Can I file for Bankruptcy and which one makes most sense?

[legitdude]

Hi Everyone. I hope I'm posting in the right section, otherwise sorry

Live in Grimes, IA
Make 43K yr
mortgage $864 month, owe $115,000, its worth $120,000
Student loan $300 month, owe $22,000
CC $600 month, owe $28,000
Car $415 month, owe $15,000, its worth about $20,000
cellphone $70 month
car ins $85 month
cable/internet $73

I'm having some financial difficulties and i went to see couple of lawyers which wanted to charge me hundreds of dollars before they can give me any advice or tell me what my options are. Every month i'm at least 300 to 500 dollars short and have been actually living on budget trying to make my all my payments but I just continue to be forced to use my credit cards to make ends meet.

I bought a house couple of years ago and my girlfriend was cosigner and was all good till she decided to move out and now i'm struggling bad... I want to keep the house, but i think as long as i can get rid of credit card debt I can live normally. I do pay all loans and expenses on time for now. My car is also co signed but i want to keep it as well because only 3 years left for payments. Part of my student loans ($7000) is private student loan and was co signed by my dad.

Please let me know what options I have. I know i will keep looking for a good lawyer who can help me, but as soon as i mention how much i make they tend to just act not interested in my case at all. Its really stressful. Thanks

[LadyInTheRed]

It sounds like you are dealing with attorneys who only want to file easy Chap 7s (i.e., for debtors with below median income). Assuming you are a one person household, you are a little over median income for Iowa. But, you may still qualify for a Chapter 7. Try taking the means test at http://www.legalconsumer.com/bankruptcy/nolo/

Keep in mind that if you file for BK, your cosignors will still be responsible for any discharged debt. As long as you stay current on your payments, you can keep your home and car in a Chap 7. Student loans are not dischargeable. I don't think it makes a difference if they are private. If I'm wrong, somebody else will hopefully say so.

It looks like Iowa has an unlimited homestead exemption, so the equity in your home should be protected. Do you have any assets that don't fall within the other exemptions: http://www.bankruptcyinformation.com/IA_exemp.htm How much equity do you have in your car?

[legitdude]

First I want to thank you for a quick response.

I took the means test, assuming i entered in everything correctly I do pass it and i am in negative on monthly basis. It shows -$428 a month which comes out similar to what my life situation really is...

I don't mind keeping students loans, car and house, i just think that my cc's that were racked up during college and recent years are what keeps driving me deeper in to red.

I do own 2nd vehicle, but its an old 1999 ford escort that i wrecked 3 years ago and insurance company proclaimed it total loss and i bought from them for $100 bucks... so i'm assuming that's how much its worth. I drive it to work and back to the house, that's it. It drives but its pretty banged up. I dont mind driving it because its the 30 to 40 miles i dont have to put on my newer vehicle on daily basis.... When i took the means test, it seems owning 2nd vehicle helped me pass it. Besides owning lawn more, bbq grill, couple of tvs, bedroom and living room furniture i dont have anything else. No retirement accounts or kind of inheritance etc...

[LadyInTheRed]

The means test can be tricky. You may only be able to take the vehicle ownership allowance for the car you have a loan on. You also might not be able to include operating expenses for a second vehicle in a single person household. I'm not certain about either of these statements and they may depend on your district. But, to be safe, do you still pass the means test if you don't include the operating expense and ownership allowance for the second car? What if you include the operating expense, but not the ownership allowance?

[legitdude]

I do not appear to pass means test if i do not include the operating expense and ownership allowance for the 2nd car because it leaves me with 280 disposable income. If i include the operating expense, but not the ownership allowance it leaves me with 61 disposable income. With that, I would pass the means test since i cannot pay 25% of my current unsecured debt. At least that' show I interpret it.

[LadyInTheRed]

I think you are interpreting it correctly.

Maybe someone else will come along who is more knowledgeable about those expenses.

You definitely need a good BK attorney to run your numbers. So, go on some more consults. Look for someone who has been practicing for a while and does both 7s and 13s. If you can't find someone who will run the means test for you for free, maybe they'll do it for a fee which they would credit towards their total fee if you retain them to file. It sounds like the worse case scenario is that you would have to file a Chap 13 with a pretty low plan payment.

You need to stop using credit cards. If you can't make ends meet without them, then stop paying them. That will open you up to lots of phone calls and possible lawsuits in a few months. But getting yourself deeper in the hole will do you no good. If you do end up filing BK, it's better not to have any credit card charges for 90 days before filing.