I know it's coming-how to plan?

[Diesel73L]

*EDIT* I just realized it would probably be helpful to know that we live in NJ and are thinking of filing CH7

I posted here a while back trying to learn as much as possible about bankruptcy options because we thought that my wife was going to lose her job. In an odd twist of events, she has had her job extended for one more year (she is a school teacher and managed to be re-hired to fill a temporary position at the school) but we recently found out that our unborn child (she is 21 weeks along) is very sick and we literally spent all day yesterday at Children's Hospital of Philadelphia where she will now be treated and delivered. The dilemma we are now in is this:

Now that my wife is a temporary employee of the school district she is no longer entitled to the same benefits as a full time person. She will only get enough maternity leave (unpaid) to deliver the baby and be home for a week or two after delivery. The problem is that the baby will need surgery when she is one month old, and the recovery time will be long. I am entitled to unpaid leave to care for a sick family member through my job, but basically, through the combination of both of us having to take extended unpaid leave we are going to fall behind on our credit cards (we have nothing left after minimums and basic needs every month), and possibly my truck payment if we direct our funds toward the house and basic needs (food, utilities, etc...).

Based on the fact that we know that we are going to begin losing income sometime in late September (when the baby is due) what can we do to prepare? Do we stop paying our cards and direct cash toward other expenses? What about our house and vehicles? We are slightly underwater on our home. We were about even a few months ago but the latest Case-Schiller report send the value plummeting and we're now upside down by about $15K. That being said, we're not so far that we'll never recover, and quite frankly, there's no way in hell I'd consider moving my family during this already stressful time. Do we reaffirm the mortgage? Why or why not? There is no equity to protect of course. That leads me to exemptions-I believe we have enough to cover our vehicles and our wedding rings, which are really the only other things of value we own.

Basically my goal here is to be able to come through this with first and foremost a healthy baby girl, our home and transportation intact, and a chance to wipe the slate clean and start over. Basically we over leveraged ourselves on our mortgage and improvements to our home (on credit cards) with the logic being (remember this was back in early 2008 before it all came crashing down) that our incomes would rise (we went to college which is supposed to help with that right ) and our jobs would be secure. At least if we can wipe out the debt we can begin to live within our means because the cash that used to go to ever rising minimum payments can be used to build an emergency fund and go to everyday expenses-lately I've had to resort to the card just to fill my tank in order to get work...I greatly appreciate any advice you can give us during this terrible time.

[tobee43]

first, my heart and prayers go to you and your wife and baby...you'll be in our prayers.

i know your in nj, which is not a debtor friendly state, but does give you an option to go federally if you decide to file.

you have so much to think about right now, so i know you must set your priorities which you seem to have done. i'm going tell you, and this is coming from someone who left nj and we filed in florida to get a better exemption situation. (we had to wait 2 years to file and HIDE OUT!), of course, that's not what i'm suggesting you do. but you need to be careful here and somehow wait as long as you can.

we filed because of job losses and over 200k worth of medical expenses. had we filed prior to those costs being incurred, we would have been responsible to pay for them. i also understand your situation with your wife being a teacher, my daughters husbands has a duel masters and couldn't' find a job, they finally left the state so he could finally teach. (got a job in NC, but got laid off!!! last week). so, it's happening everywhere.

for your daughter, i'm certain if you can't afford the medical family care will pick up the cost, of at least it will be based on your income for what you'll be paying for medical for your baby girl, however, not your wife, that's not covered under family care..

no one can really help you with the decisions you need to make, if it were me, the best scenario would be if you could hold on until after the birth...and then see what your really dealing with. then if you can wipe the slate clean.

first, stop, and i know this is hard, but walk away for a day or two, your plate is way too full. and, once again...our prayers are with you and yours!

