I'm sure you hear it before, but I need HELP QUICK!

[sharon7070]

First off, sorry about the spelling errors!

None of what I'm going to say will probably be new to you all, but it is very new and scary to me.

My husband and I have 4 children. We only make around 40,000 a year combined, plus we get around 3500 a year in child support from his ex. We have more debt than we can handle. A morgage, a small second morgage. A car loan, a car lease. A loan, a few credit cards and a ton of medical bills. When you live paycheck to paycheck you just don't have the money to pay those, but we still have to get medical care right?

We are seeing a lawyer on Monday for our free consultation, but I am very scared and want to know a few things before we start this whole prosess.

We should get around $4-5 thousand in tax returns for our child credits. Those usually come early Feb. I did ask the receptionist at the lawyers office about that, we NEED our tax returns, it's when we pay our insurance, catch up with utilities, pay medical stuff ect. She said we should be able to keep it if it is used for living expense. Good to know.


We will keep our van, it's a $10,000 loan, we HAVE to have a vehical to transport our kids.

We won't keep the leased car. That means we will need to buy a cheap replacement car outright. Will they let us use our tax return money for this? What if the leased car is about to be reposesed? Is that considered a living expense?

We do not plan on keeping the house. We planned on eventually moving anyway, as 6 of us are in a 2 bedroom. We are only about 2 months behind on our morgae. How long until we need to find a new place to live? Finding a rental in our price range with enough room in our kids school district will be difficult if we don't have enough time.

What about our stuff? I know there are different exemptions, but I am confused about some things.

I have a computer that I got on a store credit card, we financed $1000 for it. I looked it up on ebay and could sell it for around $350. I fhtey ask for the computer back could we just give them the $350 since that's all it's worth now, or would we have to give them the whole amount we paid for it or give the computer back?

My husband is a musician and has some instuments and things. The most expensive would probably go for $400 or less on ebay. He doesn't really make money yet with his music, other than $50 a month playing gigs, but that goes into a band fund, so isn't income for us. Could his music stuff be considered "tools of the trade" or just go under personal property?
I have a similar situation, I sew clothing and sell on ebay, I make just enough to cover cost. For this I need the computer, camera and sewing machines. What would those things fall under?

This is the most important question. We just got paid today and bills are due. They started garnishing my wages recently and my check was smaller than usual.

We need some things. It just got freezing cold here and we need some clothing items for us and the kids. (we have stuff to keep warm, but could realllllly use some more boots, jeans and sweaters ect.) We also really need to buy groceries (I would love to buy a little more groceries than we can usually afford!). So should we blow off paying the bills and buy the stuff we need/want. Or will that look like we are taking advantage of the situation and get us in trouble?



Thank you for any help you can give us!

[lrprn]

Sharon, what state are you in and when do you plan to file?

We won't keep the leased car. That means we will need to buy a cheap replacement car outright. Will they let us use our tax return money for this?

If your tax returns come before you file, then it's likely you can use them to buy a reasonable car. Ask the lawyer about this.

We do not plan on keeping the house. We planned on eventually moving anyway, as 6 of us are in a 2 bedroom. We are only about 2 months behind on our mortgage. How long until we need to find a new place to live?

Most lenders will start foreclosure proceedings after two missed payments. How long before you have to leave the house depends on your state - the foreclosure to sale time frame varies between states.

What about our stuff? I know there are different exemptions, but I am confused about some things.

Once you tell us which state you are filing in, we can help you figure the exemptions out. As far as your stuff, the average US household has $2-3,000 worth of household goods. You value your things at what you could get at a garage sale or on eBay, not what you paid for them.

I have a computer that I got on a store credit card, we financed $1000 for it. I looked it up on ebay and could sell it for around $350. I fhtey ask for the computer back could we just give them the $350 since that's all it's worth now, or would we have to give them the whole amount we paid for it or give the computer back?

When did you buy the computer? If it was more than six months ago, you likely don't have to worry about it. No matter what the lender says, because the computer is used and not very valuable at this point, they won't come pick up your computer - they want your money. DON'T PAY THEM! It makes no sense to pay them close to when you plan to file which will wipe out the debt anyway.

My husband is a musician and has some instuments and things. The most expensive would probably go for $400 or less on ebay. He doesn't really make money yet with his music, other than $50 a month playing gigs, but that goes into a band fund, so isn't income for us. Could his music stuff be considered "tools of the trade" or just go under personal property?

