Pulling BK 7 trigger this week....anxious...thoughts?

[jmc]

This is my first post to any message board EVER so forgive my lack of "netiquette" if (and when) you see it.

I finally came to grips over the weekend that I - in fact - cannot control the universe and make it all better. That my credit score doesn't define who I am...

I'll try to be brief but it's so tempting to "unload" the last 12 months of emotions here! I am like many of you who never dreamt I'd be typing this message up...always paid bills on time (no lates ever)....contributed to 401k, had 6 mos expenses, 2 cars (both paid off...always hated car loans), and kept minimal balances on cc's (only 2...primary and emergency - although for some reason I had ridiculous amounts of credit available). Have a couple rental properties, too, because I didn't want all my rtmt tied to the stock market. Married, 3 kids (10, 8, 4)

If I had it to do over again I can't think of what I would have done differently as far as managing my personal finances with what I had (income).

Currently have $75k in unsecured debt and have been playing "Peter/Paul" for the last year after liquidating 401k, wifes IRA, and ultimately credit cards. (I just KNEW things were going to turn around soon...)

I've made $5k ytd in 2009 in the banking world (100% commision) and cash-flow $200/mo after everything on rental property. The WAY I've earned income the last decade is GONE so I'm working on the new career thing in the middle of this (no, I wasn't a greedy investment banker!! i'm one of the good guys that's getting government regulated down to a minimum wage pay scale)
I will figure out the income issue....somehow.

Here's my logic on filing - any input is valued:
1) protect my primary residence
2) lol - i don't have any money to pay anyone
3) protect myself from deficiency judgements and or forgiveness of debt 1099's should i ultimately lose my rental houses to foreclosure...from what i've researched if you're insolvent they can't do that on investment props

My brain is so overwhelmed right now and I'm sure I have more questions to ask, angles to consider, etc. But maybe some of you have some thoughts, suggestions, or questions that might help me make sure I'm thinking clearly.

Thanks in advance.

[frogger]

Whoa........................

You decided this weekend to file and you're going to do it this week?

Unless you've really got something nipping at your a$$, you need to slow down and do some studying up. Start by reading the sticky posts and get yourself educated.

Read up and then start asking questions. Everyone is here to help!

[killinstinct]

I agree jmc! Slow down. Read everything you can. Meet with 3-4 different attorneys (most offer free consults). You need to prepare for this and answer a lot of questions, otherwise you could make a bad situation worse. Although it's psychological torture, if you stop paying bills most creditors will not take legal action inside of six months, so use that time to get your ducks in a row. Your credit score is toast no matter what, so don't sweat that.

Also because of the industry you are in, you may want to find out how this will effect your employement. Although legally you can't be discriminated against for filing BK, there has been much conversation on this forum about people who have been screwed in other ways that were working for banks, in the mortgage industry, etc., once their employers found out. Above all, protect your employment, it's your most valuable asset in this economy.

[HakunaMatata]

You may not be able to control the universe; although, you do have control of your future. You're contemplating a financial possibility and a new career. Cheers to you!

I understand your need to unload. Like you, I adhered to many financial standards. I paid cash for cars and luxuries, self-financed my college education, maintained a hearty savings, always paid my bills on time, etc...only to discover I'm insolvent!! Until finding this forum, I was utterly frustrated with bankruptcy articles I read. Nearly every one indicated insolvent people have intrinsically poor money management skills and need to severely alter their behavior to succeed post-BK. While this may be true for some, it doesn't apply to all. I've dissected my financial past. There is no indication of gross over-spending/living beyond my means. Rather, this lovely economy played a significant role in making my insolvent self more apparent (job loss and my money pit underwater house have been strong contributors).

Regarding credit scores...free yourself of FICO! For years I thought this silly three digit score was a reflection of me and my efforts. This score is essentially designed to keep a person in debt...pay a mortgage and your score soars, make timely payments on your auto loan and we'll reward you, use your credit cards for everyday and unnecessary purchases...woo hoo...look at your big score. Insolvent manipulation is embedded in credit scoring. This is becoming more pronounced due to our economic climate. Big scores oftentimes equal big debt load. Throw in job loss and the equation isn't very pretty.

