bankruptcy attorneys in your area - most give free or low-cost initial consultations. Bring along all the figures you've given us and explain your circumstances. After all the appointments are done, you'll understand your options a lot better.

Keep us posted on what you find out plus keep posting questions you may have. Hang in there! Better times are ahead for you and your family.

[mommytwofive]

Thanks, guys, for all of the info and advice. I did take the means test and we were under the state median. Everything points to chapter 7 so we will proceed from there.

I do have one more question that maybe you guys could answer. We have 2 credit card companies (Chase and Bank of America) that are just a week or two away from writing our accts off as a bad debts. Chase turned it over to an attorney and they of course are making threatning calls and so forth and say that if we don't send them $2300 by the end of this month that it will be a "charge off" on my credit report. Do you file bankruptcy on this if it is written off by them? If it shows on our credit report as a bad debt does the bankruptcy clear that?

Thanks for any info on this.

[keepmine]

Chargedoff debts are discharged in a bk. And no, filing bk won't get a chargedoff debt off your report.