sorry still confused

[whoops08]

I am so sorry for the redundant questions.

I've been reading alot of posts on the forum and need some clarification.

Basically we do not qualify for CH.13 because we exceed the secured debt limit. So our attny says we have to do a 7.
However we are way above the median income level for our state but when we deduct all the expenses and allowances we pass the means test.

We have alot of credit card debt so we are afraid that this will be seen as abuse by the UST. We can explain why our debt is so high.
Husband and I both got laid off at about the same time five years ago, the we had a baby who was in the ICU for a month and we had about 20k in medical bills. We then decided start small businesses but since we were unemployed we did not qualify for an SBA loan and was told to use the equity in our home and finance ourselves which is what we did. 5 years later one of the businesses was a complete failure and one is still good.

In the last five years we have done some stupid things but mostly our credit card debt is living expenses, paying mortgages etc.

If we are denied a 7 and we don't qualify for a 13. What then?

We can't afford a CH.11 nor do we think we can actually find an attorney that does the Ch.11's.

[Cali]

So how much is your total debt?

[whoops08]

total debt

So how much is your total debt?

Our total debt is as follows:

Primary Residence: $980,000 today value: $750,000 (according to realtor)
Second Home (investment): $429,000 Today's value: $350,000

Car#1: $38,000 (this amount includes a trade in that was negative $5k) value of car $27,000 (we can't do a cram down because it has been less than 910 days)

Car# 2: $11,992 Value: $21,000

Unsecured CC debt: $125,000
Unsecured Line of Credit: $75,000

HOA Debt on Second Home: $6000

Back taxes (we know this can't be in BK) Current is about $25,000 and growing

We have three children and we also send money to my mother who has been unable to work due to brain surgery 7 months ago. We send her only about $300 per month.

Thanks!

[whoops08]

one more thing

the attorney that we think we are going to hire after looking at all of our documents during the initial consultation said that he didn't think it would be a problem at all. He seemed very confident.

Our monthly income is:
Hubby: $12,000 gross after taxes and expenses about $8000
Mine: $5600 gross after taxes and health insurance deduction about $4000

We get some rental income incremetally every couple of months or so which is about $2000 so far this year we have only received about $8000 or so total.
then we pay taxes on that at the end of the year. so the net is about $5500.


We have three children that still need day care which runs us currently $2350 per month. Just paying the two mortgages leaves us only with $1000. then we go into the negative. We basically eat off of our credit cards and not pay our taxes on my hubby business. Which at the end of the year gives us a huge tax bill.

We are very much in the negative! But the gross income is over the median in California for a family of 5.

Thanks for any input.

[Help!]

[JRScott]

Hard situation.

I believe the problem is you have to much house and car for what you can afford. I know that's a hard realization.

When you say your eating off the credit cards, are you paying the credit cards?

Stop paying them.

Next before paying anything else pay food, utilities, housing, transportation, taxes, etc. The last people to get money should be the credit card companies.

I think your lawyer is pushing for a Chapter 7 because even with the credit card debt just on the surface it looks like your in trouble. You have high income and high debt. Most likely the UST is going to get involved the numbers are to big otherwise.

I really think in the end you probably need to sell both places, probably short sell if you can. Get something more affordable. 1000 left over just after housing is just to much. Your housing payment shouldn't be more than 25-30% of your gross income.

You're so upside down on the vehicles I don't see the point in keeping them either. Never buy a car that is newer than 4 years old, they depreciate so rapidly that you almost alway end up owing more than they are worth. (And no I didn't know this either until after my bankruptcy)

The problem is whether your district still allows you to use the payments for property you are surrendering, some do and some don't. I'd ask your lawyer about that. If they will allow it, I'd surrender it all practically, and then get a rental. If they don't then try to keep them through the bankruptcy without signing a reaffirmation agreement, whatever you do don't sign one. Then you can walk away later without owing anything.

[screwedupbyRE]

Whoops08, as you know mine and your situation is identicle... and this is what attorney recommended and I plan to do:

Before I get into details, one thing I came to know from couple of attornys (and it was a surprise to me - BK Guru's can confirm/comment on it)

Say if you plan to file ch 7, you can show all your payments (including mortage payments - even though if you are not planning to keep the homes) to qualify the means test.
On 10th-15th day after 341 meeting, don't re-aff the home loans. In other words, inform mortgage banker (your attorney will do it) that you are in bankruptcy and not keeping the house. You'll come out clean slate and your homes will go in bankruptcy. On the top, your attonry can write to bank for a stay of nn months in the house.

-----------------------
My secured and un-secured limit - both exceeds minimum limits set by state and according to my attorney I can do ch 13. He says - trustee can't determine the value of second house that what % is secured and what % is un-secured. He says dont let the house foreclose. On the second note, I'm also qualified for lien strip on my first home.... and I wd let the car go during b/r to qualify for ch 13.... with a monthly payment of approx $201. I'm ok to pay that for 5 yrs. And I can pay it off after one yr adn get discharged.

I'm a techie and write only technical stuff well in English - hope I didn't confuse you

Which state are you in? I can pass on attonry's info in a private message if you are in CA (East Bay).

good luck.