Finally pulling my head out of the sand...(LONG)

[ChrisInFlorida]

Hello all!

In the past few years I have been through absolute hell physically, emotionally and financially. It all started in March of 2001 when I suffered a back injury while installing a new fence around my house. The injury prevented me from being able to work and eventually led to me losing my job as an electrician in April.

Soon after losing my job, the mortgage, car, credit card and insurance payments began to mount and the stress of the entire situation was more than my wife could handle. She decided to take the easy way out (for her) and return to her homeland of the Canary Islands leaving me to deal with the entire mess myself.

Shortly after she left I began drinking heavily and completely shutdown emotionally. Needless to say, my house went into foreclosure, our brand new 2001 Expedition was repossessed and all my credit accounts went into collections. When my house was eventually sold at auction in November of 2002, I thought it was the end of the world. I have never been so depressed in my entire life.

By now I'm sure many of you are asking: "Why didn't you ask your family for help or at least file bankruptcy to stop the foreclosure?" My only answer to those questions is: I HONESTLY DON'T KNOW. I believe the alcohol had a lot to do with it. Reguardless, I'm past it now.

I have since sworn off drinking and been lucky enough to partner-up with a longtime friend in a low labor, cash-only vending business that allows me to work with my bad back. Things are getting better everyday, but I know that I'm going to have to face the court judgements and bad debts that I walked away from before I can really begin rebuilding my life. I'm hoping that a few of you can give me some sort of guidance before I consult with an attorney on Monday.

Here are the debts that I have been able to dig-up so far...

1st mortgage - $87,816.39
2nd mortgage - $34,648.46 - The house eventually sold for $118,000~

Car loan - $21,000~ - I don't know what it sold for after repo.

Credit cards - $21,643 according to Experian (although a few have gone into charge-off status)


All of these debts have been outstanding since at least November of 2002. According to the court records I have received, the 1st mortgage for the house was paid in full by the second mortgage lender and I have a certificate of satisfaction to prove it. Do any of you folks have any tips or suggestions to offer me in my quest to rebuild my finances? Any constructive advice would be greatly appreciated.


Thanks,
Chris

[HHM]

Sounds like you are prime candidate for a "fresh start" and should probably do a BK (chapter 7). You probably have a significant auto deficiency debt plus credit cards that are either in collection or with a debt purchaser by now. A BK will enhance your debt to balance ratio and debt to income ratio which will eventually enhance your overall credit rating.

Incidently, just because a credit card company has "charged off" an account, doesn't mean you still don't owe the money. Although it varies from state to state, the average statute of limitations on contractual obligations is six years.

Note, if you have judgements, your Bankruptcy would be a little more costly since judgements are not automatically discharged by simply listing them in the schedules, you have to take steps to have them expunged through bankruptcy court. In many states, judgements are either perpetual or can be renewed, so when you do finally land on your feet at a traceable job, garnishment is probably not too far behind.

The good news is, at least you realize something has to be done...and that is a start.

[ChrisInFlorida]

Note, if you have judgements, your Bankruptcy would be a little more costly since judgements are not automatically discharged by simply listing them in the schedules, you have to take steps to have them expunged through bankruptcy court. In many states, judgements are either perpetual or can be renewed, so when you do finally land on your feet at a traceable job, garnishment is probably not too far behind.

Thanks for your reply.

Can my bankruptcy attorney take care of the judgement expungment during the normal chapter 7 process or will this need to be done afterward? The last thing I will need is to have my wages garnished after I begin my process of financial reconstruction.

Also, I am currently putting all of my earnings into a bank account in my father's name to avoid any chance of it being seized by my creditors. Would it be wise to leave it all in that account or should I transfer a small amount to an account in my own name to show some kind of financial record prior to my bankruptcy?

Thanks,
Chris

[HHM]

Thanks for your reply.

Can my bankruptcy attorney take care of the judgement expungment during the normal chapter 7 process or will this need to be done afterward? The last thing I will need is to have my wages garnished after I begin my process of financial reconstruction.

Also, I am currently putting all of my earnings into a bank account in my father's name to avoid any chance of it being seized by my creditors. Would it be wise to leave it all in that account or should I transfer a small amount to an account in my own name to show some kind of financial record prior to my bankruptcy?

Thanks,
Chris

I would hope your attorney can take care of it and yes, it is done during the pendency of your BK. You need to make your attorney aware of the judgments and it will likely cost you extra as taking car of judgements is not part of the standard BK package.

[ChrisInFlorida]

HMM,
What do you suggest I do about my cash situation?... Leave it all in the "hidden" account or transfer a small amount of it into an account in my own name?

Also, should I disclose any of this to my attorney? He would be required to report it to the trustee if he knows about it right?

Thanks,
Chris

[ChrisInFlorida]

double post.

[Dawn1970]

What do you suggest I do about my cash situation. . . Also, should I disclose any of this to my attorney? He would be required to report it to the trustee if he knows about it right?

Yes, your attorney would be required to report any monies that you have to the trustee. Careful! You don't want to go to jail for BK fraud!

[ChrisInFlorida]

Yes, your attorney would be required to report any monies that you have to the trustee. Careful! You don't want to go to jail for BK fraud!

We're not talking about tens of thousands of dollars, it's just enough to maintain a reasonable emergency fund and compensate my attorney without having to make payments. Thanks for the tip though... I'll keep my mouth shut and leave the money where it is.

Chris

[ChrisInFlorida]

UPDATE: I Got the ball rolling this week...

When I last left off I was at the point of shopping for a bankruptcy attorney. I met with three of them this week and I'm scheduled to meet with another four next week. I was very impressed with the presentation and insight of the second attorney and will probably end up retaining him.

We went over my finances and quickly came to the conclusion that a chapter 7 bankruptcy will probably be my best option at this point. However, there was something we discovered while researching the situation surrounding the foreclosure of my house. It seems as if the final sale price that the bank's attorney reported in the court record is substancially less than what the county property appraiser's office has listed in it's data base. According to the bank's attorney, my house only sold for $118,000, but the county property appraiser's office has the sale price at $131,000! I only owed them $122,464.85 on it after attorney's fees, court costs and all that other BS.

The attorney was just as disturbed by this discrepency as I was but said he didn't want to comment further on it until I was certain that I wanted to retain his firm's services. Have any of you folks ever heard of things like this happening before?.. If so, does the bank owe me some money or could they still sue me for more? I'm almost positive that I'm going to retain this attorney withing the next week but the suspense is killing me in the meantime. Any ideas?

Chris