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    Preparing and Deciding-Need Advice

    Hello everyone. I have been lurking in this forum for a few months now and trying to educate myself on what to do about my situation. So far, I must say, I appreciate all of the help everyone has provided to each other, I think it's wonderful that there is a forum like this to help people manage difficult times in their lives.

    So here is my story, and I would appreciate some feedback and support!

    I bought my house in June 2006 (AKA the peak of the bubble). I paid $150k. I have two mortgages (80/20). It was zero down, interest only, and my payments until the rates reset were $1100 per month. Obviously, knowing what I know now, this was an incredibly bad purchase. The house needed new windows, a new furnace, other repairs, so I payed what I could out of pocket, and financed the rest. The house today is worth maybe 90k, and I owe 145k. I was able to finally do a harp refinance after years of trying to work out a plan with my lender (a major bank in the south) who services both loans. At the time of the purchase I was single, 2 years later I got married, and now have 2 children. These events have been blessings in my life, but we are outgrowing our home, and are very far underwater. The mortgage is in my name only. When I refinanced last year, they suggested I put my wife on the note, but didn't think it was a wise move.

    In addition to being underwater, we(I) also have a considerable amount of cc debt, approximately 39k, which is in my name only. Again, a lot of this has to do with being in an older home, trying to keep afloat, feeling ashamed and guilty about losing the house, irresponsibility, and so forth. I am not proud of where I am financially, but buying the house, with bad advice and at the wrong time, unfortunately started me on this downward spiral. We also have a car loan with about 5k left to pay, which is the only jointly held debt. Again, all other debt is in my name only. The other significant debt burden is my student loans, which total 50k, and after graduating this Spring, are now in repayment.

    My income is about 62k annually before taxes, and I have a family of four. After paying the mortgage of about $700 per month, cc ~$650 per month, car payment ~$250 per month, student loans ~$550 per month, there is basically little left for clothing, food, gas, utilities, etc. I have been living and filling the gaps with cash advances(dumb I know), but due to my high balances, those are no longer going to be offered. We have someone who wants to buy our car, that is jointly owned, and I'm considering selling it to rid ourselves of that burden and to eliminate my wife from any debt. My credit is still okay. Around 710. I have never missed a payment or have been late, but that's mainly due to shuffling and sooner or later, it probably will happen. I have also been using the cards to pay for fuel, groceries, etc. but I know I need to stop that, and prepare for what may have to happen.

    If we sell our car that we owe money on, we still have 2 much older cars with high miles. I'm wondering if it would be wise to buy something else in my name while my credit is still good before filing, or waiting until after filing to purchase something with horrible credit? I have maybe 3-4 months before the "accounting shifts" and other trickery will start affecting my credit.

    My wife is a stay at home mom, and will not be going back to the workforce for probably another year, so her income is obviously zero. With daycare costs, and job prospects in her field, it wouldn't amount to much right now. If I did file, it would be only me, and hopefully wouldn't affect her in any way.

    So, I guess I'm just looking for some support and hope. I feel awful about the situation we are in, but I am thankful to have a stable job. Any thoughts on what I should do? I have not spoken to an attorney yet, but I am planning to after the new year. Thanks!

    #2
    Here's a link to Mn.'s exemptions. Looks like you can use either state or federal.

    Bankruptcy exemptions determine if you can keep your house, car, pension and retirement funds. Learn the available state and federal bankruptcy exemptions.


    Were I you, I'd file. You have a large family and, a good chunk of debt {SL's} that won't be discharged.
    If, you feel you need a reliable ride, get it before filing. Then, stop paying all debt you wish to discharge {that includes the mortgage} and use that money for HH expenses.
    Most bk lawyers will give a free or lowcost initial consultation. Speak with a few and see what they say.

    Comment


      #3
      IMO, if you are having to use credit cards to pay your monthly expenses, you should stop making payments on the credit cards. If you need a newer car, ask attorneys during your free consultations at buying one while your credit is still good. But, make sure you buy one you can afford while still making the student loan payments.

      Is the car you are paying on worth less than you owe? How long ago did you buy it?

      Are your student loans federal loans? If so, have you explored an income based repayment plan?

      You are well below median income for a family of 4 in Minnesota, so should be an easy Chap 7. Meet with some BK attorney's asap. Don't wait 3-4 months and dig a deeper hole.
      LadyInTheRed is in the black!
      Filed Chap 13 April 2010. Discharged May 2015.
      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

      Comment


        #4
        The car is worth about 5500 but we owe 5000. We bought it in 2012. Yes, I have federal student loans and I am currently working on consolidating to a IBR plan. The reason I would wait is to ensure enough time between the last cash advance and use of the cards. I had to charge a few things just last week-the electric bill being one of the charges. I'm not trying to defraud, just trying to survive.

        Comment


          #5
          Is there some reason you wouldn't want to keep paying on the car you have instead of getting a new loan?

          Originally posted by Northstar View Post
          The reason I would wait is to ensure enough time between the last cash advance and use of the cards. I had to charge a few things just last week-the electric bill being one of the charges. I'm not trying to defraud, just trying to survive.
          You can probably stop making payments even if you wait to file. But, you may not need to wait. Put this issue on your list of questions to ask attorneys during consultations.

