Would love some advice on my situation....

[baguy]

Hello everyone, great forum and some great advice here, so I'd love to hear what you have to say about my current situation and probable filing....

Married recently, no kids, all my debt is just under just me (wife never "signed" for anything, and they don't have here SSN). Live in IL, so that is NOT a community property state. Looking to file with the status of married filing singly, and keep the wife out of it completly. Hoping to qualify for a 7...

Upside down on home, 1st 360,000, 2nd 50,000 Home value worth about 330,000 (so negative equity of about 80,000). Current on payments. Total monthly payment of about 3,100 for both, including tax and ins.

Unsecured debt, approx 70,000. Total monthly payment of approx $2,000. Current, but will not be as of next month.

I tried filing out an online means test, and I can either pass or fail for 7 depending on what I enter for the "adjustment to income if you are married and living together, but filing singly, enter the portion of your spouse's income that was NOT used for your support or the support of your dependents."

So now a few questions....

1. Does anybody know what the "standard" entry is for the portion of your spouce's income that was not used for your support or the support of your dependents? If I put about half of her income here, I pass....is this acceptable? How is this generally proven, and what should I expect as far as objections / questions the trustee might have with this?

2. I'm assuming that since she is not signed on ANY of my debt, none of the companies can or will go after her, and her credit will NOT be affected in any way? She can be left out of the mess I created for myself completly? She will not have to come to the meeting with the trustee or sign anything, correct?

3. I own a car outright (no lein) with a bluebook value of around 9,000. What will happen to this car if I get to declare ch 7? Do I get to keep it? I have very few other assets (maybe a couch, a computer, and an old TV).

4. Plan is to keep current on the Mortgages throughout the BK (and include both of them in the BK), but NOT re-affirm. As long as I stay current, they won't initiate the foreclosure process, even if I don't reaffirm, correct? From what I understand, this will allow me to walk away from the home a couple months or a couple years down the road and go through the foreclosure process, without any additional changes / reporting to the equafax. And I will still be protected and not have to pay the difference between the foreclosure sale value and the amount of the mortgage (assuming it's still negative equity), even if I do this 2 years after filing, is this correct?

5. So the plan is to either a) file BK, then try to get a mortgage to buy a home using wife's credit / income and then foreclose on current home if she can get approved. Or if her income alone is not enough, then b) wait for 2 years after filing, continuing to pay current ride-through mortgages. Then apply jointly for a mortgage with both our incomes, because after 2 years my credit should be at a point that we can qualify jointly for a new purchase....then forclose on the current home. Is this a plan that anybody else has been successful with? If I apply for a new purchase with my wife (after 2 years), will the mortgage company not approve us because they can still tell that I'm paying on the mortgages of another home? Any suggestions on the timing of buying a new home / stopping payment on / forclosing on current home (make sure transaction for new home goes through before stopping payment on current, etc?)

6. If I do plan to file and lawyer doesn't see any issues with filing a 7, when do you suggest I stop paying / attempting to make my unsecured debt payments, because it is just "throwing money away"? Two months, three?

7. Bankrupcy / foreclosure is a very embarassing thing for me (but I'm out of options), any suggestions anyone can give to minimize the public aspect of it?

Thanks everyone in advance, I'd love to hear what you have to say about my situation.

[lrprn]

1. Does anybody know what the "standard" entry is for the portion of your spouce's income that was not used for your support or the support of your dependents? If I put about half of her income here, I pass....is this acceptable? How is this generally proven, and what should I expect as far as objections / questions the trustee might have with this?

The amount that is included for your wife is the amount she contributes monthly to the household. Her personal bills, purchases, etc. are not included.

2. I'm assuming that since she is not signed on ANY of my debt, none of the companies can or will go after her, and her credit will NOT be affected in any way? She can be left out of the mess I created for myself completly? She will not have to come to the meeting with the trustee or sign anything, correct?

