NJ. Own my house outright, 85K+- in cc debt. Conflicting advice, fresh help needed.

[bc40ton]

The great folks at the ch7 forum pointed me to ch13 to see if someone has any ideas before I find the right Lawyer. So here goes:

Once again glad to find this forum, I thank everyone in advance for their time and advice. I own my own home, $160K value. Married but home is in my name. Approx $85K in CC debt. I am unemployed going on 3 yrs (no construction in/ near our tourist town), wife made $32K in '09. I have been selling my toys, camper, motorcycle, tools, misc stuff I have collected over the years to help.
Called one lawyer for consultation and he talked so fast that I couldn't keep up, he seemed to think getting a mortgage was the answer. Going to call 2 more lawyers near my town for their consultations as I am slowly learning the proper phrases and wording in the world of Bankruptcy. Getting calls about 8 times a day from the Banks. I do not answer. I have rarely been late but we just can't do the payments anymore so we stopped paying about 2 months ago. There is 5 credit cards involved. 2 Chase, 2 B of A, and a GE. Some people say to wait and maybe they will take a percentage, some people say pay what you can afford (can't do it anymore). I WILL be going to a Lawyer but wanted to get some fresh ideas. As far as I can find out, here in NJ there is no home exemption.
So if anyone wants to post, please do. I am reading as much as I can find on this spot I got myself into. Thanks,
BC

[helpmeout]

In NJ, there are practically no exemptions. Fortunately, you can go with the Federal Exemptions.

Which isn't going to be enough to exempt all of the equity in your house if there is no mortgage on it. If you want to keep the house, you will need to do a Chapter 13, and given how much equity you have, you will probably be in a 100% pay back plan.

You really need to take a hard look at your budget because your problem isn't going to go away with a BK.

[RichM]

In your case, I think a Debt Management Plan through a non-profit Consumer Credit Counseling agency may also be worth considering.

-Rich

[bc40ton]

Thank you for your replies. I am reading up on debt management plans. There are so many things to consider out there and thanks to this forum I am slowly casting aside the things I shouldn't do and reading more on the options people are pointing me towards.
A hard look at our budget is definitely in order, but we have learned much in the way of our past spending habits in the last couple years. Most of the CC debt comes from when business was good (10-12yrs ago) and the money was flowing. So thanks again for your pointers. They will be well taken.

[catleg]

You own your house outright (no mortgage)?
I'm asking to determine what your equity is.

[bc40ton]

That is correct. Feel free to ask any other questions.

[Peeps]

I'm guessing what the fast-talking lawyer (and I don't mean that in a bad way... this time) might have been hinting at:

1. Assume quick sale value for your home. It's not the $160k. Maybe take off 10-15% for quick sale/commissions. Also, are you absolutely sure it is worth $160k? Have real estate values gone down in your area? Or maybe you've already factored that in when you say the home is worth $160k?

2. With federal exemptions, you can protect a little over $20k in home equity. Get a loan against your home value, less the $20k. Safer yet, give yourself some breathing room and take a loan for the value less $15k. Or $10k? Might be challenging with 2 months of late reports on the CCs

3. Use the home loan to get back on track with your credit cards. Use the money for living expenses. If your lawyer thinks it's "safe," use it to make normal contributions to things like 401ks (that can be a bit iffy... check first).

4. Then, if you happen to look up in a couple of years and realize "oh my gosh, I need to do something about this debt," you'll have more options in the BK arena.


Obviously this erodes your commendable efforts to get your house paid off. You'd have a mortgage again and would be carrying credit card debt on top of it. Not so uncommon, really. As it stands, your problem is that big juicy asset of a house. You could do the loan thing and buy yourself some time to get back on your feet (and possibly qualify for a Ch 7 a couple years down the road) or you could go into a 13 now. As someone already pointed out, you might be facing a 100% payback plan. Five years of it.

You could also sell the house, pay off the cards, and start a new life with the money that's left over. That's a pretty big step and it sounds like you're interested in keeping your home so maybe it's not really an option you want to consider at this time.

Anyway, just a layman's perspective. I'm kind of new to this whole thing, myself so... take it with a grain of salt. Best of luck to you.

[bladerunner]

What about debt settlement? Maybe he can get a loan against his home and settle for maybe .25 cents on the dollar...perhaps the 85 grand could be cut down to 21.5 grand, just a thought... might be given a 1099 though for the remainder 75% off. What about putting the home in a trusted relative's name? Declare BK after about 8 mos. Wait a year and have the home put back in your name? I'm just throwing it out there...

[bc40ton]

Thank you all for your views. I will be rereading everyone's post many times. The value I quoted (160k) would probably get me a quick sale as it has been remodeled with upgrades. But I do want to keep the home. The "fast talking Lawyer" was only due to my own ignorance of the words and phrases common with a BK. In other words, he was asking me questions I was not prepared or had an answer to in the 5 min phone conversation. Thats what brought me here, to inquire about different scenarios available to me and learn the terms needed to talk one on one with the Lawyer. So far everyone has been extremely helpful and I appreciate it very much. The more I find out on here, the better I can communicate what I would like to do/say. So feel free to ask questions or info need. The more I learn now, the better. Thanks!

[free2breathe]

What about debt settlement? Maybe he can get a loan against his home and settle for maybe .25 cents on the dollar...perhaps the 85 grand could be cut down to 21.5 grand, just a thought... might be given a 1099 though for the remainder 75% off. What about putting the home in a trusted relative's name? Declare BK after about 8 mos. Wait a year and have the home put back in your name? I'm just throwing it out there...

Putting the home in someone else's name would raise major red flags. They can go back quite a ways in asking about property transfers. They would pick up on that and dismiss the OP's bankruptcy before he could blink an eye.

[despritfreya]

What about putting the home in a trusted relative's name? Declare BK after about 8 mos. Wait a year and have the home put back in your name? I'm just throwing it out there...

As f2b alluded to. . . this is not an answer. Not only is it a fraudulent conveyance that will be recovered by the Trustee. . . anyone who does this will not be able to claim an otherwise available exemption when the property is recovered. Do not transfer anything, especially if it is with the intent to "hinder, delay or defraud" creditors.

Des.

[bc40ton]

I understand and that never entered my mind. I got myself into this trouble and working with the system, you great people and a lawyer, will hopefully get myself out. I will be asking some questions in a day or so, as I have a slight idea on the route I think I should take. Although a talk with lawyer will be absolutely necessary, when I am comfortable I have the questions I need to ask. Thanks to everyone so far, you all have been a lot of help and comfort.

[catleg]

If you got the house titled as tenancy by the entireties you could protect it against any judgments against either of you individually.

[bc40ton]

I tried to link you to my other post but I cant yet as per rules of the forum. At thread 482128 I discussed what little I know about "tenancy by entirety". This is one of the questions I written down for the lawyer but if someone can explain now what it means that would be great. As usual, thanks for your time and patience.

[bc40ton]

So with the "post nup" I cannot go with tanacy by the entirety. So I am looking at a mortgage as my best bet so far according to the great folks in here. As stated I will be going to the Lawyer after the holidays for a one on one question/answer period. So my question, if I am going to be putting the house up as collateral for a mortgage of say $80k, and as long as I have the CCard debt payment set as to the specific amount from each of the 5-6 cards do I need a lawyer to even file ch13? Can I just get the mortgage and send out bulk payments to the Banks issuing me the cards? What am I missing here?? Is it large amounts of paperwork, tax advantages, certain filing procedures that I might not know about that I would need the lawyer for. Excuse me for my ignorance. As I have not been in this situation before. Thanks for any feedback.