Looking For Help & Advice !!!

[newlife2007]

I have been tooling about this site for several days and I have learned a tremendous amount of information that is helping me deal with our financial situation ... We are Buried at Best !!

I need some opinions and help !!

My wife and myself have looked into many possibilities to make our bad finances disappear. Years of Credit Card spending and robbing Peter to pay Paul have caught up to us. Those Balance Transfers to a 0% CC ( for 6 months ) seemed the only option to deal with the never ending minimum payments that have increased over the past 3 years. Now we have $ 150,000 in unsecured CC debt and are having trouble paying the minimum amounts to all the cards. Between the two of us we have 14 unsecured credit cards. At this point ... A joint Chapter 7 may be our only option, as we both have a huge amount of unsecured debt.

The sleepless nights and stress have taken their toll on us both.
It is starting to affect our attitude and mood around our two wonderful children ( 10 year old boy and a 13 year old girl ).

Most of the cards are current, be a few are 1/2 months past due at this point. The phone calls have started !!

We own a home ( Actually The bank does ) in a very wealthy town in the state of Massachusetts. We have a mortgage and a HELOC that now totals $450,000 ... Roughly what the house is worth. We own two cars but neither of them is worth a large amount of money.We have a 1999 Dodge Durango & 1995 Nissian. We are hopeing to keep the house and the 2 cars under our state exemptions. We just want a new start and to actually be able to save for things like college and Retirement.
We Screwed up Big Time and both realize a new start would allow us to actually see our two children grow up. The stress is killing us at this point !!

We have credit cards from the same bank as the house ... The Mortgage ( Bank of America ) and the HELCO ( Chase ) ... Is that a problem or are they separate issues ??

We are about $15,000 under the median State income for MA, so I am thinking that we would qualify for a chapter 7. I am self employed ( I own and operate a small commercial cleaning business and my wife is on Workers Compensation for an On-the-job injury at the Postal Service.

I have loads of questions ... But Now I am looking for some Experienced Advice !!

Thanks So Much In Advance For All your Help !!

[familyof7]

your mortgage and the crdit cards at the same bank should not be a problem but if you also have a checking or savings accunt with one of those banks you should put your money into a different bank.

[newlife2007]

The Checking Accounts ( Family & Business ) are at different banks at this time and will remain the same.
I will need to keep them to pay bills for the family and for the business ( DBA ) after the bk.

[lrprn]

Welcome to BK Forum, new life - love your positive attitude!

You've asked a ton of questions and given us good information to start. Your income looks to be below the median for your family size in MA, you don't have much home equity. You didn't say much about your cars - are they worth more or less than what you owe on them?

One thing to keep in mind - you MUST be current on your secured loans on the house and cars if you file Ch 7. If you have to pick and choose about what to pay while you are deciding what to do, always pay your secured obligations first. Let your unsecured credit cards and loans squawk. They won't do much else for several months at least (although they will do it frequently and loudly ).

You didn't say if you've spoken to any area bankruptcy lawyers yet, so that's going to be my first recommendation. Most bk lawyers give free or low-cost initial consultations without any obligation to hire. Make appointments to see 3-4 in your area. You can sort out a lot of the issues you mentioned during these consultations plus learn a great deal about the best options in your circumstances.

Your situation is a pretty common one here in the forums, so you won't feel alone here. There's no finger pointing and no blaming. We've all made financial mistakes that we would undo if we could. The point is that all of us are trying our best to learn from those mistakes and move forward.

Keep asking specific questions - we'll do our best to help you sort things out. We aren't bankruptcy lawyers, but we have a world of practical bankruptcy experience with both Ch 7 and Ch 13 hanging out here . Again, welcome!

[newlife2007]

Thanks for the welcome and the info.

The cars are paid for but only worth about $4500 for the durango and $1000 for the Nissan. With zero equity in the house, I may go with the federal exemptions when we file. The MA Home Equity exemption is $100,000 with the homestead ... But I have just about zero equity in the house that we bought just a few years ago !!

The House should be safe & I Think the federal exemptions may let us keep the cars ??

[newlife2007]

A few quick questions ... We are starting the bk process and I need a few things cleared up :

1. Do we stop paying all the unsecured credit cards at once and pay only the secured accounts that we have ??
2. How lnog should we wait before our last charge to file ??
3. Do we now live on cash ( Checking account for secured accounts and lifes staples ) ??
4. How long before AMEX starts the " heavy hitters " ... we are 2 1/2 months behind and it is now in the hands of a collection agency ??

Thansk Guys !!

[familyof7]

If you are going to file stop all unsecured pmts. Pay all of the secured creditors unless you are giving up the secured property. You should wait 60-90 days from last credit card charge. I had a unsecured low limit credit card and maxed it out 30 days before filing but I only bought gas with it but I did not at the time know i should wait I had no problems but they can start trouble if you dont wait long enough.

[JRScott]

A few quick questions ... We are starting the bk process and I need a few things cleared up :

1. Do we stop paying all the unsecured credit cards at once and pay only the secured accounts that we have ??
2. How lnog should we wait before our last charge to file ??
3. Do we now live on cash ( Checking account for secured accounts and lifes staples ) ??
4. How long before AMEX starts the " heavy hitters " ... we are 2 1/2 months behind and it is now in the hands of a collection agency ??

Thansk Guys !!

1. Yes
2. Ideally 90 days
3. Yes (Checking account is okay too so long as not at one of your creditors institutions)
4. Not had experience with AMEX, they move one of the fastest though but you should still have a couple months I'd think before serious stuff happens with them.

[SinkingFast]

You're best off to pay all or none. All at once.

If you pick and choose,.......... Pay some and not others,........ You can cause yourself some grief.

The longer you're delinquent, the more and more likely Creditors are to start pulling your Credit Reports. BoA was pulling our Credit weekly the last few months. We found out after BK when we started doing our Credit Reports clean-up.

Creditors want to see who you're paying how much to. If you're paying others and not them, it could push the unpaid Creditors to seek legal action much more quickly.

There's a 70/90 day rule on Credit use. 70 days on Cash Advances and 90 days for CC charges. Within that time frame, the burden of proof that you did not use the accts fraudulently falls squarely on you. Beyond those time frames, the burden of proof shifts to the Creditors.

We switched over to using our Debit Cards for purchases like groceries, gasoline, and prescriptions. We bought Money Orders at Wal-Mart to pay bills with. And got Cashier's Checks from the Bank to pay our rent with. That helped to keep our bank balance low all the time.

[newlife2007]

I have a daughter that is entering High School and in a few years will be looking at Colleges. Has anyone ever dealt with the financial Aid issues when applying for your child's college education, after filing bk ?? Would they penalize her in any way ??
I am thinking that it may help compared to still owing a huge amount of debt and being late on most accounts.