Lots of Newbie Questions - please help

[debitdork]

Hello everyone. I have spent the past week reading pretty much every post on these boards, so I feel like I already know most of the regulars on here. I cannot tell you what a great relief it has been for me to find such a wealth of realistic information given by real people who have been there - thank you all.
That said - here are my questions with as little background as I can spare you from.
I am thinking that Chapter 7 is the only way that I can go at this point - as i am not employed (Stay at home mom to 3 kids - daycare $$ would negate $$ made from job) and my husband makes about 3 times below the median income for our state. (Maryland)
The only secured debt we have is the house and a HELOC and the house is in my DH's name alone (as is HELOC). Most of the unsecured debt is in my name alone. (Husband has two small CC's because he had bad credit before we married) Our home unfortunately or fortunately depending on how you look at it has way too much equity built up right now because the propert values have gone through the roof in our area and there is no way we would survive the house being brought into it. (At least I wouldn't think)

-Can I file for BK in my name alone without there being any serious ramifications against my husband and more importantly our home? Maryland is a state that has no homestead exemption, (Yikes!) but it is also not a community property state.
-Re: the 90 day no use on CC's - I have been using CC's to pay for necessity expenses, but have been paying my minimum payment on all of my CC's. Do I just stop paying the CC's and use that money for what I have been using the CC's for? How long can I get away with that before I will be in deep trouble? What can they really do to ME if I do not have a job? (Meaning garnishment, lein,etc)
I do plan on consulting with a few lawyers as soon as time allows (no babysitter, DH has no leave) but would like to armed with a little information before I even go in.
I am sure I will think of more later, but I'll stick with this for now and then bug you more later. Thanks in advance for any advice anyone might have.

[BassBoy]

WELCOME TO OUR FORUM!

Yes, you can file BK alone, but any debts you list must be yours and yours alone. Filing BK alone does not hurt your husband at all.

You could stop paying your CC's, but I wouldn't wait too long to file then. My opinion about waiting too long is when the garnishments and/or liens start to happen, that only throws one more wrench in the mix, and why deal with more headaches.

[HHM]

Let's back up a bit for some clarification.

When was the house purchased, and were you married at the time, and when was the HELOC taken out? Also, how much unsecured debt are we talking about?

As for everything else, it should be fairly straightforward. As Bassboy points out, don't stop paying on credit cards until you have spoken to a lawyer and have committed to filing (assuming you can afford to keep making minimum payments, if you can't make the payments, you can't make the payments and should stop). But, regardless you say you are paying for necessities with credit cards, you need to figure out a way to live within your means, i.e. stop using credit cards. You won't be able to use the credit cards during your BK, and after the BK is over, do you really want to end up back in the same situation. Thus, sit down, figure out a budget and stick to it. You need to answer this question, (on paper, not just in your head, sit down and go through all your income and expenses), if you didn't have the credit card payments, could you pay for all your necessities without incurring any debt. If the answer is no, you need to come to grips with that reality and figure out what you will do to either control spending, increase income, or both, before you file BK...because unless you can live without incurring debt, a BK right now, would be relatively pointless.

[debitdork]

Wow! Thank you both for such a fast reply.
Re: using the CC's - I have slowly but surely been using them more and more to pay for the essentials because the money is not there for the essentials when I need them because I have been paying the credit minimums with that money - then the minimum amounts go up and up. It's a vicious cycle. I thought I had it under control until this business started with them raising the minimum payment required for CC's somewhere around October (?)- and I had figured I would just pay everything down in the future, but it is well out of my control now.
I have done the budget math (and we are already on a tight budget - no luxury even on the CC's - that is how I have gotten 5+ years doing this on one really small income) and I do believe that we would be OK if I did not have to pay all of these high minimus every month. i have never been one to live the life of luxury and I do not expect to ever be. : ) The problem right now is that if I stop using the credit cards - I will have to stop paying them the minimum in order to have the money to pay for food and daily living. (gas for cars, lunch for kids,clothing,etc) If I keep up with the payments for the cards - I will have to keep using them in order to keep feeding the kids. One or the other has to stop. That is really why I am looking atBK - I want a fighting chance at starting out fresh without any credit and just be able to break even legitimately without any ties to debt.
Also, bassboy, do you know if they can garnish or lein against my husband since I am not working - even though the debit is not tied to him? (We are talking a relatively short timeline here)
Re: the house - we (in his name alone) purchased it over 4 years ago, but Maryland is not a community propert state. Does that make a difference? I did not sign any of the paperwork or loan information on either the mortgage or the HELOC. We do however have a joint bank account (If that makes a difference)
Thank you sooo much for the help. It makes me fell so much sounder to have someone there to help and also to know there is someone listening.

