No idea where to start the process

[geekinheels]

My husband & I own a home. We have never been late on any of our bills. However the debt we owe is suffocating us. We have little wiggle room in our checking account when we pay all our bills. It's making really scary to live under so much stress of wondering if we're going to overdraw just so he can buy gas to drive to and from work.

We were considering selling our home, but found out from a Realtor who came out that our home is only going to market for what we currently owe. That price won't pay for closing costs and a loan we had to take out to replace the new heating and cooling unit this last summer. We don't have any money to bring to the table to help cover any of the costs. Later another realtor came out and suggested we give the house back to the bank because the market where we are is terrible and our neighborhood has had 4 foreclosures in the past 2 years, making the likelihood of the house sale to not happen. We quickly dropped the sale idea after we put it up on the market last year with not a SINGLE call! We just don't want to go through that again. Short sale will affect our credit like a foreclosure I'm told. So now my dh & I are considering taking the next step to file bankruptcy, but we both are clueless! I want to research and know what we can do BEFORE using up the free consulation from the bankruptcy lawyer.

Do we default on the credit cards and the mortgage before filing? How will that work if the bank records are pulled and it's obvious the money to pay those bills is there, but it'd make living ONCE again very very tight!?

We have a home opening up to us in another state from family who own a lot of their own properties in May. They will sell us the home no matter our credit so owning a home isn't an issue to us as we can get around that with my husband's family helping. We would prefer to strip our credit cards, medical debt, mortgage, and be able to have a fresh start. Is this realistic?

I was thinking a Chapter 7 would work, but will we be required to file a Chapter 13? My husband is the only one working with 5 people in the house. No idea if this information that is helpful or not. Do we just pay the mortgage payments until the bankruptcy is started? Or do we begin defaulting now? What about the credit cards? Do we default on those as well or wait until we file? I want to know that IF we can default we can have that extra money to put towards our move (2200 miles away).

I'm sorry for all the confusing chatter, but we're so new into this idea that it's scary as heck! And I don't want to default on anything IF it's going to make the entire process worse.

[kornellred]

No one can give you advice worth acting upon when it comes to the decision to default on your financial obligations. When you are mired in unsecured debt, you soon realize that there is no way, short of a large inheritance or winning one of the major lotteries, that you will ever escape the indebtedness. Well, not quite - you can start paying down the debt and promise yourself never to use credit again, but that will take many years of sacrifice.

As far as bankruptcy goes, you need to talk to an attorney. You will not be permitted to file for Chapter 7 unless you qualify for it. Your chances are good if you are below the median income in your state for your family size - then there is no "presumption of abuse". If your income is above the median you will have to prove that you cannot fund a Chapter 13 payment plan. This matter is complex and cannot be addressed on the forum without a lot of basic facts concerning income and expenses.

Bankruptcy is less than pleasant but it is not devastating. Good luck.

[keepsmiling]

Hi Geek and welcome.
It's the weekend and often forum traffic is slow then, so don't be dismayed if answers take a little time.

It's difficult to tell you exactly what to do, and we need some more info such as income/expenses etc. Chances are you could stop paying cc's right now; but you will be need to be able to exempt any extra cash you will have upon filing. Start reading up on exemptions for your state.

Also... how will your dh earn his living upon moving? And do the inlaws plan to finance this house for you themselves? Important q's. You are more fortunate than many here to have this option.

I'd start calling some bk atty's on Monday- although many may be on vacay....and make a few appts for some free consultations. That will help you start to sort things out.
Coming here to post was a smart first move. Read as much as you can so you can start understanding the process.

[pamkev]

The only question I will add is if you defaulted on your cc can your pay your mortgage and live within your means?

[LadyInTheRed]

Welcome to BKforum! Please do some reading here, including the stickies. Then ask some questions based on what you learn. It's never too early to consult with an attorney who will be able to advise you based on your specific circumstances.

If after you learn about BK you decide you will definitely file, that is when you should stop paying unsecured creditors unless your attorney advises you otherwise. If you decide to walk away from the home, you will also stop making mortgage payments as soon as you know you are walking away. You won't be penalized for not making payments when you had the money to do so. But, you do want to make sure that on the date you file BK you don't have more cash than can be exempted under state law (a bigger issue in a Chap 7 than in a 13).

The first step to determining whether you qualify for a 7 is to determine whether your annual income based on the last 6 months' income is above or below median. You can find the median income for your family size and state at http://www.justice.gov/ust/eo/bapcpa...come_table.htm

[BROKEDED]

According to Red's chart, yours would be $71,219. Even if it's higher than that, don't fret. Ours was something like $24,000 over median income and with all our bills we still squeaked by.

[geekinheels]

Hi Geek and welcome.
It's the weekend and often forum traffic is slow then, so don't be dismayed if answers take a little time.

It's difficult to tell you exactly what to do, and we need some more info such as income/expenses etc. Chances are you could stop paying cc's right now; but you will be need to be able to exempt any extra cash you will have upon filing. Start reading up on exemptions for your state.

