Trying to keep house causes bankruptcy. Question.

[day2day]

If I took a large credit card cash advance to pay off a HELOC, and did my best to pay off the credit card over the next 2 years, but ended up in a terrible financial situation, can I declare bankruptcy because of the credit card debt and still keep my house? Since the cash advance went to pay the HELOC it is still there...but what if I can't access it?

Thanks,

[lrprn]

If I took a large credit card cash advance to pay off a HELOC, and did my best to pay off the credit card over the next 2 years, but ended up in a terrible financial situation, can I declare bankruptcy because of the credit card debt and still keep my house?

You didn't say how large the advance was, so I'm going to assume it's over $10,000. If you continue to make payments on the credit card regularly for at least six months, that lessens the likelihood the creditor will object. However, if you can wait a year making full payments the whole time, then you have a very good chance of being out of the woods as far as a creditor objection goes.

Whether you can keep your house or not depends on your state's bankruptcy exemptions for your homestead, what chapter of bankruptcy you are hoping to file, and if you hope to file Ch 7 whether your payments are up to date when you file. What state do you live in, what's your income from all sources for the last six months, and how many adults and children are living in your home right now?

Since the cash advance went to pay the HELOC it is still there...but what if I can't access it?

It doesn't matter what you used the advance for. What matters is if the creditor can prove you took the money with no intent of paying it back and so has grounds to object to the discharge of that debt.

That's why with a large cash advance, it's best to wait as long as possible - over a year if you can manage it - before filing.

[day2day]

I am in Washington State.

Our income is in the 86,000 range, and we have one child. However our mortgage is huge, and my wife may be losing her job.

[lrprn]

I am in Washington State.

Our income is in the 86,000 range, and we have one child. However our mortgage is huge, and my wife may be losing her job.

In Washington State, the median income for a family of three is $68.139 - http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm (just updated a few days ago).

Currently you make well over the median so unless you have significant secured debt, it's going to be hard to file Ch 7. Depending on your circumstances, Ch 13 is certainly an option.

Here's the link to Washington State bankruptcy exemptions - http://www.bankruptcyaction.com/waexemptions.htm . In Washington State you can choose to use the Federal exemptions instead - http://www.bankruptcyaction.com/fedexemptions.htm . If you and your wife file together, then there's no snags about Washington being a community property state, so that's one worry off your list.

To find out where you really stand and what your best options are, make appointment for free or low cost initial appointment with 3-4 bankruptcy lawyers in your area. There's no obligation and you'll find out a great deal about what's going to work in your favor in your situation.

Good luck - keep asking questions - we'll help you as much as we can.