Great forum. I have read and read and read but still have some specific questions. First of all, I could tell the whole story of what has happened within the last 2 years but I do not think anybody would be interested. If anything good happened I would probably not be here asking for an advice. We have 15 or so credit cards, a condo and 2 cars. Of course there is some educations loans but let's put them on the side because as far as I know they can not be discharged and we will of course pay them back. Now, the condo and 2 cars are being paid and been paid on time since the day one. Never late. The cards, well, that's a different story. Wife got our of school over 2 years ago and finally found the job several months ago. I'm still going to school full time and are working part time. We had bought the house with the help of the family but because we had low income (enough for small cars and the house payments and utilities) we used credit cards for basically everything. Since 2001 we have had been using and paid them on time until we started having problems and at some point (6 months ago) just stopped because we could not afford to pay the lates and interests fees. One of the reasons of our failure was my health problems. Right now, together, we have over $60'000 in credit card debt and have no way of paying this back. Of course the creditors call 20 times a day and also every member of the family we have. We decided to file for Chapter 7 but are afraid they will try to take our house. We know as long as we pay for the cars, they will not take them away. The question is the house. Who decides what the property value is and if we can keep it or not and what the process really is? Again, we have NEVER missed the payment on the house and it will stay that way. Anyone would like to answer this? Thank you very very much
In most cases you can keep the house but it would be smart to get a consult from a BK attorney to see what exemptions apply to your state. They usually determine value by requesting a BPO for houses in your area then discounting that price by a certain percentage. The discount is not consistent and varies among jurisdictions. Maybe some of the other forum members could comment. Although CH 7 wipes out the debt, a CH 13 requires you to pay back a certain percentage of the debt based on a budget that is prepared by your BK lawyer and approved by the Trustee. Sometimes it can be as little as 20% over 3 - 5 years depending on your income. Make your plan payments on time and the balance is forgiven by the court. In some cases I've heard that once the CH 13 plan is completed, potential new creditors look upon you more favorably. Why? Because allegedly it shows some effort was made to repay the debt and not walk away from it by filing CH 7. Other forum members will have a different opinion and this is something else you might want to run by the BK lawyer. Finally, keep in mind it is easier for a lawyer to file CH 7 because there is a little less paperwork and client maintenance for them. Good luck.
OK first thing is to protect is your home. Texas and Florida offer homestead exemptions. So if you live in one of those states your home is 100% exempt. However, there is something call Tenancy by Entirety. Only 24 states allow for such an exemption. If you tell me your state I'll let you know if you qualify. I don't have the link handy. You could try to do a search on this site for it though. It has been discussed.Now, the catch, It only applies to married couples and only one of you can file. Now when you file your chapter 7 make sure your reaffirming your condo and 2 cars if you plan on keeping them. Lastly, let all the credit cards go don't reaffirm them. Hope my little 2 cents helps you out.
Thank you all, for your kind comments. We live in AR (Arkansas) and initially were thinking about both filing for CH7. Do you mind explaining what reaffirming in this case means? How and from whom can I request a BPO on my own? Thank you.
June | 2 welcome to cn *************** GET THE BASICS HERE. http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=410243#post410243 ***************** >
Well, I read and read and read again but found no answers to my last questions. Also, do you think that sending validations and following the steps may help us avoid bankruptcy?
Hey June, The way i read the exemptions for Arkansas you are your homestead is exempt in a chapter 7. That means the credit card creditors cannot force you to sell your home to pay that debt. I do not find a limit to the equity you are able to have in the house to qualify for the exemption, only that you are a citizen of the state. Talk to a lawyer for more info on that. Short story--you can probably keep your house (especially since you are current on the payments). In a BK there are two basic types of debts--secured and unsecured. Secured are things that are "guaranteed" by the thing that you purchased. For example, cars, your home, etc. The person who lent you the money for those things holds a "security interest" or lein on that property. Generally speaking BK doesn't get rid of those liens. The second type of debt is unsecured. This is just when someone lends you money to buy things but do not have in the contract that they are entitiled to the material if you don't pay. Generally speaking all of your credit cards are unsecured. In a chapter 13 BK you will make payments as directed by the court for between 24 and 60 months to pay something back to the creditors. at the end of that period the remaining debt is "discharged"--that is, you don't owe it any longer and the court excuses you from responsibility for it. In chapter 7, all non-exempt assets are taken care of and the proceeds used to pay off creditors as much as possible. You get an immediate discharge from the debt (usually 4-6 months after filing). As far as your assets there that you owe money on there are 3 things you can do: 1) Reaffirm--that is, accept the responsibility for the debt even after it is discharged. They can still come after you if you fail to pay. The terms are negotiable and sometimes you can "re-write" the terms of the debt. all reaffirmations must be approved by the court. 2) Redemption--You pay the fair market value of the assett in a lump sum and the lein is excused--that is, you buy out the collateral from the creditor. If you have spare change and need to redeem something you can save a ton of money this way. Here's how it works---you have a refridgerator you purchased from Sears for $2800. Today you still owe $1750. If you were to sell it in the newspaper you may be able to get $400 for it. If the court the creditor agrees to that value or the court determines that that is the FMV you can pay a lump sum of $400 to sears and the fridge is yours free and clear. The same works for cars as well if you are upside down on the loan. There is a company out there called 722redemption that finances this type of thing--the interest rates are high but you save a ton of money by paying only what the FMV of the vehicle is. 3) Surrender the asset--Simply give it back. The creditor walks away with the asset and sells it to recoupe as much money as possible. You are no longer responsible for the debt. Well, hope that helps. I'm not an attorney of course so it would be in your best interest to go and find one you are comfortable with. Don't necessarily go with the cheapest---go with one who will make sure your best interests are taken care of.
Thank you very much. One more thing, two months ago I had a car accident (not my fault) and this last Friday had a surgery on my arm, due to the accident. I have no idea what the actual settlement if any I will get. In case there's so monies left after paying all the medical bills, would I be eligible to keep the remaining portion? I'm not trying to hide them from anybody, but after filing CH7 it would be nice to not to start off with empty pockets. Thank you for any insights.
Probably not. You will have to list that as possible monies due. The trustee will likely take them to go towards your creditors claims.
Re: Bankruptcy - will our home be s Yeah...I agree. That would be a very bad thing to happen. I believe that it is a felony that carries jail time. I work in a federal prison. You don't want to live there
Re: Bankruptcy - will our home be s BPO = Broker Price Opinion. It is simply an estimate of fair market value that any real estate broker can prepare. Call one and say you are thinking about selling your home and would like a free market analysis. Do not mention the BK. As for the settlement money you hope to receive I am not suggesting anything but have you heard of a lawyer escrow account? If you have one you can trust, who is not filing the BK for you, you'd be amazed at what people hide in those accounts. If I had one I knew for aome time I would talk with him about how he would respond in this 'hypothetical' situation and go from there. If he agrees to help out don't be stupid by going on a spending spree and drawing attention to yourself. Disclaimer: I am only trying to make conversation and would never recommend the above to anyone.
Re: Bankruptcy - will our home be s One more thing, does anyone thinks that it would be possible to avoid bankruptcy whatsoever in my case?
Re: Bankruptcy - will our home be s . Do you mind explaining what reaffirming in this case means? june Asked
