Planning Bankruptcy....

[HoosierMan19]

Thanks to all who have provided a plethara of information here. I have read these post for about 3 weeks now and with so much info I am at a stand still and do not know which action to take first.

Short history. Have a property in Georgia that I owe around 140,000 with 20 left on it. It is now a rental due to parents becoming ill and having to relocate back to the midwest. Strategic Walkaway in Jan,2010. Have not made payment in 4 months. Letting bank foreclose on it. Homes in the neighborhood selling for around 60-70,000 tops. So I am Underwater by 50%,
Also the place has a tenant till June. So I have been saving the mortgage payment for my emergency fund.

Called BOA in Feb about lowering intrest rate from 29.99% back to 18% because the say I missed due date by 2 days. So they increased my rate and declined to lower it. So I decided that I would not send another dime to BOA. Kinda making my own stimulus plan..

Georgia is a recourse state and I have 2 rentals here. One with out a mortgage and the other about 38000 left to pay.

Question. When if I need to file for bankruptcy?

When the Mortgage Company comes after me in a Deficiecy Judgement.

I will wait to JDC come after me for the BOA credit card and try and settle for 10%.

Any Suggestion would greatly be appreciate.

I will try to see how things pan out and start at least researching BK lawyers just in case.

[kornellred]

Your posting gives me pause (like you care, right?). At first blush it appears that you want to set yourself up for eventual bankruptcy - as though filing for BK will magically solve your financial problems. It won't - you will just exchange your current problems for a new set. Bankruptcy is no picnic - in a Chapter 7 your non-exempt assets will be liquidated, and Chapter 13 is a long, long road that will tax your patience. And, oh yeah - there is no such thing as an "emergency fund" in bankruptcy, unless, prior to filing, you hide or transfer assets. That includes cash in a strong box hidden in a secret place. Good luck with that. However, an emergency fund is something you may be able to accumulate AFTER you file, if conditions allow.

[frogger]

Georgia is a recourse state

Perhaps you need to go back and do some more homework.

[HoosierMan19]

Frogger?

Perhaps you need to go back and do some more homework

What do you mean Frogger?

[HoosierMan19]

Kornell,

I read your post but am a little confused. I am trying to map out my worst case scenario for th situation that I am in. I know that I can not " Hide Asset" in a Bk. I am not paying BOA and using this money to pay my other CC, since BOA will not work with me. I have lost over 75% in my salary and it getting harder to juggle some of my bills.

I for one have never not paid any bills until I decided to walk from my Ga rental. Tenant not taking care of property and repairs are to great right now.

I am just trying to get some light on this subject.

[BCA2009]

Georgia is a recouse state. The mortgage company only has 30 days from the sale to get court approval to pursue the deficiency. The mortgage company has to prove that the home sold for true market value.

[frogger]

GA is a recourse state, however the lender is not required to seek a deficiency judgment and most commercial and residential lenders in Georgia do not seek deficiencies.

[LadyInTheRed]

And, oh yeah - there is no such thing as an "emergency fund" in bankruptcy, unless, prior to filing, you hide or transfer assets. That includes cash in a strong box hidden in a secret place.

Not true for all states. I depends on your state's exemptions and what other property you have. In Georgia, where the OP is, there is a $600 wildcard exemption. Also, you can use up to $5,000 of your unused homestead exemption on any property. That means it is possible to have an emergency fund of $5,600, depending on what other assets you have. http://www.thebankruptcysite.org/exe...s/georgia.html

Another example is in CA where, under "system 2", we can use the unused portion of the $20,725 homestead exemption plus an $1,100 wildcard exemption. With so many houes in CA underwater and the other generous bk exemptions in CA, that leaves many people room for a pretty nice emergency fund. Since all of my household goods will fit within exemptions, I will be able to keep my $10,000 CD that I opened at 5% before interest rates tanked (it still has another 4 years 'til maturity). After covering the portion of my vehicle not covered by the auto exemption, I have room to save about $5,000 more before I file (if only I could!). http://www.thebankruptcysite.org/exe...alifornia.html

[BCA2009]

GA is a recourse state, however the lender is not required to seek a deficiency judgment and most commercial and residential lenders in Georgia do not seek deficiencies.

Are you saying that some state require lenders to pursue a deficiency judgement?

[Jan]

Sounds like rentals are your problem?

If your largest debts are your rental properties, it should be classified as a "non-consumer" bankruptcy. Means test doesn't apply. We just went thru that too. We filed bk before any foreclosure action started, due to the fact that the PMI company wanted 80 grand from us to approve a short sale. So, strategic bk. We surrendered both rentals. The one with tenants, the Trustee collects the rent. The other sits empty. Both mortgages discharged along with our small credit card debt. Even our home mortgage (B of A doesn't do reaffirmations).

If one of yours is free and clear, the Trustee will most likely take it and sell it. The other, he will probably collect the rent direct from the tenants. Let him! The bank will have to file a Motion for Relief from Stay to continue the foreclosure.

Long story short, the bankruptcy will trump the foreclosure on your credit report. I just checked mine and my score only dropped to 710! That's after having 2 mortgages + 1 credit card discharged. Now we just wait for the asset distribution by the Trustee and we'll be closed. I had no problem giving the Trustee our non-exempt assets (including tax refund) to be free of $730k of debt. Now the banks can foreclose all they like, and it won't affect me or my credit!

Timing is everything...................if you fear a deficiency judgment (lender option), beat them to the courthouse and file first. Less headaches, less credit damage.

[Jan]

As to cash on hand in excess of your exemptions, put it into a Roth IRA or other exempt retirement fund, if you haven't already maxed out your allowances. This makes it exempt. I would suggest keeping it in a cash fund, not the stock market though! With a Roth, I believe you can make withdrawals of your principal any time (could be subject to a 5 year rule, not sure). But that would keep it safe from your creditors.

Here in Florida, we can even have a "hurricane fund" which is exempt. Maybe that's true for you too?