Tricky because you say he doesn't keep the money he earns by playing. What is the band fund used for? Is the band paid in cash or by check? Does he ever take any money from the band fund? This is another good question to ask your lawyer.

I have a similar situation, I sew clothing and sell on ebay, I make just enough to cover cost. For this I need the computer, camera and sewing machines. What would those things fall under?

Unless your ebay work is a business and you file your taxes accordingly, then these items are just considered more household goods.

This is the most important question. ... So should we blow off paying the bills and buy the stuff we need/want. Or will that look like we are taking advantage of the situation and get us in trouble?

Are you behind on credit card payments now? If you are, how many months behind are you? And about your check garnishment - which of your lenders took you to court and why? It will help a lot to know a little more about your situation.

And about not paying your credit cards looking like you are taking advantage....don't worry - many, many members here have stopped paying on their unsecured debt for months before filing, my husband and I included. Ask the lawyer during your free consult about whether this is a good idea to do in your situation or not.

Also consider having 2-3 more free consultations before settling on a lawyer. The more you talk over your case, the better you will understand all your options and hopefully find the best lawyer for you! Good luck and please keep us posted on what you find out.

[SinkingFast]

I saw all the expenses you normally use your income tax refund for. And that you'd like to buy a reliable car as well.

Before you pay for a car with the cash, we really need to know what State you live in. We also need to know the make, model, year, and mileage of the van. This way we can give you an idea of whether or not you're gonna have enough Vehicle Exemptions to cover both cars.

Instead of paying in full with the cash, maybe you might have to let the Lease go back and take on a small car payment. With a family of 6, it sounds like you'd qualify for a Ch 7 in just about any State. You might be able to get a 722 Redemption Loan. Something to ask attnys about as you Consult around.

And, don't forget, you're gonna have to pay an attny and your filing fee as well.

[sharon7070]

We live in Nebraska.

My husbands "band fund" is to cover recording costs, flyers, cd's and other mis. things that benifit the WHOLE band. They get paid in cash by the bar or other establishment they played at. They usually just get part of the money the bar charged for a cover at the door.

We aren't really behind on our credit cards, but credit cards are only a small part of our bills and debt, we ARE behind on our $8,000 line of credit, our lease payment, our house and our utilities. We also have a TON of unpaid medical bills and the collection agency for them is who is garnishing my wages, the judgement was for a $500 bill.


As for our van, it is a 99 ford windstar, the loan is for $10,000. We want to keep this vehical, even if we have to take the loan back as one of our debts. We are NOT behind on this one, but have had to do the payment deferment thing on it twice in the past couple months. They allow us to deffer payment (and just pay the interest) 4 times a year.

As for the computer, we got it around this time last year. I ask because someone had mentioned Best Buy in another thread and it is a store similar to that one. We got it from Neb. Furniture Mart on our store credit card.


I had another question too. If something is under $400, how is that exempt. We really don't have much worth more than $400. What exactly do they want you to list.....just bigger stuff worth money or even the small stuff too like silverware, pillows, board games, picture frames ect.?

[SinkingFast]

Here's a link to Nebraska BK Exemptions:

http://www.bankruptcyinformation.com/NE_exemp.htm

This is the $$$ amounts allowed for property you can protect and keep.

Depending on the values you set for Hubby's instruments, you might be tight in that area. But remember, as you price things, use garage sale, yard sale, 2nd hand store prices. So your entire kitchen may only be worth $100. Framed pictures you can often find on eBay for next to nothing.

As an FYI for you,........... Goodwill has an auction website where you can get some very good prices on items you don't commonly see listed in the newspaper. Fully functional computers sell for $50-$100 there, to give you idea of the level of pricing. You might find some of the band gear there as well.

I didn't see a Vehicle Exemption listed. Possibly attnys use the "Unused Homestead" WildCard to protect vehicles??!! You're really gonna have to ask as you consult around.

On the van,.............. I looked at Edmunds.com and there are 4 different levels of Windstars. Values range from $2500 to $5800, the retail high. So, basically, you have no equity in the van. That will not be a problem to keep the van. You might even be able to do a 722 Redemption loan on that, negotiate with the Lender to redeem the van for a lower $$$ amount, and wind up paying less.