Should BK be a consideration?

[JRScott]

Okay the first thing you need to do is file the taxes if you haven't done so. Not necessarily pay it off but you need to have it filed. Tax debt is to new to have discharged anyway.

Next you probably need to consult with a lawyer, but as you saw it will depend on what your house is valued at. It might pay off to ask a real estate agent to come over and make an estimate on the home. Most will do such for free, and you might mention (up to you) that it is potentially for bankruptcy.

In PA you can choose to use the PA state exemptions or the Federal Exemptions.

Without more knowledge it is hard to say which you need to use, but the PA state exemptions does not have an exemption for a home or real estate, while the Federal will allow,

However never really allow a car exemption though in the Federal Exemptions you can use up to half the real estate exemption towards any property which could help you exempt the cars depending if you have equity left.

Now one thing is the child support since it will end next year, that will represent a change in income. It could make a Chapter 13 much tighter.

As for the bonus it probably would be to your advantage to file before the bonus. The reason being is that if the bonus is in the 6 month look back period it will be doubled for yearly income even if you don't get it twice a year.

From the sounds of it your wife has been out of the workforce for a number of years and given the state of the economy I doubt she'll find a high paying job and it may even be hard to find a job where she works only when the kids are at school, many low paying jobs require work on weekends. That's not a problem if you can watch the kids but if you have to pay a sitter then in the long run you could be worse off than you are now, still it is something you two could consider.

I'd try to schedule 3-4 appointments with local bankruptcy attorneys, many give a free initial consultation and run the situation by them. If you are actually well under the medium income, then a chapter 7 might not raise an eyebrow in your area and you might be better going with it so long as you can keep the house and cars with Federal exemptions. However if that's not possible you might need to go the Chapter 13 route.

[bradybunchdad]

Thanks JRScott, that's sort of where I was heading I think. Most of what you say makes sense to me.

The hinge pin to the whole thing seems to be the house. My Mortgage is for right about 80K. When it sold at Sherrif's sale in 2006, no one took it so Fannie Mae had to buy it for like $90K. When I realized there was this other money from the prior employer's pension I could use, I offered to buy it back. FNMA said sure, but with fees and interest, it would be about $101k. I was still OK with that, we had a 90 day stay and I got a mortgage lined up. FNMA's lawyer drug her heels for 87 days in getting a final price. During that time, I paid $900/mo rent, plus they kept accruing interest and more fees. By the time it came time to close, I paid $114K. FNMA made about $20K on me in six months. At the time, we cleaned everything up and made it as good as we could for the appraisal. Even I was shocked when it came in at $144. The local market has continued to collapse since then, and my house definitely needs work now, so I don't think it would be that high now. I also read that the value was that of what they could get at auction, not what it would get sitting on the open market for 6 months with an agent taking their cut. So at auction, I don't think it would get more than $90, or someone would have scarfed it up back two years ago. My local tax assesment is about $109, which was just updated last year as well. So I think it could come in anywhere between $90K and $140K, although probably leaning towards the 90-100 range. If it is uner $100, I am good with the federal exemption.

The issues I need to resolve I guess are what type of values do the local trustees use for calculating exemptions, and whether or not my wife and I can combine our exemption for the house even thought it is only in my name, and the mortgage is only in my name as well.

Next is the issue with the cars. Same situation, all 3 in my name. Edmunds shows the trade in on my truck at just under $3K, my van at only $500 and my beater is the same. Can her exemption be used in addition to mine?

Last issue is the inheritance. My mother died in 2006 intestate. We are still banging out her estate. She had cancer, lots of bills, and 2 pieces of property she owned with her sister. One is sold, and the other is the one that borders my house. I'd like to keep it, provided there is enough in the inheritance for me to buy everyone else out. I don't know when that case might finally settle. I've read various places that inheritances within 6 months of filing could be taken by the trustee. I have to find out if it is based on the time the funds are available or how it works. There is a chance her sister will not agree to my buy out, or that there may be no money left for me to buy out with, in which case it won't matter what happens.

