NEW and Totally Overwhelmed...help

[teresa]

I've just started on my research of bankruptcy. At first I was sure that I would have to go Ch 13, but now I'm not sure. I would appreciate it if someone could look over my situation (I'll try to keep it short and sweet) and give me a spin...

I am buying a home (that will never be worth what I owe on it, predatory lendor - BENEFICIAL ), and have 2 newish vehicles financed, one through a credit union, one through another lender. I'm upside down in BOTH vehciles, significantly, with at least 48-60 months left on the payments.

I bring in around 4K/month net, my husband, <1.5K/month. My monthly expenses, money I owe to creditors, secured and unsecured, is around 4.8K. This includes everything but Dr. Bills, groceries, gas, car repairs, clothing (I've got two teenaged boys), entertainment, etc.

My ex didn't pay cs for the longest time, when I finally went after him for support, he just retired. The kids get 550 each/month from his SS, and 330 of that each is supposed to be alotted for cs. The money goes in automatically to an account that I hold joint w/ both of them. I've geen receiving this money for 2 years. My intention was to stay out of it, but due to a lack of money and high debt, I've had to use almost all of the money in there accounts, more than what I am entitled to for cs. In addtion, I have not paid the 2nd half property taxes for 2005, 1st half for 2006 is due in a month, and I have not paid (or filed, or even done) income taxes since 2002. When I figured my taxes for 2003, it looked like we owed about 6K, got shell shock, buried my head in the sand, and have just been mindlessly plugging along, scared, ashamed, resentful, guilty. To make matters worse, my husband lost his job, and has been trying to get his insurance business going. He has good months/bad months, but lately they have all been bad months. I've asked him only to take care of his cs obligation to his kids and to pay his car payment, in all, around 1k/month, but he hasn't been able to do that lately, either. I was single for a long time, and managed to support myself/kids w/out any help, now that I'm married, and making 3x the money, I'm in worse financial shape. This month, when I dipped into their money again, something just clicked and I said "no more" -- I'm not jeopardizing the kids possibly only nest egg they'll have for college any longer. I realized that even though we're scraping by now, I still have what I am sure will be a huge tax debt (income and property), my youngest needs braces, I am making minimum payments...My washer went on the fritz last weekend and I thought I was going to die. I just don't see how I can continue without bringing my boys down with me. I know how I got in this boat -- pure stupidity. I don't have huge medical bills, lost jobs (husband lost job 3 years ago, but he is making some money) --- it's just crazy. Go ahead, flame me, I know I deserve it.

To me, filing bankruptcy is my only chance. I can't count on my husband to help out, the business is just too unpredictable. I can't ask him to quit and find another job, don't ask me why, I've already turned this into whining 101, don't need to make it marriage 101.

What I want seems ridiculas, I want to keep my home, my cars. I want to be able to put money into my 401K, I want to keep my mitts out of my kids' money, I want to be able to replace my old applianced if I have to, I want to be able to get my son the braces he needs. I want to pay my taxes and keep current. I don't know what to do. What I have done was quit paying any cc bills. I'm current on house payment (after being 30 days late Jan/Fed), I'm current on one car loan (due 3/27) and late on another due 3/15). I've paid up my electric (was 750 past due, had to pay 530 yesterday), I've made appointments at CCCounseling, a tax guy, and with a BK attorney all for next week, and I've been going cross eyed reading as much as I can.

So, what is worng with me? I'm seriously depressed, and I'm suffocating. My appointment w/ attorney is this thursday, but I read something on this forum that maybe i don't want to talk to one too soon. If someone could please talk to me now, I just need someone to give me a little direction.

[aa06a47]

Your doing the right thing now. Make sure your CCCounseling can give you the pre-bk certificate. All other credit counseling is probably a waste of time for you now. You will need to have your taxes prepared and sent in prior to filing bk. I do not know the tax law, but have read enough that back taxes can be paid in a chapter 13. I understand BK does stop the interest and penalties for past due taxes. Make sure you bk attorney knows about the taxes.

Remember, tax evasion is against the law. Right now, that is your worst sin. Get that straightened out first.