Continue educating yourself on BK and don't forget, this is a business decision. (GM can attest to this ). You will need to understand your State laws in order to better assess your position (ex/ exemptions). There are plenty of knowledgeable people here available to offer advice and opinions when specifics are presented. Welcome (and great job on your netiquette!).

[jmc]

frogger and killinstinct - My bad. What I meant to get across is that I came to grips with the decision this weekend.... been researching (here, there, EVERYWHERE...) for 6 months. I've spoken with 2 attorney's - 1 a referral from a trusted advisor from church and 1 straight from a google search who focuses his practice on BK only. Productive conversations with both.

I do have some "nipping" action going on.... most pressing on paper would be cost to cure letters for 9/21/2009 on both rental properties totalling around $5k and cost to cure letter for 2nd mtg on primary residence of $1200 (ran out of innovative ways to pay - owe for 7/1, 8/1, 9/1 on those 3 notes).

The rest of the nipping is $1100 minimum debt payments and primary mortgage.

I asked for the input so by all means "let me have it" - the way I look at it from a pure business standpoint is I've got no means currently to service anything currently nor any reason to think that will change soon (3-6 months) with current state of affairs economically.

Obviously when you're beat down from trying to avoid BK and your $$ world falling apart there is an aspect of a new start and clean slate that has a lot of appeal.

Thanks for your quick replies

[jmc]

Primary mortgage is $1700/month inclusive btw

So $1100 min pymt on unsecured, $1700 mortgage before groceries, blah, blah, blah

We've cut everything possible (i.e. no cable, no netflix, no eating out except for once a week visit to the 99-cent menu somewhere)

My number 1 issue is an INCOME ISSUE and I know that....primary house is for sale and I could move into one of my rentals when it sells.

But even after all that my monthly nut would be nearly $5k/month - so I'm thinking, "Huh...if you DID find employment in a new field at $5k/month (not strong chance right now) then you would be able to have your nose above water but have $75k in debt that would loom over you for the next - FOREVER".

I am also looking at a move out of state for possible employment, being closer to family, and a FRESH START

[Chowder]

You've come to the right place.

Most of what will happen once the process has started is out of your hands.
Plan for it accordingly.

Get an Attorney that has a good understanding of how the Trustees in your area operate.

Then relax.

[jmc]

[QUOTE=Chowder;321058]
Most of what will happen once the process has started is out of your hands.
Plan for it accordingly.
QUOTE]

Can you elaborate a little on this comment? I realize that I lose control and a Trustee gets to call the shots directly for a while. And having been in banking I fully get what it will mean to credit scores, loan approvals, etc. I assume we all think we have a general idea of what will happen.... Was there anything you wished you'd planned better that might help me?

[backtoschool]

This is my first post to any message board EVER so forgive my lack of "netiquette" if (and when) you see it.

I finally came to grips over the weekend that I - in fact - cannot control the universe and make it all better. That my credit score doesn't define who I am...

I'll try to be brief but it's so tempting to "unload" the last 12 months of emotions here! I am like many of you who never dreamt I'd be typing this message up...always paid bills on time (no lates ever)....contributed to 401k, had 6 mos expenses, 2 cars (both paid off...always hated car loans), and kept minimal balances on cc's (only 2...primary and emergency - although for some reason I had ridiculous amounts of credit available). Have a couple rental properties, too, because I didn't want all my rtmt tied to the stock market. Married, 3 kids (10, 8, 4)

If I had it to do over again I can't think of what I would have done differently as far as managing my personal finances with what I had (income).

Currently have $75k in unsecured debt and have been playing "Peter/Paul" for the last year after liquidating 401k, wifes IRA, and ultimately credit cards. (I just KNEW things were going to turn around soon...)

I've made $5k ytd in 2009 in the banking world (100% commision) and cash-flow $200/mo after everything on rental property. The WAY I've earned income the last decade is GONE so I'm working on the new career thing in the middle of this (no, I wasn't a greedy investment banker!! i'm one of the good guys that's getting government regulated down to a minimum wage pay scale)
I will figure out the income issue....somehow.