          The reason you would wait to file is to avoid an objection by a creditor to discharge of the recently incurred debts. The following is a description of debts that are presumed to be not dischargeable if the creditor objects:

          (C)
          (i)for purposes of subparagraph (A)—
          (I)consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and

          (II)cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable; and

          (ii)for purposes of this subparagraph—
          (I)the terms “consumer”, “credit”, and “open end credit plan” have the same meanings as in section 103 of the Truth in Lending Act; and

          (II)the term “luxury goods or services” does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor;
          The above is from 11 U.S. Code § 523

          If the charges are not huge amounts and do not fall within the above descriptions, a creditor is very unlikely to object to discharge because they would have to prove that the charges were fraudulent.
          LadyInTheRed is in the black!
          Filed Chap 13 April 2010. Discharged May 2015.
          $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

          Comment


            #6
            I reread your post and found the answer to my question:
            We have someone who wants to buy our car, that is jointly owned, and I'm considering selling it to rid ourselves of that burden and to eliminate my wife from any debt.
            It doesn't seem trading a new loan for an old one will rid yourselves of a burden. Why is it important your wife not be on any debt? If you keep making the payments, it will be a positive on her credit report. But, so will paying it off I suppose. I don't get the need for the new loan.
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

            Comment


              #7
              I understand what your saying. A couple of things. I took an advance larger than $750 a month ago. The reasons we would be selling the car: It is higher mileage ~150k miles, our family is outgrowing it, we could lock into something more reliable while my credit is good, and this is the only debt that is jointly held, thus I would be filing on my own and leaving my wife out of the proceedings. Does this plan make sense? I truly appreciate your help! We don't want that expensive of a car, just something that works better for the family. I understand "that expensive" is a subjective term.

              Comment


                #8
                Getting a more reliable car is a good reason to get a new car. Keeping your wife out of the proceedings is not. Even with a joint debt, she will not be affected by you filing BK as long as you do not default on the loan.

                As far as the cash advance is concerned, talk to an attorney about it. They may advise you to make a couple of payments, but may also say to stop paying and just put 70 days between the advance and the BK. As soon as you make a decision to definitely file BK and purchase a car (if that's what you decide to do), then you should stop paying all other unsecured debt. To pay unsecured debt when you are going to file BK is throwing money away. Save it for attorney fees.
                LadyInTheRed is in the black!
                Filed Chap 13 April 2010. Discharged May 2015.
                $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                Comment


                  #9
                  All good advice above. I just wanted to add. . .

                  If you do not think you "qualify" for either a full or partial hardship discharge for the student loans (or have no interest in attempting to discharge them) you might what to try a repayment plan offered by the government (assuming the loans are "federal"). Please see info below:



                  Des.

                  Comment


                    #10
                    Originally posted by despritfreya View Post
                    All good advice above. I just wanted to add. . .

                    If you do not think you "qualify" for either a full or partial hardship discharge for the student loans (or have no interest in attempting to discharge them) you might what to try a repayment plan offered by the government (assuming the loans are "federal"). Please see info below:



                    Des.
                    How would he get a hardship discharge of his student loans? I thought student loans were almost never dischargable in bankruptcy?

                    Comment


                      #11
                      Originally posted by Blossoms View Post
                      How would he get a hardship discharge of his student loans? I thought student loans were almost never dischargable in bankruptcy?
                      Google "the Brunner Test" and comb through this Forum for info on dishcarging student loans. Do not believe those like Suzie Orman, who claim student loans are not dischargeable. If the circumstances are right one can get either a full or partial discharge. Tough - yes. Impossible - absolutely not.

                      Des.

                      Comment


                        #12
                        Stay strong 4years out youll make it....

                        Comment


                          #13
                          I just wanted to provide a quick update, and ask a few more questions if I may.

                          After some more thought, and reflection, we have decided to keep our car and continue to make monthly payments. Even with higher miles, the reputation of the vehicle, and my mechanical skills make it a better(wiser) decision. So, that question is settled.

                          However, I have a couple of questions for those of you that have gone through a chapter 7. How has it affected your employment prospects? I only ask because I am currently in the process of looking for a new job, but worry I may be looked at unfavorably.

                          Also, this may be a dumb question, but one of my cards includes airline miles, and I would prefer to use them rather than give them up. We have an opportunity to travel in February, but I'm not sure that it would "look good" to do so. Thoughts?

                          I'll be talking to an attorney this Thursday, are there any questions I should ask outside of the norm?

                          Thanks again for all of your guidance, I truly appreciate it!
                          Last edited by AngelinaCat; 01-06-2014, 07:45 PM. Reason: Make a longish post post easier to read.

                          Comment


                            #14
                            I don't think most employers care about a potential employee's bankruptcy. Unless it's a job that requires an employee to be bonded, and would require the employee to have good/clean credit.

                            Comment


                              #15
                              Bumping this thread. As of May 1, I have stopped paying the mortgage and credit cards. Unfortunately, I forgot to remove one from auto-pay, so that one processed, but the others are not paid and all cards are shredded. I retained a lawyer and hopefully by the beginning of June, I will have the money to pay for filing. I am comfortable with my attorney and he has been extremely comforting and non-judgmental. I will not reaffirm any debt, but will pay off the car, and student loans. We plan to stay in the house as long as possible and than see what is in store for us down the road. I'm ready to start anew and prepare a better financial future for my family. Thus far, no calls from creditors. If they do call, they will be referred to my counsel. Trying to figure out the best method to employ when dealing with Suntrust (Mortgage). They will likely be the first to call, as soon as tomorrow, when the grace period on the mortgage payment for this month ends. Hoping all goes well! Thanks!

                              Comment

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