Does anyone know when the federal exemption amounts change each year?

[Flamingo]

Thanks JRScott, that's sort of where I was heading I think. Most of what you say makes sense to me.

The hinge pin to the whole thing seems to be the house. My Mortgage is for right about 80K. When it sold at Sherrif's sale in 2006, no one took it so Fannie Mae had to buy it for like $90K. When I realized there was this other money from the prior employer's pension I could use, I offered to buy it back. FNMA said sure, but with fees and interest, it would be about $101k. I was still OK with that, we had a 90 day stay and I got a mortgage lined up. FNMA's lawyer drug her heels for 87 days in getting a final price. During that time, I paid $900/mo rent, plus they kept accruing interest and more fees. By the time it came time to close, I paid $114K. FNMA made about $20K on me in six months. At the time, we cleaned everything up and made it as good as we could for the appraisal. Even I was shocked when it came in at $144. The local market has continued to collapse since then, and my house definitely needs work now, so I don't think it would be that high now. I also read that the value was that of what they could get at auction, not what it would get sitting on the open market for 6 months with an agent taking their cut. So at auction, I don't think it would get more than $90, or someone would have scarfed it up back two years ago. My local tax assesment is about $109, which was just updated last year as well. So I think it could come in anywhere between $90K and $140K, although probably leaning towards the 90-100 range. If it is uner $100, I am good with the federal exemption.

The issues I need to resolve I guess are what type of values do the local trustees use for calculating exemptions, and whether or not my wife and I can combine our exemption for the house even thought it is only in my name, and the mortgage is only in my name as well.

Next is the issue with the cars. Same situation, all 3 in my name. Edmunds shows the trade in on my truck at just under $3K, my van at only $500 and my beater is the same. Can her exemption be used in addition to mine?

Last issue is the inheritance. My mother died in 2006 intestate. We are still banging out her estate. She had cancer, lots of bills, and 2 pieces of property she owned with her sister. One is sold, and the other is the one that borders my house. I'd like to keep it, provided there is enough in the inheritance for me to buy everyone else out. I don't know when that case might finally settle. I've read various places that inheritances within 6 months of filing could be taken by the trustee. I have to find out if it is based on the time the funds are available or how it works. There is a chance her sister will not agree to my buy out, or that there may be no money left for me to buy out with, in which case it won't matter what happens.

Does anyone know when the federal exemption amounts change each year?

Since you are and have been aware of a possible inheritance in the near future ensure that is brought up in any BK discussions with any attorney. What you would like to do and what can be done are two different things when it comes to assets and bankruptcy. My father-in-law passed away right smack dab in the middle of our Chapter 13 so I've been down that road. You will be asked in advance if you are aware of any possible inheritances that could come your way.

Your entire major issue is a large family resulting in higher bills and one income, which results in a major cash flow problem for you. No one understands the Brandy Bunch syndrome more than I but we had yours, mine and ours (4 eventually in total) ranging in age from 14 to infant when the last was born 21 years ago. You have more. It is a challenge for you financially and I think once you get a few things in order and have some major legal financial discussions with all the cards on the table you will be able to finally figure a way out whether it is BK or otherwise. You probably need to include the entire family in on a major budget to get things running smoothly and get a handle on things.

[bradybunchdad]

Flamingo, as someone who's been there, I do want you to know that I appreciate your experience. You know exactly what we have been up against.

I do think we have a decent handle on things. I think with what we've done so far and with my wife taking a job, we'll have made the necessary adjustments to make everything work. If nothing else our we may reach some level of sanity again. If things don't work out on that separate property, I still might be able to get my dad to buy it temporarily. If he could get it and timber it, he'd probably make enough off of it to pay it off.

Things I wish we had done differently - filed for child support early on and considered the Ch 13 back when we could have saved the house without devouring my pension. We could have gotten current on the mortgage at a fraction of what things wound up costing, and we'd be almost done with the 36 months right now, and at 6.5% on the mortgage. We just didn't know and didn't know who or what to ask.