Large Equity & Filing Chapter 13

[NotEvenADime]

We are meeting this week with a lawyer to see about filing for bankruptcy. We are pretty sure that we are filing Chapter 13. We have about $55K in credit card dept. Our annual income is $62K. Our home is valued at about $300K and we still owe $203K.
Will someone please tell me how that works with all that equity? Do they take it and use it to pay the creditors?
Also, for the re-payments do they go by your income and what you can afford? I don't want to file and then find out that we have to pay way more then we can afford.
We are in PA.

Thank you for your help!

[Flamingo]

Whether or not you can file a Chapter 13 and, if so, your Chapter 13 payments, are based on a number of things, each of which is different for everyone. It is based on your income, the value of your assets, the amount of your debt, and the exemptions and median income for the state in which you live. Your home may not be valued at what you are stating now with the recent drop in real estate values. Take with you to your appointment a complete listing of all your debts, monthly payments, sources of income, paystubs, a complete listing of assets and your most recent tax returns. Your attorney will advise you as to where you stand and what you can and cannot do.

[NotEvenADime]

Thanks

Thanks for your help Flamingo.....anyone else have any suggestions?

[lrprn]

We are meeting this week with a lawyer to see about filing for bankruptcy. We are pretty sure that we are filing Chapter 13. We have about $55K in credit card dept. Our annual income is $62K. Our home is valued at about $300K and we still owe $203K. ... We are in PA.

The PA homestead exemption is zero - see http://www.bankruptcyaction.com/paexemptions.htm .

However, good news - in PA you are allowed to use the federal bankruptcy exemptions if you wish. Unfortunately in your case, the federal exemptions protect $20,200 homestead equity plus a $925 wildcard that can be used for anything you choose - more than the stingy zero PA has but not enough to cover $100K in equity. See http://www.bankruptcyaction.com/fedexemptions.htm for a list of the federal exemptions.

Your best option right now is to make your decisions about filing with sound legal information that matches the specifics of your situation. Make free or low cost initial appointments with 3-4 experienced bankruptcy lawyers in your area. You'll learn exactly where you stand with your home and also learn a lot about what your best options are plus any other potential problem points too.

[Boscoe]

I would also add that you should find someone, i.e. a real estate agent, who can give you a market price for your home based on recent sales. Since many markets are still going down in value, you can probably make a case for your home being worth somewhat less than the $300k you are estimating.

For this purpose, you want your home to be worth as little as possible, so you can exempt as much as possible.

[BKOnce]

Wait for house prices to drop more.