Since you are filing alone in a non-community property state, as long as she is not a co-signer on any of your debts, she will not be held responsible for anything. However, since she will be included in your bankruptcy as an "interested party", sometimes the credit agencies make a mistake and may list something on her credit report as IIB (included in bankruptcy). All she has to do is dispute it to get that corrected.

3. I own a car outright (no lein) with a bluebook value of around 9,000. What will happen to this car if I get to declare ch 7? Do I get to keep it? I have very few other assets (maybe a couch, a computer, and an old TV).

In Illinois your state bankruptcy exemptions protect $1200 of equity in an auto + a $2000 wild card that you can use for anything you wish = $3200 total. Unfortunately that leaves $5800 open and that very well could be enough for your trustee to take your car and sell it (which also makes your Ch 7 an asset case - can be much slower to close).

Take a close look at the Illinois exemptions to see where you fall on each - http://www.bankruptcyinformation.com/IL_exemp.htm

4. Plan is to keep current on the Mortgages throughout the BK (and include both of them in the BK), but NOT re-affirm. As long as I stay current, they won't initiate the foreclosure process, even if I don't reaffirm, correct?

Although the current bk law requires the filer to declare surrender, reaffirmation, or redemption, in practice so far at least the lenders allow a "ride-through" without doing any of the three and do not repossess or foreclose as long as you keep payments current.

However, there is no guarantee that this can be depended on 100% of the time. By law, the lender has the right to foreclose/repossess if you do not select one of the three options. It's just that so far, it's to the lender's advantage to leave well enough alone, especially when a house is concerned.

And I will still be protected and not have to pay the difference between the foreclosure sale value and the amount of the mortgage (assuming it's still negative equity), even if I do this 2 years after filing, is this correct?

Given the information you've provided here, yes.

5. Is this a plan that anybody else has been successful with?

Both have been tried successfully by other members over the years. However, the mortgage market is not what it was even a year ago. I wouldn't make any assumptions until the housing market settles out more.

6. If I do plan to file and lawyer doesn't see any issues with filing a 7, when do you suggest I stop paying / attempting to make my unsecured debt payments, because it is just "throwing money away"? Two months, three?

Most of us that knew we were going to file needed the money to get caught up on other bills, buy long-delayed purchases like medical care and clothes, etc. Most lawyers will tell you that paying non-secured creditors when you know you are going to file is a waste of money. The exception is when you have recent charges or cash advances - then you will get the advice to make at least a few payments before filing.

As far as how long you can go without paying, most filers have at least 5-6 months before the original creditors and collectors who buy the original debt start getting serious. Some of our members have gone without paying for more than 18 months without a serious attempt to take them to court.

7. Bankrupcy / foreclosure is a very embarassing thing for me (but I'm out of options), any suggestions anyone can give to minimize the public aspect of it?

Bankruptcy is a public notice. There's nothing you can do about that. Search for some of the many threads here on this topic - you'll find that for most of us, no one knows that we really do not want to know or have to tell.

Now it's time for you to start making appointments for free or low cost initial consultations with 3-4 experienced bankruptcy lawyers in your area. Since you are filing singly but are married, have to include some of your wife's income and that makes you close to the median, and have a paid-for car you can't protect using your exemptions, you need sound legal advice in your situation. Be sure to come back and let us know what you find out. And keep asking questions here - we'll help you sort things out as best we can.

[2confused]

Don't skimp on the lawyer...get one you trust and who is accessible...trust me on this one, it can ad great undue stress...just read the forum. i went for the cheaper guy even though i loved my first very knowledgable lady, and it will cost me in the end, he won't do anything, well, i'd like to say extra, but it's not even extra....check references and do your research...

[baguy]

Thanks for your replys so far....couple of follow up questions....

