filed today chapter 7...now what

[gamama]

I've been lurking and contributing throughout the last 2 months.

What tremendous information here! I'm addicted to this website and read through many other helpful posts!

Our story, family of 5 (w/3 teenagers) living in GA,

Sept. 2003 I was laid off from nice paying direct deposit high tech job
July 2004: good time in our financial and personal lives to start a business...but what? Looked at franchising and purchased one with HELOC. Still OK as this would be GREAT tax benefits and DH has great job w/benefits and savings in the bank.
Started "American Dream...turned nightmare" . Business really grew FAST and couldn't keep up. Had to spend money to make money - we were rolling in the dough the first couple of years.

The debt began to build...still OK as business revenue was good, dh job was stable and pay increases continued. Hey, most businesses run on credit! Why not? We still had a nice cushion of cash for the 'what-ifs'.

but the business began to go south in late 2007; revenue was just barely making it. I was limiting myself to how much salary I was taking. Began to borrow from Peter to pay Paul; payroll started to come in with no money to pay - CASH advance from CC @ 0% interest will be OK as I know the business will start creeping back in. Hey, worse case scenerio - i'd sell the business. This must be how small business works??? Right - well I'm learning the hard way!

Nov. 2008 - DH was laid off during the peak of our recession - loosing 150k/yr job. We cashed in our cash reserves to live off of for the next 7 months. The reality of the business revenue was really hitting me.

The IRS was calling for non-payment of payroll liabilities, owing about 10k with interest & penalties

Had not filed 2007 returns; delivered to accountant that didn't file. Didn't know this for 6 months

2008 was not filed either

we owe irs over 40k

And our credit card Debt is 75K

HELOC is 75K

business revenue dropped from 180k in 2007 to 75k in 2009

DH took a temp job in may 2009 and was paid $50.00/hour (equal to 100k /year no paid holidays, vacation, sick, etc) Had to take out independent health insurance for $624/month (family of 5 cost was reasonable).

It is really becoming clear that it's time to do something drastic. As we were deciding the best route to get our financial life back in order, we didn't pay credit cards. After 3 months we got filed with a judgement suit from AmEX. This was the final straw.

We hired an attorney end of August.

Today we just filed for Chapter 7.

My question is what's next.

We now make a little over $105k /year (2008 combined income was 187k - crazy; so why are we in this mess??)

Mortgage 1st (2200 piti/255k balance) & heloc (700/75k balance); 2900 total; value of house is anywhere between 330k - 400k (depending on where you get the value)

We qualify for the chapter 7, phase II based on our expenses.

because our mortgage is about 50% of take home, that leaves very little for the rest.

Concerns:

paid off 2006 hyundai 3 weeks ago (had very little left to payoff). the loan was originally made through our primary CU. We have not received title yet; called and they don't have the title - never did. I called the DMV and they show them as lien holders as of yesterday. I found out that I need to obtain a lien release letter from the cu to get a re-issue of the title from the DMV.

I have w/ same CU the heloc (17 days past due), visa (10k, 45 days pd) and overdraft (2k, 45 days pd) with the same credit union as the now paid off car. We also had our primary checking acct with this credit union.

Our lawyer advised us to stop direct deposit to the CU (we did) and setup a new checking acct (which has been done as well). she explained cross-collaterazation and wasn't sure what was going to happen if we left the car loan open and is why we decided to pay that car off as part of our pre-bk planning. Didn't expect this quagmire to come out...

1: Will I be able to get a lien release letter from the CU releasing interest in the car, now that they have been notified of our bk on the other accts?
2. I know the CU will freeze the remaining funds (only about 200 in that acct), but how quickly will that happen. I absentmindedly wrote a $50.00 check on that acct this am.


Value of our home. zillow.com shows value just about what we owe on it; however, other sources show we have about 0k in equity. How will the trustee determine this value? Believe me - no houses are selling in this neighborhood either. I could probably sell it quickly at 330 (what we owe); but others are on the market for around 400. I really want to keep our house, it's a very, very fine house--sing it

lawyer said our auto's are ok as they are within the exemption amount for vehicles

Our lawyer filed our motion to bk this am - we received 341 meeting appt for Nov. 17...Lawyer said that the trustee assigned is "one of the toughest trustees, but we will be fine". I'm scared to death by that statement as I have read other horror stories of 341 meetings with a bully-trustee. what can i expect ? (worse case scenerio?)

As far as the business...I'm behind on royalties by about 6k. DH wants me to include this in BK, but that means I will have to close the business, which does offer us a little back in return like mileage, home based business expenses and a few other items (about 15k in unrealized income) I'm still torn on this one.

Whew - i think this is it. Thanks !

[drowning123]

Trustee doesn't determine value of your house. You get that done with a Comparative Marketing Analysis done by a realtor. I paid $100 for mine. It was worth it. Trustee will have a lot of questions for you. Go online and try to find what type of questions might be asked at your 341 meeting for your district. I did that for New York and it really helped. Good luck!

[mrskal]

Zillow shows my house at 186k, realtor market annalysis with comps comes in at 150-155K. I would get that done first. For me either way it did not matter, I am not keeping the house, and both amounts are less than the 200k I owe on it. The realtor said that if I were to list it we would start at about 169k, for the short sale. No thanks!

[drowning123]

I'm with you on that one, mrskal.

[ja181]

Your situation (business, taxes, income, debt) sounds somewhat similar to what I was in. With a good attorney (sounds like you've got that covered) you should be fine at the 341, just pay attention to the personality type, if he/she has a big ego, say Sir/Ma'am.

My trustee was supposedly the worst in the state (for the debtor) and he was perfectly ok with all of the answers my attorney and I carefully crafted in advance.

