Am I being realistic or is it wishful thinking...

[time2startover]

I have been in debt for many, many years and just recently thought about filing for bk. I've been watching this site for about a week and have found many answers and have benefitted from everyone's wisdom. I'll try to keep my questions to ones that haven't been answered over and over, but I do have a few questions that I will list after my scenario is described. I also have another question about the pre-planning that I keep reading about, but I think I will post that separately.

I'm married with two kids. My wife has not worked for over a year. I've made around $55K the last few years, but that includes all bonuses and overtime. This year it's on pace to be closer to $51K. We have one vehicle loan and a mortgage. Our credit cards are spread between four different companies (all VISA or MC) and a Dell Computer account. I had never really considered this option until recently. We are current on all accounts, although we've remained that way from taking a cash advance out about a month ago ($2K). It was deposited directly into my account and our house and car were paid with it. I've been using my credit cards very regularly, but only for normal items such as food, baby formula, eating out, clothes, etc. I did buy a new computer just a month ago. All of this is before bk ever was something I thought I would do. I am a new Realtor (this is not where the income listed above is from) and was thinking if my wife found a job and I could sell some homes along with my regular job, we could get out of debt. I had big hopes of investing in real estate and that probably won't be an option now. On to the questions...

1. Will the cash advances or purchases hurt me filing?

2. Should I try and jump on the real estate job and make some money and risk going over the median income, or sit back file, and then start selling homes?

3. Is there any hope of coming out of this? Am I just delaying the obvious?

4. What amount of time should I wait before filing?

5. What about the Dell computer? Will that hurt me? I was just about to transfer the balance to a credit card (the interest is 29.99 % and I have credit cards with 8% interest and available space).

It was so hard to even utter the word bankruptcy to my wife. I've always thought we would be able to catch up. I'm also worried about my Mother finding out. My Father passed away last year and would be so ashamed of how I let my finances end up. They were both always very conservative and pay all balances off every month. She has no clue what are debts are. Thanks in advance for the help.

[keepmine]

How much cc debt and other unsecured debt do you have? What state and how much equity in your home?

[SinkingFast]

The general rule I've heard about Real Estate is,............ You should be able to support yourself for at least 6 months going in.

That's pursuing REA full time. Trying to sell houses. In a good market. Resale housing is tanking all over the country right now. Too much new construction. Interest rates are going up.

First, you have to go to school and get your license. Then it will probably take a couple of months or so before you ever even get a sale. An agreed up on offer. Not sold and closed. You don't get paid until the deal closes, and the Title company releases all the money and the commissions go to the Real Estate COMPANIES/OFFICES. Then the Real Estate Company/Office takes their cut off the top of your commission. Then there's an "Errors and Omissions" insurance policy many agents have to pay on each and every sale. Some offices deduct for the secretary that puts your paperwork together for you. Finally, you get paid. Suddenly your 3-3.5% becomes 2%. And it takes a while to establish a reputation where you can start listing houses to sell. That's where the real money comes in.

So even if you don't decide to wait, it's gonna take a bit before you start to realize any significant amount of money out of REA as a part time venture.

There's a 70/90 day rule most every attny will make you abide by. No Cash Advances or Convenience Check use for 70 days. No CC use for 90 days. You file before the 70/90 day marks and the burden of proof that you are not filing in Fraud falls on you. After that time period, the burden of proof shifts to the Creditors.

Personally, I feel the fact that you're here and thinking about BK as a viable possibility tells me that your debt load is such that you are seriously concerned. In that case, I would continue to hope for the best but prepare for the worst.

Quit using your CC's and your LOC's. Start the 70/90 day clock ticking just in case you need it.

You need to learn about BK. The things you should and should not be doing during the time period prior to filing. You may continue to make your payments and things go along just fine for another year or so. You may get 6 months and things really start to deteriorate. REA may be a huge success for you and you won't need BK. You never know what the future holds. But as far as BK goes, you'll wanna do your homework and be prepped just in case.

BK is serious Federal business and ignorance is not an acceptable defense.

[anonymuse]

1. Will the cash advances or purchases hurt me filing?

By the letter of the law you shouldn't file until any of those purchases and advances are out of that 90 day window. However, it's always best to wait as long as you can to file since the trustee can look further back than 90 days.

2. Should I try and jump on the real estate job and make some money and risk going over the median income, or sit back file, and then start selling homes?

Depends on how much slack you have between what you make and the 6-months previous income versus the median income.

I'm not sure how real estate is doing where you live; but here things are very slow. It takes quite a bit to get up and running being a realtor. Do you have your license yet? A lot of real estate is about networking--do you have the contacts?

3. Is there any hope of coming out of this? Am I just delaying the obvious?

Once you answer the other questions regarding income and equity, we'll be able to tell you more.

4. What amount of time should I wait before filing?

The longer the better--once you decide to file, stop paying those debts that you want to discharge in bk.

5. What about the Dell computer? Will that hurt me? I was just about to transfer the balance to a credit card (the interest is 29.99 % and I have credit cards with 8% interest and available space).

