Just need some guidance on whether it's 7 or 13, or ?

[totallybroke]

Background: (I'll try to keep it brief
1. We lost our family business last year. There are debts that belong to the corp, some to us personally (taxes, secured credit line, SBA loan that has defaulted), and some I don't know where they fall. The company has not been formally terminated, but there has been zero activity since August.

2. I'd say the debts total about $475K. Taxes are half of that, though neither the Feds or state folks are pressing it. They know we have no assets (leased cars, no land, no other assets but minimal personal items). There is a federal lien on any leftover proceeds from a sale of my house, though they are third in line behind two banks.

3. Pre-tax income right now is averaging just under $4,000 per month, and there are three of us in the family (husband-wife-child under 18).

4. Monthly obligations, when paying the mortgage, run about $3,600. We pay medical costs out of pocket. When the company went away, we lost our health insurance. Given what taxes will take, we're probably $500 under what we need.

5. The house was recently valued at $310K. We're five months behind on the mortgage, which has $205K remaining — and the bank is taking steps to foreclose. The second bank, owed $80K, is getting ready to take legal action.

6. A handful of the business creditors are threatening personal lawsuits against us, to collect what the company owes.

7. I understand that because we are not current on the mortgage and because I haven't got $10K to get current, that we cannot qualify for Chapter 7. However, we don't have guaranteed or stable income that will allow a Chapter 13 repayment of the secured or unsecured creditors that make up that $475K. So, at this point, I don't know where we are.

Question: If we can't qualify for Ch. 7 because we can't get current on the secured accounts, AND we can't show the ability to generate enough income to satisfy Ch. 13 repayment, then WHAT do we do?

Question: Is there no way to keep the house under these circumstances? If there is not, how long might we expect to be able to stay in it before the foreclosure is completed?

Question: We have an offer to rent the house, which would generate enough to satisfy both banks, and then we could try to catch up on the arrears. Is this worth pursuing, or is it likely that this will be disallowed by the court?

Question: What are the exemptions here? Will we be able to keep anything if we can't go Ch. 7 or 13?

Question: Do I have to do a separate action for the corp that is no longer functioning? I really can't afford it.

Question: There are unsecured debts that are personal in nature that we feel we have to pay. Is this a situation where if you pay one you have to pay them all? Could I let the rest go and pay some without having legal issues?

Question: Can I cut a deal with the tax people and those with secured debts for a lower amount during this process, or wait until it's finished and see where we are?

Bottom line, I'm over 60 and the company was going to be our retirement. We put everything into it. People in my age range aren't prime candidates for jobs, so I have to start over and try to build another small company. That will be with zero credit options and whatever I walk away with out of this mess.

Sorry for the length. Any help is appreciated.

Thank you.

[ScaredINMich]

We were in pretty much the same situation but we weren't behind on our mortgage. We qualified for Ch 7 easily.

I don't know enough about it, but I'm not sure why you wouldn't qualify for Ch. 7 because you are behind on your house. I'm hopeful for you that you can do Ch. 7.

[BKAttyMI]

You have a lot of issues and sitting down with an attorney that specializes in bankruptcy is probably the best option. Before doing that, you need to decide what your priorities are. Do you want to keep the house? Surrender the house? Dump everything and start over? I think with the facts you've laid out here it's possible you could go either way, 7 or 13, depending on what you're trying to accomplish with this.

[lillymarlene]

Bottom line, I'm over 60 and the company was going to be our retirement. We put everything into it. People in my age range aren't prime candidates for jobs, so I have to start over and try to build another small company. That will be with zero credit options and whatever I walk away with out of this mess.

I am sort of in that situation. I filed 13 last year, since I hope to hang on to a few things, and a piece of my small business, which is my livelihood is one of them.

I used an attorney, who went over the pros and cons of 7's and 13's with me. This is probably your best bet, since I think having a business seems to make things a little more complicated.

Good luck in what ever you decide.

[porkchopcash]

Don't know about the house situation. You may have to give it up but it sounds like you may qualify for a non-consumer chap 7 as over 50% of your debts are business related. Definitely look into it and ask attorney about it. Chap 7 and wiping out all debt is much better than attempting a lengthy repayment plan in your situation.

[corrin69]

Background: (I'll try to keep it brief
Question: If we can't qualify for Ch. 7 because we can't get current on the secured accounts, AND we can't show the ability to generate enough income to satisfy Ch. 13 repayment, then WHAT do we do?

I had the same question and the answer makes no sense - in that situation, you cannot afford to file bankruptcy. You have to be able to show the ability to sustain at least some repayment plan to file a Chapter 13. The proposed payment can be quite low. Mine was $75 a month. But you have to be able to show that you will be able to afford it. It puts you in the strange situation of having to prove you are not broke, even though you need to file bankruptcy.