Also... how will your dh earn his living upon moving? And do the inlaws plan to finance this house for you themselves? Important q's. You are more fortunate than many here to have this option.

I'd start calling some bk atty's on Monday- although many may be on vacay....and make a few appts for some free consultations. That will help you start to sort things out.
Coming here to post was a smart first move. Read as much as you can so you can start understanding the process.

Thank you!

I will make some calls to our local office on Wednesday. We have only a small handful of bankruptcy attorneys here.

I will read up on exemptions. I started and was easily overwhelmed but I feel that's because I've been cramming so much info the last few days since I can't sleep well right now over this whole situation.

My husband makes $46k/year. We are a family of 5. We are wanting to file against our mortgage, credit cards, medical debt, & a loan we've gotten from our local electric company for a new heating & cooling unit that we had to replace this last summer. We've paid all January bills already.

My husband has the opportunity to take his job with him. His current job is allowing him to work for them at home until they can find a replacement for him or until my husband finds a new job at our new location, whichever comes first. He's currently working an hour away 5 days a week.

My in-laws are indeed financing the home for us and another vehicle as well once the move has been finalized. The home is currently his aunts home and she owes $0 on the home. The home has been paid off since 1960 by his grandparents.

The only question I will add is if you defaulted on your cc can your pay your mortgage and live within your means?

Yes. However we don't want the home. We owe more on it than we can sell it for.

Welcome to BKforum! Please do some reading here, including the stickies. Then ask some questions based on what you learn. It's never too early to consult with an attorney who will be able to advise you based on your specific circumstances.

If after you learn about BK you decide you will definitely file, that is when you should stop paying unsecured creditors unless your attorney advises you otherwise. If you decide to walk away from the home, you will also stop making mortgage payments as soon as you know you are walking away. You won't be penalized for not making payments when you had the money to do so. But, you do want to make sure that on the date you file BK you don't have more cash than can be exempted under state law (a bigger issue in a Chap 7 than in a 13).

The first step to determining whether you qualify for a 7 is to determine whether your annual income based on the last 6 months' income is above or below median. You can find the median income for your family size and state at .....

Thank you.

What very helpful tips! I didn't know about the day of filing and the money situation or the fact that even if we have the mortgage funds we don't get that counted against us.

I did read that in TN the lender can come after us for the balance owed if we let the foreclosure complete. That was a bit scary to learn. So I need to find out from an attorney if we can still stop paying our mortgage soon since we want to file bankruptcy and include the mortgage.

According to Red's chart, yours would be $71,219. Even if it's higher than that, don't fret. Ours was something like $24,000 over median income and with all our bills we still squeaked by.

My husband makes about $46k/year

[df04527]

My husband makes $46k/year. We are a family of 5. We are wanting to file against our mortgage, credit cards, medical debt, & a loan we've gotten from our local electric company for a new heating & cooling unit that we had to replace this last summer. We've paid all January bills already.

Want to point out that everything you owe goes in to the bk, not specific things like you mentioned. Just in case you were thinking you could bk certain things and not others.

[geekinheels]

My husband makes $46k/year. We are a family of 5. We are wanting to file against our mortgage, credit cards, medical debt, & a loan we've gotten from our local electric company for a new heating & cooling unit that we had to replace this last summer. We've paid all January bills already.

Want to point out that everything you owe goes in to the bk, not specific things like you mentioned. Just in case you were thinking you could bk certain things and not others.

Yes I guess I didn't realize filing bk means just that and stating everything we owe is rather silly! Sorry!

Does anyone know anything about tax refunds? We are going to be filing AFTER our taxes so we can pay off our car. Does the tax refund count towards the median? Or am I just confusing too much here?

[dina13]

Get a Nolo BK guide (ch.7 or ch.13 depending on your situation. It seems like you are way below median, so ch.7 seems like an option). When we were considering to file, I spent days browsing this forum, and then I got Nolo ch.7 Bk Guide, and after I read it, the whole process became much more clear to me, and it was a smooth sail after that.

[keepmine]

Yes I guess I didn't realize filing bk means just that and stating everything we owe is rather silly! Sorry!

Does anyone know anything about tax refunds? We are going to be filing AFTER our taxes so we can pay off our car. Does the tax refund count towards the median? Or am I just confusing too much here?

A tax refund doesn't count for means testing purposes. Just be sure if you payoff the car, the equity doesn't exceed what your state exempts.

[keepsmiling]

Think very carefully about paying off your car. It is probably not in your best interest at this time.
You might be better off using that refund for something else. Keep reading.

[LadyInTheRed]

.
I did read that in TN the lender can come after us for the balance owed if we let the foreclosure complete. That was a bit scary to learn. So I need to find out from an attorney if we can still stop paying our mortgage soon since we want to file bankruptcy and include the mortgage.

The lender can't come after you for a mortgage deficiency if the debt is discharged in BK.