With your two kids / interest on your house payment, ect...you may not owe as much taxes as you think. In fact, you might get some money back. I cannot imagine if you make 60K a year and have the deductions your talking about that you would owe that much taxes unless your employeer was just not taking anything out of your check.

Keep your head up, while the tax thing is very serious thing, you may be thinking that your drowing, relax a little and you might find your not in the deep end of the pool. Put your legs down, you may find that you find bottom and can lift yourself up.

[edwards2]

teresa what you want does not sound ridiculous. At the risk of wearing out a cliche...we have all been there...done that and know pretty much what you are going through. You have chronic despair and it is understandable. Unfortunately, when it rains, it does pour. I think you have made a smart move in making an appt with an attorney. You need some legal advice. You have way too much on your plate to wing it alone. The information on this forum is priceless and yes there are situations when filing too soon would not be in your best interest but those are cases when the poster had taken out cash advances in the past 30 days, etc. Doesnt sound like that applies in your case. Having said that you can keep your house if you are current on your payments at least in a Chapter 7. If you file a Chapter 13 you will be making payments at a percentage dictated by the trustee. That is based on disposable income and the means test. That test will determine if you can qualify for a Chapter 7. Let me also add my husband and I filed a Chapter 7 before the new BK laws took effect so I am not that familiar with the facets of the new law however, based on what you have written I cant imagine you having any disposable income to pay creditors. Your lawyer is your best bet to advise you on what to do. Regardless, I know it is a difficult time for you but you can and will get through this. Pre-BK is difficult, going through it is difficult and even post-Bk is hard but the good news is filing BK is not terminal. We are all survivors and you will be too. Keep us posted with any questions or concerns you have and we will do our best to help you. This is a great support lifeline - use it. Take care.

[teresa]

Thank you both for your reply. Wow, tax evasion, that really is what I am doing, huh? I mean, I know it is wrong and irrepsonsible, but I've been fooling myself, I'm guilty. My appot. w/ tax man is next saturday, I can't wait to get it over with. Hopefully I do not owe as much as I think I do. I went with a very reputable guy, so I am confident he'll get us straightened out. The attorney I went with is a guy I went all through school with. I thought it would help to go with someone I know I will be comfortable with. What a relief it is to find this board. You can read statutes all you want, but nothing replaced the folks that have been there, done that.
Thaks

[edwards2]

teresa....you are welcome and remember NO ONE is here to judge you. None of us is in a position to do that anyway. I learned so much from this forum and another. I cant imagine what I would have done w/o these guys. Let us know and do keep your chin up...

[aa06a47]

teresa, here is a web site you may wish to look at:

http://library.findlaw.com/1999/Aug/1/127981.html

It is rather old file, but doubt much as changed in regard to the rules. The tax thing is really all you have to worry about, the rest of it is handled in BK without much problem. So, with that said, get your taxes done and see where you stand. At worst, you'll be on a payment plan (which if your in a chapter 13, it comes off as a priority debt I believe).

Also, my use of the word tax evasion may sound strong, but if you haven't filed your income taxes, they might find you guilty of such. Don't allow them the chance!

I don't really like lawyers, even though they are like oxygen in some cases, but I feel under no circumstances should you attempt this on your own. (filing pro-se). This one could get very complicated, and I'm glad you have someone you can trust do it. Just make sure that he / she is qualified to do this type of law. Your friend may save you a few hundred dollars up front, but might cost you more later on. Make sure you ask him if they can handle this type of case.

[keepmine]

I am buying a home (that will never be worth what I owe on it, predatory lendor - BENEFICIAL ), and have 2 newish vehicles financed, one through a credit union, one through another lender. I'm upside down in BOTH vehciles, significantly, with at least 48-60 months left on the payments.

If you're way upside down in the cars and house, the very worse thing you could do is reaffirm them and try and keep them.
BK {IMO anyway} is a pure business decision. Take the emotions and sentiment out of the equation and take care of yourself and your family and maximize the benefits to bk the fullest extend possible. Don't jeopardize your future by trying to keep something you can't affford and won't appreciate.

