New to site need some help!

[OregonMom]

My husband and I have decided to file Chap 7 after we talked with a credit counsler who suggested we do it and let our home go, we clearly couldn't afford it. We talked with a lawyer and retained him, but are having to make payments to pay the fees before we continue. We originally wanted to try and keep our car (we owe more than it is worth) and our home (we owe more than it is worth also). We are now wanting to let the car go too with gas as high as it is we can't afford the payments anymore, how does this work? Just let it get repossesed or give it back?

Second questions is our home we are about $50,000 in the hole with it, between our 1st, 2nd and equity line. (I know stupid mistake) can we do anything about it and still keep it??

Third we haven't got our stimulus, which was going to pay for bankruptcy, should we continue to wait for it before we file?

Fourth question, I got a new job and start in a month, same pay as old just better opportunity in future. I am getting my money that was in my 401k about $2500 back soon, I wanted to buy a cheap car with it and give up my one with the loan. Should I wait to file until I get that money back??

I am going to have my husband go and talk to the lawyer again to clear some things up, but figured someone here might be able to help. Thanks!!

[justplaintired]

You can use your stimulus for your attorney atleast that's what our attorney told us, we used our refund. Far as waiting, I think you should be fine, we are waiting on ours also before we file.

Your home sounds like your too far upside down on it to make it wise to keep it. Did your attorney give you any advise on this? You can file on both the house and the car.

401K is not touchable in a BK, so if you can don't cash it in save it. Make sure if you purchase a car is can be exempted in your state. Ask you attorney what they recommend. Did your attorney recommend C7?

[OregonMom]

Our attorney suggested a Chap 7. When reading through the rules and regulations for Oregon I believe it said my husband and I could both keep a car valued less than $3,000. I only want to buy a cheap $2,000 car to get by for a year or so, if not we can survive with one. The thing with my 401k is that since I am quitting they will automatically cash it out to me since it is such a small amount. I believe I can roll it into something else, but it is the only way to pay for the second car if I let my one with payments go. As with the house I think our pride is too much attached to it, it took us so long to be able to buy it, even though we should have never been qualified for it, we just don't know about letting it go. We hate being renters and if we found something similar to rent we would be paying about the same in rent. Maybe $200/month less if we are lucky. So it almost makes sense to keep it for the long run.

[Phillymanhere]

oregonmom,
I'm not the only one who will tell you this, but I would NOT, definitely NOT, cash out my 401K ... it's protected under bk ....

If they cash it out, that means you need to roll it over into an ira, which you can do easily .... if you take that money, you will pay an immediate 10 percent penalty, as you'll get only 90 percent of what you have in the account. Plus .... plus ... you will have the include 100 percent of the cash-out in your income tax calculations .... so that's another huge cut taken ... by the end, you'll get only about 50 to 60 percent of the money ... What's more, you'll immediately be hock to the irs because you will owe that additional money the next year ...

Retirement is fast approaching for all of us--I don't care how young we are. I would Not touch that 401. Roll it over and let it grow. You have either 60 or 90 days to roll it over and all the major mutual fund companies will do this easily for you based on a phone call.

And yes, if you're wondering, I made this mistake earlier, about 10 years ago when I quit a job and returned back to school ... it's one of a series of bad moves I've made ..... I really wish I hadn't done that ....