Running out of time in PA

[shark66]

I so wish I would've Googled and found this spectacular forum a year ago...but the hindsight is always 20/20, and then some...

the situation: House to be sold at sheriff's auction six weeks from now. My goal is to keep it using all/any reasonable and legal means, short of suicide...

facts to consider:

a) The house has two mortgages on it: the first one (in default and foreclosure, with the aforementioned sale upcoming) is roughly $250,000 and is in both mine and my wife's name. The second one - in my name only - is roughly $70,000 and no payments have been made in a year, no action from lender this far. PA does not have homestead exemption which wouldn't matter much in this case anyway, since this house has no equity at best, and likely some negative equity. In real world sale, one would have to push very hard to get anything more than $250,000 and the sheriff's sale would likely bring less than that.

b) Family of five, one income, no disposable income to speak thereof. Under median for the family of this size according to some online calculators I've used.

c) One car, paid off, 10 years old, NADA value under the allowed exemption in the state.

d) My wife has $50K + in unsecured debt, including a 11K judgement from a CC company.

e) I have little debt, the only fairly serious figure being a $4K judgement against me by a CC company.

f) No 401(k) or saving accounts or anything similar to that.

g) None of us has used credit cards in at least 2.5 years.

In my understanding, this should be eligible for Chapter 7, but I've read (and heard) differently, including this attorney's statement online:

Therefore, in order to file a chapter 7 where the debtor owns real estate, the real estate equity must be exempt under state or federal law, and, the payments must be current upon filing and maintained current.

I've heard something similar from a BK lawyer last year, but she had left an overall impression of wanting to push us into Ch.13 although the fees are the same - capped under PA law to $1,500.

Now, to my questions:

A) What - if anything - am I missing, or misinterpreting here?

B) Should I have my wife file for herself - or should we both file ?

C) PA has furnishing exemption up to $10,000. Retail value of our furniture/appliances would top that, but garage sale/eBay/CL value wouldn't...confused on what to do here. Anyone coming to unplug my fridge/stove/whatever?

My reasoning against going into Ch. 13 would be as follows:

1) As previously stated, we have no disposable income at the moment, so I doubt that we would qualify, let alone be able to make any payments to the trustee. We are juggling bills as it is to make ends meet and obviously not quite succeeding. I will spare you a long story of how we got into this mess in the first place.

2) I have a chunk of money coming this way from overseas, which will likely not get here in time to stop the sale. I'd downright hate to have that go to trustee...

All/any advice taken with immense gratitude. Questions welcomed.

[jadams]

I see lots of cons for keeping the house, what are the pros? Just a quick glance at your situation worries me that you could very easily get discharged and shortly be back in the same position. Write out the pros and cons, do some research on rental prices in your area, and make sure you're making a good decision.

Have you been making partial payments to the first and they just weren't enough to stop/delay the sale? Or is the first not being paid either?

If you want to keep the house in a CH 7, you MUST be current. Only a CH 13 provides you with an option to cover arrearages.

Furniture and appliances are not valued at retail. They should be valued considering what they could actually get if sold.

The money coming from overseas -- what is that? Income from working? Inheritance? etc. In a CH 7 depending on where that money is coming from it's possible that could be considered an asset that's exposed to the trustee.

[LostNFound]

I think you'd be crazy to try to keep that house. Aside from the fact that you have no equity or neg. equity....wow. It's a losing proposition.

1) You can't afford to make your credit card payments and you haven't made a payment in 2 years.
2) You haven't paid on the 2nd in over a year.
3) You have a car with 100K miles on it, no car payment. Better hope it doesn't need repairs in the near future.
4) 5 kids and no savings? Not even a 401k?
5) 1 income?? Why?

My suggestion to you would be to give it all up and leave the money overseas. You are not going to put yourself in a better situation financially then you are currently in right now. You probably need to start investing money for your future instead of trying to build off the neg. equity in that house. Retirement should be a concern...not saving that house.

Unless you have enough money to pay for your debts, which you obviously don't since you haven't paid on anything in a while, then I say you need to file and walk away.

[nerves]

First and foremost, you should seek advise from a couple other attorneys. A couple items to consider and discuss with an attorney:
1) You didn't say how much the home was worth. Will the amount you pay in full for from the overseas funds create any equity? If not, you may want to think about paying cash for another home with these funds.
2) I don't know what the homestead exemption is in PA - you will want to determine this before taking any action with purchasing any home.
3) Be careful with your bk timing as the overseas funds will probably be considered income on the means test.
4) Is this windfall a one time situation? If you have more funds coming in the future, this may create additional issues. Odds are pretty good this will be questioned by the trustee.
5) We are missing a lot of pieces of your situation such as income and monthly expenses. Have you completed a means test to see if you would qualify for a Chap 7? If not, this is recommended so you know where you stand financially after bk.
6) I agree with LNF - you need to start looking towards your future.
7) Creating a budget and sticking to it will help you avoid this situation in the future.

We have all gotten ourselfs here one way or another and you are not alone. This site has some great information and support. I wish the best for you.

Nerves

[shark66]

First and foremost, thank you all for replying.

Yes, I've completed the means test and we would qualify for Ch. 7.

If I were to file for bankruptcy, I'd freeze the transaction overseas for the time being. The amount in question would not pay the house off in full. All of that would make sense in case of Ch. 7 and absolutely none in Ch. 13, at least in my book.

One could say that this situation is a one time deal, but could happen again if I don't play my cards right. That's why I need to keep the aforementioned funds out of the whole bankruptcy deal. I've got things going on the side that have kept us from getting to this point three years ago. However, now it's a make it or break it moment. I must expand and become visible to our favourite uncle. That's what the (most of) funds from overseas (coming from a sale of property) are meant to be used for.
I do understand that it would make sense to walk away from a house in a Ch. 7. I just can't do it to my kids who love it up here and love this house. They've been through hell in one of the previous stages of their lives and that's not something I'm going to expose them to if I've got any way of preventing it.

My employer does provide an old-time pension plan, but it's fairly unique especially in today's environment. Let's just say that I can't touch it - or borrow against it - for the next ten years.

I hope this clears some of the fog my original post might have left behind. If not, I'm all ears, send your questions this way.

Thanks again, one and all.