[baybreeze]

Teresa,

Like others have said, we've all been through this before. I had also gotten to the point of depression, anxiety, feeling like I stuck in a black hole or something that I would never get out of. Scrounging up change to put a gallon or 2 of gas in my car, hoping I would make it work; not eating sometimes; my car contantly breaking down with no more way to pay for repairs except to borrow from family (which, I have since paid all back after my BK). I tried to negotiate with my credit card co.'s on my own first, only one company was willing to help out - believe it or not, it was Citibank. They actually stopped the interest for a while and I arranged a lower payment but I had to have them deduct it from my checking acct every month. Since the others wouldn't help, one of them referred to me a credit counseling service, which I did sign up for. However, I got behind on one payment. I had 3/4 of a payment one week..and had to wait til my next paycheck to pay the rest. But the service got rather irate and just threw me out of the program like that. The only other option for me was BK. I found that most BK lawyers would give a free consulation so that's what I did. He told to just stop paying on all credit cards and I could pay him off instead. When I paid him off we filed and I got discharged in 4 months. Since my credit was ruined from all the late payments and collections, it didnt much matter anymore to me to file BK. Let me tell you it was the biggest relief of my life. After discharge it was all gone! What a feeling that was just to be able to go out and buy necessities and such. And since all i had left were school loans (and they did work with me to extend my payment years so I would have lower monthly payments)...I finally had money to live on. That was almost 3 years ago...and since I've always had the cash since then, I didnt care less that I had no credit cards. It's a wonderful feeling to start anew and it feels great when I can buy something outright with out owing anyone payments or interest, etc...Then you just have to work on re-building your credit (and please DO read thru all these message boards for others advice b/c you will learn so much it's unbelievable). And after a few years of re-building and keeping your spending under control you're credit scores WILL build up again. BK is not the end of the world..you just have to be willing to either not use credit for a while or just pay higher interest, etc...over time you'll qualify for much better rates.

[SinkingFast]

I can appreciate your position. We're going thru it right now ourselves.

One thing you are absolutely, positively gonna have to take care of are the taxes. Those have to be filed before you can file BK.

It's a New Law requirement. Our own personal copies aren't good enough for the attnys. They have to get transcripts direct from the IRS. You have to have filed your taxes for the last 4 years before filing. So that's a must that you resolve that issue.

I know it's hard to let go of STUFF. It's your stuff, it's become a part of you, your life, your identity. But it is just STUFF.

I keep telling myself the same thing, even tho selling my truck is about to kill me. It's not the truck. It's the idea that the truck is THE LAST THING I have left. Everything else is gone. And now I'm loosing my truck too.

I can imagine how you feel, but,.......... Give some serious thought to just letting go of the cars you are so upside down on.

The only way to know if your Ch 13 or 7 is to run the Means Test. You'll have to check the Median Income level for your State, and look at average costs for various living expenses. There's only a few places on the Means Test for actual expenses. Medicals is one. Priority payments like alimony and child support are a couple others.

Here's a link for you to get started:

http://www.usdoj.gov/ust/

In the box under Bankruptcy Reform. Start there.

[StaciMM]

Something to think about... How do you stand, expense to income wise, when you do not include the credit card debt and dr. bills, but do count groceries, gas, and all the other needed expenses? That will play a big part in determining ch. 7 or 13. Ch. 13, if you have a little room in that equation for a plan payment, could be a way to handle the IRS w/ the BK court's help.

Something else to consider, and others have already touched on it... If you're paying more than the current value for your cars & home, BK could be a way to get out from under those obligations as well as a general fresh start. Could you rent something more affordably? Moving takes time & money, but if you chose to give up the house in BK you'd have some time - a few months at least - where after filing, you could save up your mortgage payment money to put towards the move. And, save the car payment money monthly to buy used vehicles, or even a replacement vehicle potentially thru 722 redemption.

You have a lot on your plate right, and you're taking the right first step in that you're trying to learn what is ahead of you. I'd certainly suggest speaking with a few BK attorneys-to discuss local exemptions/expectations, etc.