[tcreegan]

Hi gamama,

zillow is notoriously high, use the comp. value from the realator

If you are betting on what a credit union will do, go to Vegas, the odds are better....

To cure the 341 jitters, find out where the trustee holds meetings and go watch a few. Works wonders..

Good luck w. your filing,

Tom in Colo

[ja181]

To cure the 341 jitters, find out where the trustee holds meetings and go watch a few. Works wonders..

Some states, like mine, have their 341s in private meeting rooms, not open to the public... So, find out before you make a trip.

When you do head to your 341 though, you'll likely be surprised about the range of people and situations. I expected to see a lot of poor hygiene and addictive personalities, but very little of that...

[scorpion35]

I've been lurking and contributing throughout the last 2 months.

What tremendous information here! I'm addicted to this website and read through many other helpful posts!

Our story, family of 5 (w/3 teenagers) living in GA,

Sept. 2003 I was laid off from nice paying direct deposit high tech job
July 2004: good time in our financial and personal lives to start a business...but what? Looked at franchising and purchased one with HELOC. Still OK as this would be GREAT tax benefits and DH has great job w/benefits and savings in the bank.
Started "American Dream...turned nightmare" . Business really grew FAST and couldn't keep up. Had to spend money to make money - we were rolling in the dough the first couple of years.

The debt began to build...still OK as business revenue was good, dh job was stable and pay increases continued. Hey, most businesses run on credit! Why not? We still had a nice cushion of cash for the 'what-ifs'.

but the business began to go south in late 2007; revenue was just barely making it. I was limiting myself to how much salary I was taking. Began to borrow from Peter to pay Paul; payroll started to come in with no money to pay - CASH advance from CC @ 0% interest will be OK as I know the business will start creeping back in. Hey, worse case scenerio - i'd sell the business. This must be how small business works??? Right - well I'm learning the hard way!

Nov. 2008 - DH was laid off during the peak of our recession - loosing 150k/yr job. We cashed in our cash reserves to live off of for the next 7 months. The reality of the business revenue was really hitting me.

The IRS was calling for non-payment of payroll liabilities, owing about 10k with interest & penalties

Had not filed 2007 returns; delivered to accountant that didn't file. Didn't know this for 6 months

2008 was not filed either

we owe irs over 40k

And our credit card Debt is 75K

HELOC is 75K

business revenue dropped from 180k in 2007 to 75k in 2009

DH took a temp job in may 2009 and was paid $50.00/hour (equal to 100k /year no paid holidays, vacation, sick, etc) Had to take out independent health insurance for $624/month (family of 5 cost was reasonable).

It is really becoming clear that it's time to do something drastic. As we were deciding the best route to get our financial life back in order, we didn't pay credit cards. After 3 months we got filed with a judgement suit from AmEX. This was the final straw.

We hired an attorney end of August.

Today we just filed for Chapter 7.

My question is what's next.

We now make a little over $105k /year (2008 combined income was 187k - crazy; so why are we in this mess??)

Mortgage 1st (2200 piti/255k balance) & heloc (700/75k balance); 2900 total; value of house is anywhere between 330k - 400k (depending on where you get the value)

We qualify for the chapter 7, phase II based on our expenses.

because our mortgage is about 50% of take home, that leaves very little for the rest.

Concerns:

paid off 2006 hyundai 3 weeks ago (had very little left to payoff). the loan was originally made through our primary CU. We have not received title yet; called and they don't have the title - never did. I called the DMV and they show them as lien holders as of yesterday. I found out that I need to obtain a lien release letter from the cu to get a re-issue of the title from the DMV.

I have w/ same CU the heloc (17 days past due), visa (10k, 45 days pd) and overdraft (2k, 45 days pd) with the same credit union as the now paid off car. We also had our primary checking acct with this credit union.

Our lawyer advised us to stop direct deposit to the CU (we did) and setup a new checking acct (which has been done as well). she explained cross-collaterazation and wasn't sure what was going to happen if we left the car loan open and is why we decided to pay that car off as part of our pre-bk planning. Didn't expect this quagmire to come out...

1: Will I be able to get a lien release letter from the CU releasing interest in the car, now that they have been notified of our bk on the other accts?
2. I know the CU will freeze the remaining funds (only about 200 in that acct), but how quickly will that happen. I absentmindedly wrote a $50.00 check on that acct this am.


Value of our home. zillow.com shows value just about what we owe on it; however, other sources show we have about 0k in equity. How will the trustee determine this value? Believe me - no houses are selling in this neighborhood either. I could probably sell it quickly at 330 (what we owe); but others are on the market for around 400. I really want to keep our house, it's a very, very fine house--sing it

lawyer said our auto's are ok as they are within the exemption amount for vehicles

Our lawyer filed our motion to bk this am - we received 341 meeting appt for Nov. 17...Lawyer said that the trustee assigned is "one of the toughest trustees, but we will be fine". I'm scared to death by that statement as I have read other horror stories of 341 meetings with a bully-trustee. what can i expect ? (worse case scenerio?)

As far as the business...I'm behind on royalties by about 6k. DH wants me to include this in BK, but that means I will have to close the business, which does offer us a little back in return like mileage, home based business expenses and a few other items (about 15k in unrealized income) I'm still torn on this one.

Whew - i think this is it. Thanks !

more than likely the CU will not release the title,because u BK'ed them .they have Cross-collateralization clauses


Cross-collateralization clauses make collateral that secures one loan serve as collateral for all loans the credit union has made to the borrower in the past, and may make in the future. This transforms all past, present and future loans into secured loans. Unfortunately, the borrower is often not aware of the cross-collateralization clause.s make collateral that secures one loan serve as collateral for all loans the credit union has made to the borrower in the past, and may make in the future. This transforms all past, present and future loans into secured loans. Unfortunately, the borrower is often not aware of the cross-collateralization clause.