New...so many questions

[harat]

I think you can agree that this whole situation SUCKS...anyway I have so many questions. We live in Texas and we are thinking of filing. WE have around 50K in credit cards. Not to defend our situtaion because yes it was poor planning and behavior on our part but two years ago we had a child born with a severe birth defect and had five very expensive surgeries in one year. With the pressure to pay off one procedure before the next we paid with credit cards....not to smart now I realise. So what was once 10k is now 50k. I stay at home/work from home partime. I looked into going back to work full time but with the cost of a specialize daycare I would make less than I do now. Seems we were handling the payments well until the new law doubled the min. payment amount and now we are barely feeding the kids. If something goes wrong we are just....well. So we have been considering bankruptcy. (No we could not get any funding for the medical bills due to DH income of 89K) Plus I have read that now that we have paid the bills with credit cards we can not file a medical BK.

My questions are this....We have an inherited traditional IRA will that be secured? We ahve looked into cashing it out but the penalties are crazy and it is the only retirement we have thus far. Also we have a time share. We looked into selling it but we are told that we will be held responsible for it FOREVER....can they really do this...Meaning that if the buyers fail to pay maientence fees or trash the place one crazy week they can come after us. Will the courts even let us hold this as an asset? It has never showed up on our credit report and I cant even consider hiding assests...I can barely even talk about backruptcy with out breaking out in tears. Also Husband is looking for a new job...what if we are to move and sell our house. I dont mind paying what I owe. I tried to second morgage to get some relief but texas homestead laws....How will a new employer take to BK on his credit???? This sucks. Plus right now he has a corporate amex card that he needs to purchase equiptment with for work...will he loose this too?

Any advice would be great. I have considered selling the house and taking what equity get and just renting but I know that is not enough to solve our problems.

[lrprn]

Hi, harat, and welcome. We all feel your pain here - we have all been right where you are right now. Glad to see you found this forum - it's a tremendous source of great information and support!

My answers to your questions are in red inside your original post below:

I think you can agree that this whole situation SUCKS... [YES!] anyway I have so many questions. We live in Texas and we are thinking of filing. WE have around 50K in credit cards. Not to defend our situtaion because yes it was poor planning and behavior on our part but two years ago we had a child born with a severe birth defect and had five very expensive surgeries in one year. With the pressure to pay off one procedure before the next we paid with credit cards....not to smart now I realise. So what was once 10k is now 50k. I stay at home/work from home partime. I looked into going back to work full time but with the cost of a specialize daycare I would make less than I do now. Seems we were handling the payments well until the new law doubled the min. payment amount and now we are barely feeding the kids. If something goes wrong we are just....well. So we have been considering bankruptcy. (No we could not get any funding for the medical bills due to DH income of 89K) [I'm a nurse - so sorry to hear about your child's problems - hope all is well now. Have you spoken with the hospital's patient accounts folks? It's very rare for a hospital to not be willing to work out a reasonable payment plan with a family in your situation. Of course since you put some of the surgeries on your credit cards, the hospital can't help with those costs.] Plus I have read that now that we have paid the bills with credit cards we can not file a medical BK. [There is no such thing as a 'medical BK' - for typical consumers there's Chapter 7 and Chapter 13 - which one you get to file depends on how your income compares to your state's median income and how you come out on the required means test. Given your husband's $89K income, it's likely you two will be a Ch 13 candidate, but only a bk lawyer can say for sure which chapter you qualify for.]

My questions are this....We have an inherited traditional IRA will that be secured? We ahve looked into cashing it out but the penalties are crazy and it is the only retirement we have thus far. [DO NOT CASH OUT YOUR IRA! If you do file bk, this money is safe - the court can't touch it. Also the tax hit will be incredible next year - how will you pay it if you are short of money now? Don't do it!] Also we have a time share. We looked into selling it but we are told that we will be held responsible for it FOREVER....can they really do this...Meaning that if the buyers fail to pay maientence fees or trash the place one crazy week they can come after us. Will the courts even let us hold this as an asset? [Don't know the answer, but there's a thread going currently started by another poster who has a time share - you can find it by doing a search.] It has never showed up on our credit report and I cant even consider hiding assests...I can barely even talk about backruptcy with out breaking out in tears. [Believe me, many of us have been here too. I had a crying jag today myself. Good news is the intense emotions do lessen over time.] Also Husband is looking for a new job [is he looking for a new job to make more money?]...what if we are to move and sell our house. I dont mind paying what I owe. I tried to second morgage to get some relief but texas homestead laws....How will a new employer take to BK on his credit???? [Although it's against the law to discriminate against an employee who files, the company can always make up an acceptable reason even if the true reason is the bk.] This sucks. Plus right now he has a corporate amex card that he needs to purchase equiptment with for work...will he loose this too? [I have a corporate card that is used for travel - before we filed, the card's collections manager told me since I had NO personal charges on the card, not to list it on our list of creditors - if I did list it, the card would be canceled. We filed Ch 13 six weeks ago and we didn't include my corporate card on our list of creditors - so far, so good. My corporate card is still working.]
Any advice would be great. I have considered selling the house and taking what equity get and just renting but I know that is not enough to solve our problems. [Sometimes it's hard to see that we do have choices, as hard as those choices might be. If you haven't done this yet, it would be a great idea for you to contact several bk lawyers in your area - most have FREE half-hour to hour consultations. Take a complete list of your assets and debts along with your typical monthly expenses with you. After speaking with several, you'll have a good idea of what your best options are. Good luck, harat - we are here whenever you have questions or need support. Please keep us posted on what you decide to do, ok?]

