How long can a lawyer drag-out a bankruptcy hearing?

[BrokeIn2011]

For about 1 ½ years, I have about 10 creditors after me, 2 are for bank business lines of credit that I did PG, 1 creditor is a few days away from wining a 14K credit card default judgment on me, and I have 1 lawsuit summons to answer in the next 2 weeks or it will turn int a default judgment; I am thinking about going BK, yet I am not sure if I can.

I had heard that in order to make the creditors go away temporarily, I have to get a lawyer to file a BK for me to basically to get the creditors to stop contacting me. Next the creditors just need to know that I am filing BK and they need to know the case number filed at the courthouse, and that should stop all contact from the creditors until the BK court hearing.

Since I have very little money to hire a BK lawyer, what are the chances of getting a layer that can drag-out a BK case hearing until I have enough money to actually proceed with the BK filing? The best I can afford now, is about $100 per month.

I had to close my business last year. However with the economy being so poor, nobody is really hiring. Needless to say, since I was self employed, I was not eligible for unemployment insurance.

I don’t think I can file a BK13, since I don’t have a job. I don’t think I can file a BK7 since I have a house I want to keep. Bottom line, I just got hit very hard because of the recession. Until the recession, before having to close my business last year, I was able to keep up on all of my bills and I had a 730 FICO score.

[justbroke]

You can't drag it out. Upon filing, you have to pay the minimum of the filing fee ($274 for Chapter 13 and $299 for Chapter 7), plus any attorney fees on top of that. You can probably find the money to file somehow. Are you paying any creditors at this point? (I'm talking about unsecured creditors?)

If you don't have money to pay our mortgage, then you won't be able to keep your home anyhow? A Chapter 7 does not protect your home from foreclosure... only delays the inevitable. As you know, a Chapter 13 Plan can include the home and cure any default (due to arrears). If you have no regular income, you can't go into a Chapter 13.

[keepsmiling]

Lots of folks right there with you.
You have a pretty nice home exemption in CA. What's the equity in your home? Chances are you can keep it in a 7.
You have to be able to show some income to do a 13.

[HHM]

Unfortunately, it doesn't work as you assume. BK attorneys are generally paid all the fees up front before the case is filed. So it is not a matter of filing the case and dragging it out. About 80% of the work in BK is done before the case is every filed.

[shark66]

Since I have very little money to hire a BK lawyer, what are the chances of getting a layer that can drag-out a BK case hearing until I have enough money to actually proceed with the BK filing? The best I can afford now, is about $100 per month.

I had to close my business last year. However with the economy being so poor, nobody is really hiring. Needless to say, since I was self employed, I was not eligible for unemployment insurance.

My initial hunch - based on what you've written - is that there's really not much that creditors could go after, if they were to win a judgment against you.

What is the situation with your house? Are you underwater or have equity in it? That is the key question.

Presuming that your house is underwater, and that any funds that you have are under the mattress, I wouldn't sweat it and I wouldn't be considering BK. If and when times change, and the creditors get something to go after (as in garnishing the wages, bank account etc.) then I'd look into filing BK.

My $0.02 only...

Good luck to us all.

[BrokeIn2011]

Well I am back. I am so very sorry that it has taken me so long to respond back to all of you very nice people trying to help me, however it just has been such a long and painful last few days trying to deal with my financial problems and trying to figure out what I should do, since I am basically flat broke.

I just want to take this opportunity to thank all of you for being so kind to provide me with good & detailed feedback and help. What you have provided, certainly gives me good food for thought.

My family is helping me keep up on my mortgage and some of my bills . . . but not all of them. Yet as far as the creditors, the collection companies, the two pending lawsuits, that is all over unsecured credit card debt (about 100K total of unsecured credit card debt). Yet at the very lease, I figure the creditors can go after my house . . . or at least put a lien against it and then put a levy on my bank accounts . . . yet as of now, I don’t even have $200 combined in my bank accounts.

According to the Assessor, my home has a value of $380,000 and I owe about $180,000. I am 48 years old and single (never married). So I am not sure if a “homestead” would help me, since I don’t know that much about them. Yet I think I heard that you have to be at least 50+ years old to get a good advantage of having a homestead. Yet I am not sure. I don’t know anything about a home exemption though. Yet as bad as my luck has been for the past 1 ½ years, I am sure (without looking) that a home exemption is not going to help me in anyway . . . again, I am only thinking this since my luck has just been so rotten and I just can not imagine things getting any better for me right now, since it seems like I am living under a dark and ominous cloud:-(

Thanks again Everybody for your kind and generous help.

