Married Couple from NY in a jam... ideas?

[timetofixit9]

Please HELP We have a rental property which is titled to both of us but only debtor 2 is on the mortgage and it is underwater but cash flows approximately 400/month. We also have our home we live in which is titled to just debtor 2 and the mortgage is only in debtor 2s name. Debtor 2 borrowed money out of his retirement account fund a real estate investment flip. The property was titled to debtor 2 only and the mortgage was in debtor 2 name only. Things didn’t work out so well we already had a sizable investment from family members but had to borrow more to keep it afloat till it sold. After all was said and done we made money on paper but not in reality because we had to put all of our living costs on credit for a year. The house was finally sold and all the proceeds went into a joint account. We are unable to pay our monthly obligations. The proceeds from the sale went into a joint checking account but we paid back all of our family members leaving us with a small amount of cash and a lot of debt. We are unable to pay and running out of money is inevitable. We recently stopped paying debtors 1 credit card payments… the minimum payments add up to $2500.

Is it possible to debtor 1 file for chapter 7 on own and just get the credit card debt discharged or will they come after money in the joint checking?

Can debtor 2 use the remaining funds to pay back his retirement account?

Will they claw back all the payments to family?

Any recommendations on the best course of action?

Thanks

[justbroke]

First, welcome to BKForum!

You have some serious property issues that are going to require someone that does this for a living. I see issues, alone, with paying back family insiders and then stopping payments to other unsecured creditors. This payback of the insider debt is referred to as a preferential payment(s).

I can't tell you that it's okay to pay certain things and file bankruptcy for just one debtor. The co-debtor stay is not going to protect the other debtor if there is any co-debt. A checking account owned by other party is likely marital property and would be difficult to protect outside normal exemptions.

The course of action is to sit down with several attorneys and address this in your free consultation. You have property and insiders and debt scattered (titled) between two different debtors.

[timetofixit9]

Thanks Justbroke.

None of the cred it cards are past 30 days late. Should I keep paying them while I figure this out?

There actually is no Co debt... all secured debt went on debtors 2 credit and all unsecured debt went on debtor 1.

the only thing that is titled to debtor 1 and 2... is the cash flowing under water rental property but the mortgage was only in debtor 2s name.

I will surely meet with attys just trying to get my ducks in a row.

thx

[justbroke]

It's just complex for me and sitting here in Florida I don't want to steer you in the wrong direction. The insider transfers alone is what tells me that your ducks are probably not going to be aligned for another year. It doesn't hurt to do some bankruptcy planning and/or execute some asset protection strategies. It just needs the help of a professional.