1. Seems like the car is going to be the main sticking point. Anybody have any suggestions with this one? Can I sell the car and buy a car valued at less than my exemption? Or what about a car title loan, if I get a car title loan, this will reduce the "equity" or value in the car to something close to the exemption by putting a lien on it. Has anybody done this, and does either of these have potential to be considered "abuse"?

2. Irprn mentioned that for my original first question:

"The amount that is included for your wife is the amount she contributes monthly to the household. Her personal bills, purchases, etc. are not included."

How is this determined / proven to the trustee? Anyone can say that their wife contributes nothing to the household, or a minimum amount? Or would a joint account where all the household items are paid from that shows the wifes monthly deposits / contributions to this account be sufficient for the trustee? Or is the trustee going to need to do a complete financial profile on her, user her personal checking accounts and everything else?

Thanks, and I'm looking forward to hearing anybody else's experiences that are similiar to mine.....

[baguy]

bump...

Anyone have any comments on the below?

1. Seems like the car is going to be the main sticking point. Anybody have any suggestions with this one? Can I sell the car and buy a car valued at less than my exemption? Or what about a car title loan, if I get a car title loan, this will reduce the "equity" or value in the car to something close to the exemption by putting a lien on it. Has anybody done this, and does either of these have potential to be considered "abuse"?

2. Irprn mentioned that for my original first question:

"The amount that is included for your wife is the amount she contributes monthly to the household. Her personal bills, purchases, etc. are not included."

How is this determined / proven to the trustee? Anyone can say that their wife contributes nothing to the household, or a minimum amount? Or would a joint account where all the household items are paid from that shows the wifes monthly deposits / contributions to this account be sufficient for the trustee? Or is the trustee going to need to do a complete financial profile on her, user her personal checking accounts and everything else? What information will I need to give on my wife if she is NOT filing?

Thanks, and I'm looking forward to hearing anybody else's experiences that are similiar to mine.....

[woeisme]

If you sell your call close to when you file, yes, it can be seen as abuse by the trustee. They check with the DMV, at least in our case they did, and asked us about 2 vehicles we had owned then sold in the 2 years before filing. One was totaled by a drunk driver (luckily our car was parked at the time with no one in it) and the insurance just paid for the balance of the loan (well, after the separate gap insurance policy paid off) so the title got turned over to the insurance company who sold it for scrap metal, and the second car was a 1994 clunker that died on us and would have cost more to fix than it was worth, so we sold it directly to a junk yard, it was in that bad of shape, and the trustee was still questioning us about it! So a car with $5800 unprotected equity in it will be sure to be questioned. Ask your lawyer once you pick one, but I doubt you'll be able to sell it and keep the money, unless you can prove it was spent for necessities, and even then you might get an objection. Sorry, but I'm sure it will still be worth the clean slate and fresh start, even if you do have to give up the one asset.

[woeisme]

PS, yes, your wife will need to give her paystubs for the past 6 months, probably her checking and savings account statements for the same period of time, and you will need to break down where all of her money is going. Even though you are filing separately, the court considers your entire financial situation, including everything your wife makes and spends, in the calculations.

[baguy]

Thanks woeisme. I guess my best bet is to talk to an attorney about the car and what the best course of action will be for it. But unfortunately, once I hire him and he gives me advice, I can no longer do certain things because it might be considered abuse, right?

For example, if I take a car title loan on the car today, and then next month go to an attorney and file, that might be OK, where as if I got advise from the lawyer and then did that or sold the car it would be considered abuse?

I guess I'm just wondering if I can get an attorney's advice about preparing for BK BEFORE getting all my ducks in a row, or if once I contact an attorney everything I do after that will be watched over more closley.....

Thanks!

[sunshine mary]

If you want to keep the car you might be able to do a buy back. An attorney in your area should know if the trustees in your area do that or not... My attorney told me the trustee doesn't really want the car but would rather have the $$ for it. I had no idea they even did that but my attorney said she does it all the time...I am hoping to discharge a massive amount of debt so it's worth it to me even if they take it and sell it in the end.