Advice for my MIL

[becky20]

My MIL is in quite the financial predicament and I'm trying to figure out what might be the best course of option for her...

Only brings in 1k a month in SS, no other income (currently she is taking care of her MIL, who is wheelchair bound and in return helps with housing expenses). Her 44 year old son is also living at the house and contributing to the household expenses.

Mortgage alone is 1400 a month and she has a ton of credit cards.

Has a camping trailer, bought in 2006 and never used, mint condition (paid cash)

Has an old 1977 or so corvette that needs work, paid off

Has a ford pickup truck, 1997 or so, also paid off, as well as a mini van paid off that is old.

She definitely needs to get out of her house, it's drowning her. She can either sell all her assets and pay off her credit cards, walk away from the house and rent an apartment, or file bankruptcy, but I think they'd take all her assets anyway to pay towards the creditors. But I'm thinking now that she's judgement proof since she has only social security income, so maybe she should sell all her assets, put it in an account in someone else's name (my SIL I think) and then just stop paying everything and get an apartment. Creditors may file a judgement but they can't collect, right? I mean, would filing chapter 7 be a total waste since the creditors can't get a judgement collected?

How should I "guide" her in what she should do? I'm thinking she could live in her house for a good 6 months or longer and not pay credit cards or mortgage, save all those monthly payments, and then when it's looking like they'll foreclose, get a place to rent (assuming she could find a place to rent) and yeah, she may get phone calls to collect on the debt but that's about it, right?

This is in Arizona... Any advice would be appreciated.

[lrprn]

Your MIL has a household of three - herself, her MIL, and her son. The AZ median income for a household of three is $62,002 (http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm). I assume that even adding the MIL's and the son's income, the total is well below this. Also your MIL's SS income is protected after filing and cannot be taken by the trustee.

Here are the current AZ bankruptcy exemptions - http://www.thebankruptcysite.org/exe...s/arizona.html . The home can be protected up to $150,000 in equity. However, the problem seems to be that even with everyone contributing, they can't afford the monthly house payment. No sense trying to keep what even together they cannot pay for.

One motor vehicle can be protected up to $5000 - $10,000 if the filer is disabled. Is your MIL designated as 'disabled'?

Your MIL's biggest problems are the paid-off assets you listed because I can't find an exemption that she can protect them with. It would be a good idea to do some research to find out their current true market value.

She can sell the paid-off assets, but then she has to figure out what to do with the proceeds. It looks like AZ only allows her to have $1000 + $150 in cash on filing day.

The very best thing you can do for your MIL at this point is to set up 3-4 free or low cost appointments with experienced bk lawyers in her area. Her living situation is unusual and she has unprotected assets - that doesn't lend itself to going it alone. Until she sorts out what her best options are in the long run, she should sit tight and not do anything that might accidentally jeopardize her filing down the road.

You are a good DIL for trying to help her. I hope everything works out all right for her, her MIL, and her son.

[becky20]

Thanks so much. I talked to my SIL yesterday and right now my MIL is saying she doesn't want to file bk, so I don't know if she will or not, at this point I'm trying to figure out her options. My MIL isn't officially disabled, though I do doubt her ability to function at a job... My MIL takes care of HER MIL, a 90+ year old woman who I think is close to blind, has MS, and is wheelchair bound, but no, my MIL is not officially disabled. My BIL, who is living with her, is also collecting disability (what a situation, huh?). If my MIL files, would the trustees be able to take HER MIL's money? (I think she has about 30K or so in a bank account) I don't think so but just want to ask...

The more I'm thinking about this whole situation, I'm wondering if she even should file - I mean, she could walk away from her house (I am pretty sure in AZ the banks can't get a judgement on you for the deficiency), stop paying all her credit cards, and even if they sued her and got a judgement, because it's social security, they couldn't ever collect from her, right? That way she could sell her assets and have that money if she needs it for any of her expenses...