Several Questions & Slightly Confused

[Phoebers]

Hi everyone,

I'm new to the board and my husband and I have been possibly discussing bankruptcy as an option for him. I had a bankruptcy discharged in 2001 and I am currently working with a debt settlement company. My husband was listed on there for awhile but he had some loans that were secured with personal property such as tools and our computer. We do not have any joint debt. I personally filed under the old laws after my divorce from my first husband. I got rapped up in the payday loan cycle (which I'm now out of) but this caused a lot of financial hardship for us and this is one of the reasons I am now in debt settlement. I have learned a lot about managing money but obviously I have a long way to go as my husband does.

I think we will call the attorney I used in my bankruptcy case but the more I read about the new laws, the more I am confused and obviously scared that they will take everything we own. My husband does have a house in his name that he has owned for several years. He also has a second mortgage on it that he is behind on. We almost lost the house a couple of months ago because he was behind on the payments but we made arrangments with the mortgage company and their attorney. We have no intention of breaking those payment arrangements because we do not want to lose the house.

I'm not sure which bankruptcy he would qualify for, I guess there is a means test to do and that would need to be discussed with an attorney. What prompted this was trying to pay an old medical bill of his and it seems any arrangments we try to make are not good enough. We paid a little over a couple of years to the original creditor but now it is with a CA. I called them on Monday to make payment arrangments via monthly debits from my checking account so they would not take this to court. We agree to a monthly payment over four years. They never took the funds out and we received another letter from them stating that we needed to call and make payment arrangements. Today, he received a letter from a CA representing Citifinancial to call immediately to make arrangments. Honestly, I did not know how far behind he was on this bill either. This loan is secured with some personal property but not a car title. He has another loan with American General but I think some of the same property is used from what he told me. He has a smaller loan that is almost paid off at a local loan firm. Mainly it is tools, tvs, and his tools that these are secured with. When we trying to dig ourselves out of my payday loan mess, anything seemed to be a solution at the time but we just dug ourselves deeper into financial abyss.

So, he should be able to file bankruptcy on his own correct? So what happens to personal property that is actually mine, such as beds or antiques, can they take those in a Chapter 7 if he would qualifty for that? I understand something about Homestead laws but I really don't understand that. We live in Ohio if that would help for some clarification. He also has another loan that happened after his divorce from his first wife several years ago. His mother is a co-signer on it and I believe it might be secured with some of her farmland. She has been making payments on it because of him falling behind. She has even talked about paying it off because of the hurt it has put on her credit report over the past couple of years. How would this play into a bankruptcy? We don't want to break any laws or committ fraud in anyway. We have made some horrible mistakes and we want to do the right thing. Thanks for any opinions or advice on this matter.

[keepmine]

Your personal property is yours. He does not need to list it.
Since his mother is cosigner, she can pay the loan off if she wants too. She does have a contractual obligation to pay if the other party defaults.
How much equity is in the house?

[Phoebers]

Well, he refinanced the house in Jan 2005 and it appraised for $115,000 and he got the 2nd mortgage a couple of months later, that pretty much ate up the rest of the equity in the house. If he refinanced, does that change the homestead exemption even though he is "owned" it since the early 90's?

[keepmine]

Re-fi's don't change the homestead exemption.
Problem is, you have a home you can't afford that has no equity. The prudent thing to do is let the home go in the bk and start all over again with something reasonable.

[Phoebers]

Does that mean their would be no exemptions? And since he is not current on the second mortgage, he probably wouldn't qualify for a Chapter 7 anyway?

[keepmine]

Not sure what you mean in that last post.
If there is no equity in the home then that would mean you are under whatever exemption your state allows. If he filed a Chapter 7, he'd need to be current in a hurry or the lender may move to lift the stay and proceed with foreclosure. That has nothing to do with his ability to file a Chapter 7.

[SinkingFast]

Exemptions work pretty much the same now as when you filed. You will have a Homestead Exemption to apply to your house.

Problem is, your Hubby cannot file Ch 7 and you keep the house if you're behind on payments. Your Hubby would have to file Ch 13 to keep the house and pay the arrears into the Ch 13 payment plan.

I have to agree with Keep. As a "Been There, Done That, Got the T-Shirt" house ate our A$$E$ up person. You're in over your head with that house. Tons of debts you cannot pay and equity is maxed out.

You're in a vicious cycle of playing catch here and there. Making payment arrangements with this Lender and that Creditor to catch up on lates. No one will rent to you in an open and active BK. Look for a place to rent and get moved. Let the house go back and file Ch 7 if you can.

[Phoebers]

Thanks for your replies. If it were up to me, I would let the house go. My hubby obviously feels differently because it has been in his family for generations and is "attached" to part of the family farm. It is kind of odd how the property is divided up. I would love just to find an apartment to rent and get out from under this heavy burden. We will make an appointment with my old attorney to see what his options are, maybe it's just not the right time to file. I do know that with the plan that we have with the mortgage company now, everything will be caught up by the end of December. There is now way right now we could just automatically catch up without letting everything else go. We're in a world of hurt but we know it's by our own mistakes. I have read a lot and learned a lot so far. I guess we will just take it day by day right now.

[Phoebers]

Well, hubby and I were discussing this over coffee a little while ago and he definately does not want to let go of the house so we'll have to see what our other options are once we sit down with a lawyer. He said if it had been any other house, then it would not have been a problem. I'm feeling a little more positive after reading on the site. I think once we discuss our situation with the lawyer, we'll know more in which direction that we should head, now or down the road if and when he does decide to file. I'm thinking it will happen at some point. It's nice reading other's experiences and know that it is better to be prepared for this. With mine, it was pretty simple because I really only had to reaffirm my car, I didn't own a home. This will be more complicated and we'll just keep one foot in front of the other.

[PM1974]

Go to http://www.allsolutionsnetwork.com/PM/PM45579/ From there you will find links to free bankruptcy forms, commonly asked questions, and a free bankruptcy manual.