File jointly? Separately? Not at all?

[WC Nurse]

Sorry this is so long but here's our situation:

Live in California. Married 22 years. Two children in college, aged 19 and 21. Live in a house where we owe more than what we could sell it for. When my husband and I were both working, we did okay, but were living basically paycheck to paycheck. All of our bills were paid on time and our credit report looked good.

Over the last few years, he had been laid off several times. Last year he was laid off for 6 straight months. To compensate for the loss of income and to pay the bills we had, I took out many credit card cash advances, took out a Capital One Personal Loan and also transferred balances from one card to another several times. He went back to work in January 08 and worked steady until June 08. We were just getting back on our feet when he was laid off again. He's still out of work and is #169 on the out of work list. He's a union carpenter so he has to follow the union rules and cannot work any outside employment.

We've gotten to the situation where we are late on our mortgage. I've been paying the credit cards on time so that the interest rate doesn't jump up on all of them. I've been paying the mortgage late and try to pay before it's 30 days late so it doesn't show up on the credit reports. It's gotten to the point where I can't juggle it anymore.

We owe about $75,000 in credit card/personal loan dept. I have $28,000 in student loans. We owe about $11,000 on the Toyota Sequoia. Lastly we owe $346,000 on our home and $42,000 on a Home Equity Loan (both with low fixed rates).

I bring home $4300 a month. He's bringing home $1800 in unemployment. When he returns to work, he'll also bring home about $4300.

My husband wants to claim bankruptcy. We met with an attorney yesterday. Our attorne thinks we should let everything go, including the house (of course I'll have to continue paying the student loans). We want to stay in our home. I know our situation seems bleak, but I just don't feel right filing bankruptcy. I feel like we can get out of this slowly once he goes back to work but he doesn't want to be paying on this debt for decades to come. I feel like I created it and should be responsible for it. He wants a fresh start. We have very different views on this. He's happy as a lark thinking about not having anymore credit cards. I'm extremely depressed thinking my once perfect credit will be marred. The bad thing is that we previously filed in 1995 prior to every owning a home. We should have learned our lesson then. I should have planned better for the times when construction would be slow and he wouldn't be working. I'm mentally and emotionally sickened by what I've allowed to happen to my family. I take responsibility because I was the one paying the bills.

We have 5 vechicles in both of our names. We're only paying payments on one vehicle, a 2002 Toyota Sequioa which is my husband's. He also has a 1994 GMC Sierra which he uses only occasionally (going to the dump, etc.). It's not in the best of shape. I have a 2002 Toyota Camry which is paid for. One vehicle is my son's (1999 Toyota Corolla) and one vehicle is our daughter's (2003 Toyota Matrix). They are going to separate colleges and need vehicles for transportation. We have kept all vehicles in our name as we're paying the car insurance on all of them. I promised my children I'd do that until they finished college. Then they have to get their own insurance.
Should we put the kids cars in their names only? I don't think we (or possibly just him) will be filing for bankruptcy for another six months.

What do you think we should do? Should we jointly file for bankruptcy? What if he just files on his own and I continue to pay the bills in my name only. How will that affect us? We have a joint checking account that we've had for about 20 years so I don't want to close it. I guess I could take his name off it and have him open a separate account. Any suggestions?

[lrprn]

Since you live in a community property state and have been married for a long time, knowing just what you've told us there's likely no benefit to either of you filing alone.

It's very difficult to let go of assets like houses that we've invested so much of ourselves in. However, remember that the house is just a thing and things can be replaced.

It sounds like you two are swirling the drain financially and you are hanging on to wishful thinking hoping against hope that "something will work out". If you are already borrowing to make ends meet every month, then you are going to tip over carrying too high a debt load on your credit cards. Your interest rates are going to skyrocket (if they haven't already). And once one goes up, they all go up. And it's perfectly legal to do so.

Please set up 3-4 free or low cost initial consultations with experienced bankruptcy lawyers in your area. There's no obligation. Be sure to ask about filing Ch 13 where you could keep your house and reorganize your finances to settle things out over 3-5 years with your creditors having no choice but to go along with the court-ordered plan.

Waking up to the reality of your situation and getting past the intense emotions of guilt and fear are extremely difficult but a necessary part of moving on to find the best solution for your family. What you are considering is a business decision that needs to be made in a cold, emotionless way looking at the reality of your situation. That's what your creditors do. You need to do the same.

Sit down with your husband and put everything down on paper. Assess your situation for what it is NOW, not what it might be in the future. See where you stand. And go make those appointments - you'll be glad you did. Keep posting questions - we'll help you as much as we can. Hang in there - you are not alone!

[chloe0724]

Also, if you are able to do a 13 and your 2nd mortgage is completly unsecured, meaning your home is worth less than your first only, you may be able to strip the lien.

[TEW]

You are defiantly not alone your story sounds like almost everyone else here. Keep coming back let us know how you are doing.

[Blue14]

I live in CA and filed CH7 BK and we got to keep our home. We also filed jointly. Maybe since you have been late on your mortgage payment, then you can (if you haven't already) contact your mortgage company before you file for BK and let them know you are having a financial hardship and see if there is something they can do to help like lower the interest rate to make your payments less. It seems like the mortgage companies only want to try and help when you start paying late or defaulting. There is a lot of good information here on this forum. I wish I knew this about this forum before I filed BK.