[keepmine]

Please folow lrprn's suggestion and get yourself to a lawyer ASAP.
Texas offers TREMENDOUS protection to bk filers. The exemptions are likely the most liberal of state.
Here's what you get to keep.

http://www.thebankruptcysite.com/bankruptcy-exemptions/texas.php

Also, please try and take the emotion out of the equation. I looked at my filing as strictly a business decicion. Are you better off with a bk filing or, do you wish to stuggle for decades ? You've a retirement to plan and a child's future to secure.

Also, timeshares and the associated maintences fees,etc. are dischargeable in bk and any attempt to collect post bk will violate the permanent injunction against future collection activity on discharged debt.

[edwards2]

Ditto to what keepmine and lrprn said...we all know exactly what you are feeling - contemplating filing BK is definitely a business decision but it is almost impossible to keep your emotions out of the equation. Nevertheless, try and focus on it being just that. This forum can be and should be your lifeline - they were mine along with one other. We had a medical catastrophie that led to our filing as well but while it was the cause it was the aftermath that did us in. We did the same thing about paying my husband's medical costs - credit cards, delaying payments on other things, etc. Some medical bills simply hounded us until we did pay; i.e., the 2 ambulances who transported him to the Trauma Center at $500 each right off the bat...$1K may not seem like a lot but when you factor in all the meds, hospital stays, and simple everyday expenses it was a financial disaster yet we tried for 3 years to keep the payments up and not file BK. Sooner or later though robbing Peter to pay Paul doesnt work because there is no more Peter. It happens and filing BK is not terminal. We are all here to support and help you. I can tell you with absolute certainty had it not been for this forum I could not have made it through the process. I got more information from this forum than I did my own attorney but you should definitely consult one asap. We are all so sorry for your child's medical issues but think of it this way...what you may have to do is for your child's future and yours. Good luck...keep us posted.

[anonymuse]

First, I'm very sorry to hear about your child. I hope s/he is getting better and doesn't need continual care.

Your DH may be making great money, but how is your health insurance? Is there a lot that is not being covered and high copays and high deductibles?

Make sure you complete the means test--I'm not sure if you have significant ongoing care expenses for your child that could make a difference.

Not sure if you have more than one child. Texas median income is $58,143 for a family of 4. (add $6300 for each member over 4.)

The unlimitted homestead exemption in Texas is incredible (some states are 10K and even lower).

Go get at least 3 free consultations and see what the attorneys have to say.

[harat]

Thank you all for your replys. I am so nervous about all of this. So many questions left to be answered. Our son is fine now but faces monthly therapy and future surgery. Our insurance is good now so that will help in the future. It is just getting past this huge bump.

To answer some questions my hunsband is not really looking for a higher paying job....just one that he will be happy with in the long run. I would hate the fact that he may miss out on a oppertunity due to bankrupcy but he will just have to explain the situation and hopefully he will find someone understanding. After all we are not the first to be in this situation.

I understand that Texas has great homestead exemptions but what will happen if we have to move with in the five years we are going to be making payments back? Also how big may we expect the payments to be? I at least hope that we can free up some money so that we can at least buy groceries and clothes for our growing boys. The last 6 months have been horrible...stressing out whenever we need diapers...lol.

Thanks for all your support I feel like I found the right place.

[Minnymouth]

Okay, consult at least 3 attorneys in your area (consultations are free)..... no harm in getting "free advice"....

Lay it all out on the table and see where you stand...... you may qualify for Chapter 7 and don't know it......

Then make your decisions on what you need to do.....

If you have questions, feel free to ask..... we will try to help......

[jane taylor]

So sorry that you are going through this and the issues with your child. Financial problems and family members who are ill are so stressful by themselves, much less together.

Please do not touch your IRA! I am still kicking myself for using up all of our retirement to try and repay debts. That is one regret I have. Do consult with at least 3 attorneys and see what they have to say. Keep in touch with us and God bless--

jane