Here's my logic on filing - any input is valued:
1) protect my primary residence
2) lol - i don't have any money to pay anyone
3) protect myself from deficiency judgements and or forgiveness of debt 1099's should i ultimately lose my rental houses to foreclosure...from what i've researched if you're insolvent they can't do that on investment props

My brain is so overwhelmed right now and I'm sure I have more questions to ask, angles to consider, etc. But maybe some of you have some thoughts, suggestions, or questions that might help me make sure I'm thinking clearly.

Thanks in advance.

Welcome to the board!

Here are a few thoughts I had when reading your posts:

1. If you are working in banking or finance, bankruptcy will hurt your ability to get a new job moving forward. Banking is one industry that really frowns upon bankruptcy.

2. Talk to a few lawyers before you file. Filing hits your reports and changes your credit score almost instantly.

3. The lookback period for wages is six months, so your ytd numbers should qualify you, but with your rental properties, etc, you may have the UST involved, and that will make your case more detailed, etc.

[Chowder]

Can you elaborate a little on this comment?

I think you have a pretty good grasp on what's coming.

I'm just saying to prepare as best you can to create an uneventful BK process.

Was there anything you wished you'd planned better that might help me?

Personally, I don't think I could have been more prepared. I found this forum over a year ago when it started to look like I wasn't going to be able to fix the mess. This forum is full of great general knowledge. But only a good Attorney knows what applies and what doesn't to your area.

[whipster1]

Pay only the important things and forget the rest right now. You have no income. If one of your properties is decent move in there if you can afford it, a 1700/mo payment is unreasonable for you unless you have major equity to protect.

Remember this is a business decision, just as GM and Chrysler made.

Good luck!

[killinstinct]

Good luck! Sounds like you're checking in with all your available resources. As you know, the income/expense thing has to get fixed at some point. Hopefully you can work out a sale and get into one of your rentals soon.

[OhioFiler]

It appears you own your vehicles debt free. What are they worth?


Is your home upside down? In a C13 you can strip the 2nd mortgage if your home is worth less than the 1st mortgage.

Since you have lost so much income you may well qualify for one of Obama's loan mods as well.

[frogger]

frogger and killinstinct - My bad. What I meant to get across is that I came to grips with the decision this weekend.... been researching (here, there, EVERYWHERE...) for 6 months.

I do have some "nipping" action going on.... most pressing on paper would be cost to cure letters for 9/21/2009 on both rental properties totalling around $5k and cost to cure letter for 2nd mtg on primary residence of $1200 (ran out of innovative ways to pay - owe for 7/1, 8/1, 9/1 on those 3 notes).

The rest of the nipping is $1100 minimum debt payments and primary mortgage.

Not bad at all. Just remember to take your time and do your research. They're not going to come and whip you or eat you, so do what's in your best interest.

As to nipping? Sounds like your rentals are costing you money. The big question is "so what" if you can't cure them. Let the bank relieve you of the burden and manage them instead. Take the money from the rentals and cure your home if you intend to try and keep it. As to the other $1100 on minimum payments, consider not paying them.

Keep a roof over your head and food on the table. Everything else is a luxury.

I've got a banker breathing down my neck on some rentals now. Love those letters with the veiled "threats". They don't want them any more than I do, so whatever they want to do is fine with me. I'm not going to let them rush me into bk. I'll do it at the time that works best for me, not them.

[jmc]

It appears you own your vehicles debt free. What are they worth?


Is your home upside down? In a C13 you can strip the 2nd mortgage if your home is worth less than the 1st mortgage.

Since you have lost so much income you may well qualify for one of Obama's loan mods as well.

ohiofiler - Correct on the cars '93 model & '00 model - '93 worth less than $3k and has lots of work needed, '00 worth $4-5k and it's begging for a new transmission

Primary res is not upside down and we are priced well - listed mid-June - 1st is $750/mo & 2nd is $415/mo (not incl tax/insur - i can drag the tax bill out to the middle of next year if necessary)

Have looked in to loan mod, but have no income to show so dead in the water there

There is paper equity of maybe $30k after realtor comm, etc. Obviously I'd like to see that happen, but have come to terms with the fact that I may never see any of it...