I need some advice

[poorintennessee]

Hello all,

Unfortunatly, I find myself looking through these posts to be prepared in case I have to file as a last resort.

My situation is kind of unique. I moved to a different state to purchase a business several years ago, and so far the business is making me poor. To date this year I have about $12,000 in profit and have been living off of my 401K which is almost gone. I have no late payments and a credit score in the 720 range, but as soon as I have a late payment I'll be screwed bad because of the higher interest rates I'll incur.

My specifics personal:
-House payment is $1156 per month with a payoff of 154K
-Heloc is $830 per month with balance of 83K
-3 credit cards with outstanding balances of 26K and monthly payments of $650 (two have not been used in months and one with a balance of $6000 is used occasionally). All of these items have interest rates of 7% or less

My business specifics:
-30,000 Bank of America signiture business loan with a high rate (-12%) and $330 monthly payment.
-Two credit cards with balances of $30k that are used regularly to purchase products for my retail store to sell.
-Amex LOC with a $6000 balance that hasn't been used in 3-4 months

My biggest issue is business rent which is over $3000 per month and eats up alot of my profit. Is there a way for me to file bankruptcy and still keep a portion of my business? I have about 10 customers that make up half of my sales, and I could probably keep them no matter what happens. Right now I'm thinking about one last hoorah this spring, and if that looks to be failing, I'll get a few payments behind on everything and file chapter 7 letting everything liquidate. Can I do that, reincorportate and start right over working out of my house? My house will be my fiancee's house and hopefully she will stick through this with me.

My plan as of today is to start a full time job in a few weeks that pays bad but has great benefits ($10.50 per hour). I can still work my business part-time and on my days off to try and get things going. In May, I'll be married and living in her house. I already have my house out of state for sale and hopefully it will sell saving me about $1000 per month that I've been making up because my renters don't pay enough.

This sucks because everything in my life is great, but I just cant pay my bills working for myself.

Sorry if I've confused you. I basically want to know if I can file chapter 7 if I give up everything. I have a brand new car that is worth about what I owe so i think that is safe.

[keepmine]

Sorry if I've confused you. I basically want to know if I can file chapter 7 if I give up everything. I have a brand new car that is worth about what I owe so i think that is safe.

That about sums up the process. Of course, all states allow you to exempt some property so you won't give up everything.
How much equity do you think you'll realize from the home sale and what do you mean by the statement "one last hoorah"?
Post bk, you are free do do anything you please.

[poorintennessee]

The home sale will actually result in my fancee' and I putting about $20,000 towards the payoff. I will be selling the house for more than I built it for, but I used the HELOC to purchase my business.

By one last hoorah, I meant that I'm planning to work my butt off with outside sales and marketing to try and make this work. I am so close to being successful I hate the thought of giving up before I turn the corner. I plan to make all of my payments on time until I get my first late, once that happens the ship is going down fast when they raise my low interest rates to 30%!

If I put everything into BK, could I still keep the business phone numbers? If not, I need to transition my better customers to a new cell phone or something so I can keep them. What happens to the business website, and name?

I realize they will liquidate my assets, is it better for me to sell things off myself from the business?

TIA

[leftyf]

Do you have much equity in the house you are selling? You could stop paying on the unsecureds, wait about 6 - 8 months, and the creditors will start making debt "negotiation" offers. I've had offers of $.30 - $.40 on the dollar...unfortunately I have too much debt and too many different creditors to even consider this. A big if, I suspect, will be if you can sell your house fast and get the price you want. That was a big contributor to my fall into the abyss since it took about 2 years to sell my house at the price I paid 4 years before that. The housing "thing" is very real in some places around the country.
If this can't work, you could start selling small assets as you need to, but I wouldn't start selling any big stuff right away. You may want to keep a few assets around to offer the trustee as his/her "booty", so to speak.
I haven't even filed yet, so take everything I say with a grain of salt. Just throwing some ideas around. For professional reasons, I would love to avoid bankruptcy since it will probably have lasting effects on my career. If this is irrelevant for you right now, maybe bk is the best option. Do the free consults...some will actually help you.
Lefty

[poorintennessee]

Lefty, thanks for the advice. I didn't realize that they would come to me with offers on the unsecured debt... does that also include a HELOC from Chase?

I could easily sell teh house for about $20K less than I'm asking, I just cant find the cash to make up the difference I owe on the second mortgage... do you think Chase would negotiate the second without me ever being late?

The housing crunch is real! For me, the market where the house is located just died! I should have sold last year, but I was hoping a family member would take it from me (it's built on family land).

[leftyf]

Can you get any CC cash advances to pay off the second mortgage? I doubt you can do a deed in lieu or short-sale with two mortgages on the place. That way you can convert secured debt to unsecured and possibly negotiate your way out of it later. or BK it without the stigma of a foreclosure.

[keepmine]

If bk is inevitable, don't pay anything on that HELOC just to get a sale. The deficiency balance is unsecured debt and will be discharged.

[poorintennessee]

I will be taking about 10K from a Chase card and my fiancee will make up the difference with her HELOC.

This sucks because she has everything in her life in place... absolutely nothing to question, and here I am making less money per year than I did in high school. There's always tomorrow!

[keepmine]

I will be taking about 10K from a Chase card and my fiancee will make up the difference with her HELOC.

This sucks because she has everything in her life in place... absolutely nothing to question, and here I am making less money per year than I did in high school. There's always tomorrow!

I'll say again, don't put another penny in the house regardless of the source. Let it foreclose and add the deficiency balance into the bk.
You are trying to borrow your way out of a hole and it just doesn't work. Your fiancee would be foolish to tap her HELOC to pay for something that could be discharged in bk. Part of the bk process is, you have to stop making bad decicions. This is a really bad move.

[HHM]

I will be taking about 10K from a Chase card and my fiancee will make up the difference with her HELOC.

This sucks because she has everything in her life in place... absolutely nothing to question, and here I am making less money per year than I did in high school. There's always tomorrow!

What ever you do, DO NOT DO THAT.

[poorintennessee]

I'm not 100% sure I'll be filing. If I can get the house sold it will free up about $1000 per month to use on other bills and getting out of the hole I'm in.

I own my own business, and I am so close to making a good living. The difference between breaking even and making good money is only a few extra sales per day. I just need to make them happen while reducing my overhead. I'm also moving retail locations in a few months which should save me a substantial amount of money each month.

If I see the BK is going to happen I'll definitely take all of your advice.

[leftyf]

I would definitely not have the fiance take out secured debt to help you out of your mess. My understanding is that a HELOC is secured debt, so I was suggesting you could get out of the home by using credit cards to pay these obligations off.

[HHM]

I'm not 100% sure I'll be filing. If I can get the house sold it will free up about $1000 per month to use on other bills and getting out of the hole I'm in.

I own my own business, and I am so close to making a good living. The difference between breaking even and making good money is only a few extra sales per day. I just need to make them happen while reducing my overhead. I'm also moving retail locations in a few months which should save me a substantial amount of money each month.

If I see the BK is going to happen I'll definitely take all of your advice.

Well, good luck with that...if you really read the posts here...everyone has their "if only", "would'a", "could'a", "should'a" stories.

I hope it works out for you, but pinning your hopes on selling a house in this real-estate market is probably unwise.