[Diesel73L]

first, my heart and prayers go to you and your wife and baby...you'll be in our prayers.

i know your in nj, which is not a debtor friendly state, but does give you an option to go federally if you decide to file.

you have so much to think about right now, so i know you must set your priorities which you seem to have done. i'm going tell you, and this is coming from someone who left nj and we filed in florida to get a better exemption situation. (we had to wait 2 years to file and HIDE OUT!), of course, that's not what i'm suggesting you do. but you need to be careful here and somehow wait as long as you can.

we filed because of job losses and over 200k worth of medical expenses. had we filed prior to those costs being incurred, we would have been responsible to pay for them. i also understand your situation with your wife being a teacher, my daughters husbands has a duel masters and couldn't' find a job, they finally left the state so he could finally teach. (got a job in NC, but got laid off!!! last week). so, it's happening everywhere.

for your daughter, i'm certain if you can't afford the medical family care will pick up the cost, of at least it will be based on your income for what you'll be paying for medical for your baby girl, however, not your wife, that's not covered under family care..

no one can really help you with the decisions you need to make, if it were me, the best scenario would be if you could hold on until after the birth...and then see what your really dealing with. then if you can wipe the slate clean.

first, stop, and i know this is hard, but walk away for a day or two, your plate is way too full. and, once again...our prayers are with you and yours!

Thank you for the advice and the prayers-we appreciate it. I should clarify a bit though-our big problem is credit card debt. Between our mortgage, my truck payment, and the cards, even though we're both working (and my wife will have a job next year) we have nothing left over at the end of the month after only paying the minimums. The medical expenses, ironically, are not an issue at all. Though neither of us make a lot of money we both have excellent health benefits, thank god. Since we both have dual coverage (I am on her plan and she is on mine) we pay nothing for Dr. visits, etc...because whatever one insurance doesn't pay the other does. That being said, though we don't have insurmountable medical bills to deal with, we still have credit card debt that we can't get out from under as it is, and it's only going to get worse once we take time off to care for our child.

[IamOld]

I wish you all the best diesel - take care of yourself and your family!!!!!!!!!!!!!!!!!

Regarding your OP - that sounds like a classic case of bk planning to me!!!! If you haven't already done so, speak to several good BK attys, and see what they say - if you both will be off work w/out pay, you can use that to be even further under the means test...

[debee]

Stay current with your house and cars. You need to be current to keep those. No need to reaffirm in order to keep your house. Just don't default. When it comes to the cars, if you have payments, you'll have to reaffirm, redeem or surrender (if the lender insists on one of these) in order to keep them.

Stop paying on the debts you plan to discharge. Alot of people do it this way. You may have to field calls, etc but you'll be able to put together the money for your attorney and to compensate for income loss ahead.

Since you still have time before you file, good idea to run some numbers for your schedules I&J to make sure your expenses will be enough to qualify you for a chapter 7.

[tobee43]

Thank you for the advice and the prayers-we appreciate it. I should clarify a bit though-our big problem is credit card debt. Between our mortgage, my truck payment, and the cards, even though we're both working (and my wife will have a job next year) we have nothing left over at the end of the month after only paying the minimums. The medical expenses, ironically, are not an issue at all. Though neither of us make a lot of money we both have excellent health benefits, thank god. Since we both have dual coverage (I am on her plan and she is on mine) we pay nothing for Dr. visits, etc...because whatever one insurance doesn't pay the other does. That being said, though we don't have insurmountable medical bills to deal with, we still have credit card debt that we can't get out from under as it is, and it's only going to get worse once we take time off to care for our child.

that's great news at least about the medical coverage.

i would attempt to keep everyone at bay as long as possible. in nj it takes forever to forclose on your house...it's 3 years and 7 months for us at this point. so if you're thinking about surrendering or not keeping the house i would start to save that money. however, if not, keep up with those needed bills and try to keep everyone at bay until you are just about ready to file. you need a roof over your head and cars to get to work. but once again, if you don't plan on keeping the house, i would stop paying...but ONLY if that's what your planning on doing.

the problem if you stop paying your credit cards is they are quicker to begin suit..which even the worse senario, they did get a judgement, you can move to make a motion after you get discharged in your bk to vacate those judgements, but remember in nj, they can garnish your pay. so we kept us with them and let the house go. BUT that was US, since we made the decision, that, even if one of us was able to get a job we could no longer live there. after all, in nj we were paying just for heat and electric over $1100 ...that now pays everything, including food for where we presently live. and we left our home after 33 years.
however, remember, you need to think about what your plans are going to be. once again, if you are going to keep the house maybe try to do a loan mod...lower that payment???

once again, best of luck!!!