New, Confused and LOTS of Questions!

[BarbaraL]

I have done so much reading and researching lately, everything is starting to run together and I am so confused!

General background, during 2004 til mid-2006, I lived in Florida with one of my sisters, one of my brothers and my 9 yr old granddaughter (I have custody), as our Mom was in a nursing home there and we wanted to be closer to her. In mid-2006, our brother bailed and moved to Wisconsin, forcing my sister, granddaughter and myself to move (no way we could afford south Florida any longer!). The three of us moved to eastern North Carolina in July, 2006. Although my only income is from Social Security Disabillity and State of Florida Retirement Disability, and my sister had to take over a $20,000 a year cut in pay, we managed to purchase a mobile home there, closing in October, 2006.

Everything rolled along ok for a few months, and then my sister's employer (a construction company) began having problems with making payroll, paying their taxes, writing bad checks, etc. My sister began searching for another job that would pay at least as much as what she was currently making, and none were to be found (month after month!).

Then we received notice that our property taxes had almost doubled and our homeowner's insurance tripled due to hurricane damage several counties away; therefore our mortgage payments went up because of the escrow! We contacted the bank and explained our problem, which was of course no help.

So, after much soul searching and research on different areas, we decided to cut our losses, and moved to Texas the last week of October, 2007. We are now renters again, and my sister has managed to find a better job. The only bills that we have had to stop paying (so far!) is the mortgage payment and the equity line of credit, both through Wells Fargo. We are two payments behind at this point, and there is no way to catch them up, nor is there any way to sell the place, because of the depressed area that it is in. Also, according to the mortgage, we were not allowed to rent the place out, to try to cover the payments.

If I understand any of what I've been reading, we have to be residents of Texas for at least six months before we can file BK-7, and we would have to use the exemptions for North Carolina, because we have not lived in Texas for at least two years. Am I right so far? Or is the time limit in North Carolina over a year also, where we would have to use Florida exemptions??

Is there anything we can do prior to meeting the six month residency requirement to prepare? I have no other secured debt, and approximately 13,000 in CC's. The only other secured debt my sister has is her car, which is current, and she intends to reaffirm that if possible. She has considerably more in CC's. We each had to charge and/or get cash advances on our cards in order to make the move; how far do the trustees look back on the charge records? We both passed the means test for Chapter 7.

We will need to try to scrape the money together for all the fees involved, so, as much as we hate to, we are probably going to have to quit making the payments on our CC's, and just pay our living expenses and save the rest towards that goal. What would the possibilities be of creditors freezing and/or seizing either of our bank accounts? We have both been paying most CC payments on-line, and are now seriously considering changing banks due to this. Roughly what would the total costs be for each of us to file a BK-7?

Any and all comments, advice or anything would be greatly appreciated!!! And sorry this is so long!!!

[FreshLikeADaisy]

Hi Barbara! Yes, you sure do have a lot of questions! Others will chime in here to help as well, but here's a couple I'll take on:

Domicile Issues: You do NOT have to be in a specific state for at least 180 days to file bankruptcy; you only have to be there for the *greater part* of 180 days, which is 91 days and up. So whenever your three months and one day is up (early February) you can file right then.

Secondly, according to the timeline you gave, you would be using Florida's exemptions -- unfortunately -- because that is where you were 2 years before filing, in 2005. The Nolo book puts it this way: "If you have had your domicile in your current state for more than 91 days but less than two years, you must use the exemptions of the state where you were domiciled for the better part of the 180 day period immediately prior to the two year period preceeding your filing." In other words, take where you were two years ago, and count back six months from there.

Fortunately for you, however, Texas is one of the states that gives its filers the option of using Federal exemptions, which are much more generous than those of the great state of Florida. So when you or your attorney check off the little box on Schedule C, you'll check off the top box (Federal) instead of the lower box (Florida).

If you know you're going to file pretty soon, like early next year, yes, many people stop paying the credit cards in order to save up for the filing, and are even advised to do so by their attorneys depending on the situation. However -- and this is key -- stop using them they day you stop paying them, and let any last purchases be of the "necessity" sort -- food, gas, etc. You may also want to buy a throwaway cell phone (one of those $30 jobs you get at Walmart; I got a Net10 and I adore it) and give that new number to all your creditors NOW while you're current, because your phone WILL start ringing off the hook when you quit paying them, and there's nothing to gain by answering the calls and talking to them when you know you're going to file. I keep the phone off and check messages occasionally when I feel like it.