If you do this, it would have to be as far as possible from your filing date to avoid looking like pre-bk planning. With Dell, it would probably be a secured debt which you wouldn't be able to discharge--they'd want the computer back.

[time2startover]

Sorry for lack of info...

I guess it would have been better if I clarified a lot of things. First the debt:

$150K mortgage, no equity

$60K credit card debt

$19K car loan, no equity

Also, pertaining to the real estate deal. I'm in Texas and in where I'm at, real estate is still booming. I already have my license and am finishing up my orientation and new agent training with a very large real estate company. I've been here for 33 years and have tons of contacts, plus a lot on inside help as well (brother-in-law is sending my people his way from his pest control company). I figure I could at least do a couple of deals (minimum). What is the median income for Texas? Let me know if more info is needed.

[anonymuse]

We always sound nosy when we start asking for salary and debt info! ;)

The median income for a family of four in Texas is $58,153. You don't have any equity in your car or houses so that looks good for you as well--especially for a Ch 7. Take a look at schedule J to see what your expenses are like and see if you have any disposable income left over.

[time2startover]

One other thing...We NEVER have any cash left over. I'm only keeping up with the payments because of cash advance, bonus from work, Mom gives all the kids a little money, etc. We are seriously negative and probably still would be if my wife worked, but we had to send both kids to daycare!

[keepmine]

I'd give it 6 months and if real estate takes off, no need to file. BK is still an option down the road.
Thing is, even if you start having success as a realtor, you better start living below your means or, you'll still be struggling.
Here are the things you can exempt in Tx.

http://www.thebankruptcysite.com/bankruptcy-exemptions/texas.php

[time2startover]

More questions...I would still like to dig myself out of this mess if possible. Should I call the credit card companies and explain my situation? Will they lower the minimum payments temporarily? Should I ever say the "bk" word when speaking to them? THanks.

[anonymuse]

Don't say the BK word. It could backfire and prompt creditors to act legally quicker. It never hurts to call the cc companies--remind them of your positive credit history with them and ask if you can temporarily reduce payments. It's always worth a shot.

[time2startover]

One other thing...My wife is just the passenger on this debt filled ride we call our life. Sure she knows "we're in debt" and has used the credit cards as well, but I handle all of the bills and make all payments, and usually rack up most of the charges. Should I leave her in the dark so she doesn't have to try and account for all of this or show her our situation first hand? We've had our debt for over 10 years and there is no way I could even go thru and explain all of the past cash advances and balance transfers. I've been doing the juggling act forever trying to get the debt down. If we do file, I just want to know what to do. Thanks.

[lrprn]

One other thing...My wife is just the passenger on this debt filled ride we call our life. Sure she knows "we're in debt" and has used the credit cards as well, but I handle all of the bills and make all payments, and usually rack up most of the charges. Should I leave her in the dark so she doesn't have to try and account for all of this or show her our situation first hand? We've had our debt for over 10 years and there is no way I could even go thru and explain all of the past cash advances and balance transfers. I've been doing the juggling act forever trying to get the debt down. If we do file, I just want to know what to do. Thanks.

As the wife passenger on our own debt-filled life ride, my husband (also the financial 'captain' in our 27-year marriage) chose to keep me in the dark about how bad we were doing financially until his "keep on borrowing and using credit cards to pay other bills" financial structure finally collapsed under its own weight. I wish with all my heart that he had told me about our worsening situation several years ago when we could have worked on our financial problems as a united front. Instead because he waited much too long, by the time I finally figured out we were in serious trouble, we had no option left but to file Ch 13 early this month.

I can't speak for your own relationship, of course, but please don't allow your pride or your shame keep you from sharing the truth with your wife. If she loves you, she will likely be hurt and angry (I was) but hopefully she will also forgive you (I did). People make mistakes - none of us are perfect. It takes a lot of courage to stand up and say "I made a mistake" and take responsibility for it. Far better to do that voluntarily than for her to finally figure it out on her own like I did. And who knows - she might just surprise you with understanding and support so you won't have to carry the burden alone any longer.

Good luck whatever you decide to do, and I hope everything works out for you both.

[time2startover]

Thanks for the nice reply. I hope the best for you as well. We've been together since high school so we've gotten into this problem together. She is aware of our problem and is fully supportive (I am truly blessed), but she couldn't answer specific questions thrown at her if someone (trustee) was to ask. She knows roughly how much we owe but none of the specifics regarding balance transfer amounts and dates. I always pay the bills and do the banking, but I don't hide anything from her.

[keepmine]

If your lawyer does his job, it's unlikely that either you you will be asked any questions by the trustee. Many of us have juggled debts for years before filing. You won't shock the trustee sensless when he sees your petition.
Also, "I don't know" is a perfectly acceptable and legimate answer as long as it's the truth.

[JeepMom]

[QUOTE=brokemommy]Wow, I was just asking for a $3,000 boob job, your going to hiest $45,000.

Does every post you make have to be aabout your wanna be boobs?

I would file then get into RE.