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Considering Chapter 7 After Divorce and Job Loss

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    Considering Chapter 7 After Divorce and Job Loss

    Hello, like many people I found this forum for advice.

    My wife and I separated last February, she moved in with her parents and our two young children and I began paying child support. I lost my job in November and was only recently able to get another job, although I have to work a part time job at night to get to about 60% what I had been making.

    After losing my job, I utilized COBRA to keep my wife and kids insured and it was a huge expense. I cashed out a small pension and took on personal loans to avoid falling behind on my mortgage, pay for the medical insurance and continue paying child support while I was looking for work. I ended up, with the personal loans as well as credit cards, about $19000 in debt not including my mortgage. So far I've been able to keep everything paid on time (minimums, naturally) but the little bit I have in the bank from the pension is about to run out.

    I'm trying to sell my house and am in the process of selling pretty much everything I have of any value to stay ahead, but the writing's on the wall. Working two jobs would have been enough had I not dug myself into such a hole while looking for work, but finding a job making what I was (around 70000 annually) is just not going to happen, I make about 3400 a month and the bills add up to about 3500.

    My divorce will be final within the next month, and I'm waiting for that before taking the next step. The debt is all in my name alone and I want to make sure my ex-wife and children are clear.

    As far as possessions go, I have a paid off car that's about ten years old and not much else other than old furniture and my clothes.

    I guess I was just wondering if anyone had some advice for me. Two personal loans amounting to 9k and about 5k in cc debt. Up to date mortgage with about 155k owed, that's about it.

    Is it too early to consider filing since everything is currently in good standing, even if I know there's no way I'll be able to keep my head up?

    Will selling off my possessions (nothing major: yard sale stuff) look like I'm transferring assets? I did it to pay bills, not hide anything.

    I'd love some advice and any insights into my situation. Thanks.

    #2
    Welcome to BK forum!

    Originally posted by ARoughYear View Post
    Is it too early to consider filing since everything is currently in good standing, even if I know there's no way I'll be able to keep my head up?

    Will selling off my possessions (nothing major: yard sale stuff) look like I'm transferring assets? I did it to pay bills, not hide anything.

    I'd love some advice and any insights into my situation. Thanks.
    Selling your possessions will not be an issue as long as you didn't sell anything to "insiders" (e.g., family members) for less than market value.

    Generally, if you are at a point where you cannot pay your debts and meet living expenses using your current income and you know you are headed for BK, you should stop paying dischargeable debts. But, you do not need to be behind on your debts to file BK.

    Most people keep their possessions, especially personal property, when they file BK. There are exemptions in each state that allow you to keep certain things. You can read about Virginia exemptions at http://www.legalconsumer.com/bankrup...-law.php?ST=VA. Even if you can't exempt everything, most trustees will not go after your miscellaneous household items because the money the sale of those items will generate isn't enough to make it worth the trouble. They are interested in things of real value.

    Consult with a BK attorney or 3 before you sell anything else to pay dischargeable debt. Most give free consultations.

    If you have any other pensions or IRAs, leave them alone! Qualified plans are exempt assets in BK.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

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