[lillymarlene]

I'm not certain but you may need that "Homestead Act" piece of paper to help keep your home during bankruptcy. I had to provide a copy of mine for my chapter 13, along with copies of my insurance policies.

You might also consider taking most of your cash from your bank account, if you are afraid of it somehow being levied in the near future. I wish I could think of more to help you, but it is good that your family is helping you out.

[lillymarlene]

Oh, I almost forgot, about your original post and dragging things out: I retained my attorney in August 2010. Then he had me wait as long as possible, trying to make sure I didn't miss anything. My chapter 13 was filed approximately 3 months later, just before I was supposed to go to court for a couple of creditor lawsuits.

[mountanddo]

I would take the money your family is giving you to pay your mortgage and some of your bills and hire an attorney. With 100k in credit card debt that is enough reason to find out if you can file a Chapter 7. Take your money out of the bank and cancel direct deposit of your check if you have that. You have to consider jugements and garnishments. You need to protect the little cash you do have. I know how hard it is to deal with daily life with such a huge financial boulder hanging over your head. The sooner you take control and find out all your options the better you will feel. Sometimes it's hard to get out of that legthagic state though.

Read all you can here and ask, ask, ask lots of questions. Even the act of gathering information can help you feel more in control of the situation. Everyone here has been where you are at one point and everyone here has something to offer.

[ValleYum]

200k in home equity may be an issue...

There are 2 CA exemption sets - Lady In The Red is the guru for this.

OP: Maybe start a fresh thread and put CA Exemptions in title so as to catch her attention??

[mountanddo]

I don't know too much about equity in home but I'm going to ask this because I'm curious. Did you have that much equity in your home because that is what you've paid into the house or did the house increase that much in value or maybe both? With my limited knowledge of how houses work there must be some way you could tap into that equity. It's a shame that you have 200k in equity but are essentially broke. Again, I don't know how equity in houses work or what your current situation is. Do you have a second mortgage on your house?

[lillymarlene]

I don't know too much about equity in home but I'm going to ask this because I'm curious. Did you have that much equity in your home because that is what you've paid into the house or did the house increase that much in value or maybe both? With my limited knowledge of how houses work there must be some way you could tap into that equity. It's a shame that you have 200k in equity but are essentially broke. Again, I don't know how equity in houses work or what your current situation is. Do you have a second mortgage on your house?

Before I filed bankruptcy, some people used to tell me to take out a home equity loan, and pay off my credit cards. Even back then, it didn't make sense to me. I was having a lot of trouble paying my bills, but I knew except for my mortgage, most of them were not secured. It is not a good idea to replace unsecured debt with secured debt. I just didn't want to take the chance of not being able to pay a second mortgage, and possibly losing my home.

[mountanddo]

Before I filed bankruptcy, some people used to tell me to take out a home equity loan, and pay off my credit cards. Even back then, it didn't make sense to me. I was having a lot of trouble paying my bills, but I knew except for my mortgage, most of them were not secured. It is not a good idea to replace unsecured debt with secured debt. I just didn't want to take the chance of not being able to pay a second mortgage, and possibly losing my home.

OH no I wasn't suggesting he take out a home equity loan to pay off his debts. I was kinda thinking out loud and it didn't come out right. It is just a shame that he has 200k in equity, 100k in CC debt and only $100 left over at the end of the month. Was just seeing if there was anyway to tap the equity at least to get some money to pay an attorney.

[lillymarlene]

OH no I wasn't suggesting he take out a home equity loan to pay off his debts. I was kinda thinking out loud and it didn't come out right. It is just a shame that he has 200k in equity, 100k in CC debt and only $100 left over at the end of the month. Was just seeing if there was anyway to tap the equity at least to get some money to pay an attorney.

I didn't think you were implying that the OP take out an equity loan to pay his debts. My own experience is also limited, but is there any other way of "tapping" the equity? Maybe I've missed something, too. I think that in order to make equity work you have to either take out a loan against it, or sell the asset.

[ttg1]

The problem here is that the numbers don't work out. If the OP has 100K in unsecured debt and 200K in equity then even filing for a 7 means there will be 100K left over after paying off all the creditors. The question then becomes how much of that 200K can be exempted under CA law. AFAIK for single people that is 50K.

So the house is worth 380K.
There is $180K balance.
There is 200K in equity.

The OP files a 7.
The court sells the house for 380K.
180K goes to mortgage holder.
100K goes to pay off unsecured creditors.
100K goes to OP.


In other words there is no way to file a 7 and keep the house. The court will sell it.