New here and don't know what to do

[0sparky0]

I am a real estate broker with a historically high income, wife works part time as a nurse and have two little kids. We have acquired a good amount of investment property over the years, including 6 commercial and residential homesites for construction projects. As the national economy started its downward spiral, I had several months pass with no closings. We used up our cash reserves to keep up with what was about 10K a month in mortgages. On top of that we had to evict a tenant from one rental, a second was empty for a month, and our third rental is still empty, insurance and property tax bills all arrived at the same time.... I went from making at least a couple hundred a year to now maybe 40 ytd. I hope to earn 80 or 90K this year, but can't predict the future. During the dry months we went from a family that paid our cc balances in full to maxing out our Amex and Visa to the tune of 34K and taking rent to pay lot loans (robbing Peter to pay Paul). A couple of the lot loans are far enough behind now that we are going into foreclosure on them and finally realized we should talk about the possibility of BK.

I went to meet with a BK atty this morning and really don't feel like I still know what to do, nor what to expect in my situation. I feel we are in a position where we can afford to continue with paying all of our house mortgages and cars (we have two cars with low balances), and really hope to not have to move from our primary residence or sell the cars. We're not extravagant. In fact, we're normally very low key and made great investments in the past. We have very little "stuff" to sell that isn't clothes, furniture or toys for the little dudes.

The change in economy really hurt and now we're really stressed. The atty today really didn't seem like he wanted to answer my questions. Maybe because it was a free consultation. Can anyone out there help me understand if I am able to ditch the lots entirely, and keep the homes and cars with either 7 or 13? With the lagging economy, our primary home, which has a HELOC 2nd is no longer worth what it was when we got the HELOC. Can that be negotiated away or down? Or should we simply leave it as is? My family have done some extensive work on one of our investment houses and are hopeful it can be protected somehow. Will being self employed make it more difficult for us? I also have one employee. He and my other work expenses run about $2200 P/MO, but I have had months with 8K out too. Other thatn that we have typical costs for groceries, electric, water, school for the kids, and lots of very expensive gasoline.

I will call another atty. tomorrow and see if he can be a little more specific than the other one was willing to be.

Any guidance will be greatly appreciated.

Thanks all.

Chip

[Flamingo]

What you truly need to consider is whether or not your income will increase and will increase enough to keep you out of hot water and pay back the debts you have incurred during this period. If not, you will eventually come to a point in your situation where you eventually realize you just cannot rob Peter to pay Paul anymore cause Peter has reached all his limits and is maxed out and broke and all the savings are gone also. You can get yourself in so much more debt than which you may have had at the start of your downturn and just slide right to the edge of the black hole where there is nothing you can do but file cause you are out of credit, deep in debt and are truly up against the wall. It can happen to anyone at any income level or any high asset level. Been there with my husband's job loss due to the tech bust in early 2001. With that job loss came a 70% reduction in income from which we could not recover.

I am just being honest cause that is the way it usually works when there is a drop in income. You also have business related items intermingled with all this which makes your situation a bit more complicated than the average BK. You need to ensure you find a qualified, experienced attorney due to your self-employment situation. If you are stumped, call the State Bar Association (in your phone book under the "State" section) and ask for names of attorneys who handle BK's involving self-employment or business.