One last thing -- you would be well advised to close your existing accounts and open new ones *right now* if the creditors you are about to non-pay have ever had regular debit access to those accounts, have ever done a "one time" payment over the phone from those accounts, or is the same bank you have the soon-to-be-unpaid credit card with (cross-collateralization). Yes, these creditors can and often do snatch funds based on prior permission that you either gave them openly (like a one time payment) or that you signed off on (a credit agreement with a cross-collateralization clause in it). Open new accounts at a totally different bank *now* and get all your checks printed and direct deposit started asap so you can close the existing accounts. Don't just leave them there open with a few dollars, go ahead and close them.

Judgements and levies and seizures and garnishments are somewhat different and generally require court intervention; maybe someone else can tell you more about those. But the scenarios I just illustrated are very common, enough to where if you take action now you won't have cause for regret.

Good luck to you!

P.S. I just came here from Johnston County myself. Eastern NC is lovely, but hard to find jobs in...

[Mystik101]

I'm the sister Barb is referring to in the post. Thanks for the info, I do have one other question.

I have a car financed through a credit union in Florida. I really wanted to keep the car and reaffirm the debt, I absolutely love my car. But...

Does the cross-collaterilzation apply? I have a Visa through the same credit union. I have not abused the card, it has a huge credit limit on it and I have about $8,000 on the card, much of it moving expenses and the rest was mostly medical expenses, as I had no health insurance. My car's value is not worth the balance owing on it plus the credit card balance.

Should I trade vehicles before filing? I am beginning to think I would have to.

Any input out there? Its Suncoast Schools FCU

[keepmine]

My car's value is not worth the balance owing on it plus the credit card balance.

Should I trade vehicles before filing? I am beginning to think I would have to.


Why trade cars? Use the time prior to filing to get another ride and just let the car go in the bk.
You need to look at the account paperwork and see if a cross collateralization clause is in there.

[CindyLou]

I agree, don't trade the car! You would then be trading that negative equity. Simply get a different car and let that one go back.

I would like to comment on the the federal vs. florida exemptions. In your case, in order to use the federal exemptions you would have to qualify first for the Texas exemptions to have that choice. If you are Florida, you are Florida. The only way you would be able to use federal is if Florida allowed federal.

[BarbaraL]

OK, now I'm confused even further, lol! Are you saying we would have to be living in Texas for the 2+ years to qualify for the Texas exemptions, and, since we have not been, that we would have to use Florida no matter what? I know that we need some consults with attorneys, but I would rather understand the process a little better before the consults! Thanks so much.

[Mystik101]

bump... I'm not quite sure how this works with the residency. I am assuming since we only lived in NC for one year, we would file in Texas because that is where we now live, but use Florida exemptions. Someone please tell me if I am mistaken, lol.

[lrprn]

Are you saying we would have to be living in Texas for the 2+ years to qualify for the Texas exemptions, and, since we have not been, that we would have to use Florida no matter what?

The current bk law requires that you live in a state for two years before you can use that state's exemptions.

Since you haven't lived in Texas for two years, you can file in Texas, but you will have to use the Florida exemptions.

[BarbaraL]

LRPRN, thank you for the clarification on the domicile issues!

[genseeker]

BarbaraL, more than likely you can get by without filing a bankruptcy. You stated your only income is disability and disability income is exempt from seizure by creditors. Not even with a judgment can a creditor, other than government (like taxes/student loans) seize that money or garnish your checks. Since all you get is disability, see if you can speak to someone at Legal Aid to confirm your Florida disability is exempt as well. And in Texas, I think creditors can't garnish wages, but not positive. If you aren't concerned about your credit report, then relax and just let the accounts go.

[FreshLikeADaisy]

Lrprn, thanks for the correction.

[BarbaraL]

Thanks all for your advice! Even though we couldn't file until at least February, my sister and I have a consult with a BK attorney today, and maybe we will both gain some needed knowledge!

Mainly due to illness which resulted in the disability, and then a couple of years of court battles trying to maintain custody of my grandchildren (my daughter got into drugs, I got custody of both kids, then the judge separated the kids and gave custody of my grandson to his biological father); at any rate, I now have too many bills to handle. I have used every cent of savings I had just trying to maintain! My daughter only within the past few months has begun to pay child support, and it is very erratic! Also, my sister and I bought the residence in North Carolina together, so I assume we both need to file BK just to get a fresh start and, preferably, slowly rebuild our credit. I don't want to go years and years having collection agencies chasing me!

I have been looking at the Florida exemptions, and they don't seem to be real favorable! It appears they only let you exempt $1000 of personal property. Does anyone know if this is per person or per family? It isn't as if we have much, but I would hate to lose anything, especially for my grand-daughter's sake!

And, one other question, lol! Almost my entire tax return consists of the child tax credits, etc. Would that possibly make it exempt or could the trustee take it?

Again, thanks for all input and/or advice.