[BassBoy]

Also, bassboy, do you know if they can garnish or lein against my husband since I am not working - even though the debit is not tied to him? (We are talking a relatively short timeline here)
Re: the house - we (in his name alone) purchased it over 4 years ago, but Maryland is not a community propert state. Does that make a difference? I did not sign any of the paperwork or loan information on either the mortgage or the HELOC. We do however have a joint bank account (If that makes a difference)
Thank you sooo much for the help. It makes me fell so much sounder to have someone there to help and also to know there is someone listening.

No way can a creditor garnish wages from someone who doesn't owe them!

Am I understanding this right? The house is in his name only????? If so, then you can file alone and the house can not be touched. YOU are filing, not your husband.....so I don't believe they can touch him or any of his assets.

[BKTango]

debitdork, I was in that same vicious cycle of using cc's to pay for food, kids clothing, medical, and anything like that needed just to keep paying the minimum's. Yes the minimum's would go up each month by a few dollars and that was justifiable to pay an extra 5 bucks considering I didn't have the $170 to pay the dentist. Oh what a tangle web we weave....it is a bad cycle to get into and once your in, your in for the long haul. We did it for three long years. Three years too many. When you do finally stop paying all those cc's you see that you in fact do have the money available to pay for the food,etc. on hand every month.

As far as not being able to find a babysitter so you can go see a lawyer, take them with you. I did. Just make some phone calls to a few lawyers to set up some consultations (they are free), and ask politely if they wouldn't mind your children being there as you have nowhere for them to go. Most are understanding of this.

If I remember correctly and someone please correct me if I am wrong, if the debt is solely in your name and your husband is not even an authorized user on the cards, they cannot try to collect from him. As far as the house, IMO that would definitely be a question for the lawyers. But I would think your home will be safe.

After you have consulted with a few lawyers, they will advise you when to stop paying and start using that money for the necessary expenses, the way they look at is "why keep paying on that when it's getting discharged?" Again wait until you have spoken with an attorney and ask them about this matter. But you will need to stop using them at some point in order to get past the 70/90 rule on cc usage prior to filing.

[debitdork]

Yes, the house is in his name alone because he was the only one of the two of us that was a first time home buyer - so therefore qualified for better bonuses in the closing and loan terms. (I had previously been on a mortgage with my ex so I would have messed up some of the good deals had I insisted I be on the mortgage)
So, let me clarify here - even if we have joint checking there is no way that the CC's can touch his money to collect for my late payments?
Thanks so much!

[BassBoy]

I would think that even though you have a joint account, the creditors could possibly tap into that, but normally, I've only heard of them filing a lawsuit to garnish wages or place liens. This takes time though. Even still, if you pay the CC's until you're told not to pay anymore, the CCC's will not get anything filed (judgements) before you filed your BK. Oh, and I wouldn't rush out and open any new accounts in his name only and transfer that money (assets). I also wouldn't say anything to any of your creditors about a BK either. Don't give them any ammo.

Now that you've clarified that you ARE NOT on the mortgage, then your home should be safe if you file alone.

[debitdork]

BKTango, thanks so much for your sympathy. I really need someone who understands how I got into this right now because I am really feeling like I am all alone. I have always been very responsible with my financial matters and I still am, it has just gotten beyond my control with the rising interest and the increased minimum payment regulations. One of my cards minimum payments went from $80 to $140 in just one billing cycle and I didn't use it - and I didn't pay late - nothing. It was just their implementing the new regulations regarding monthly minumum payments. This left less and less cash on hand for anything other than making the payments - and now the monthly minimums are beyond what I can pay - at all. Even if I do not use them and stop eating,etc. I am afraid that I am already going to have to stop making payments on a few of these cards just to make sure the utilities get paid and even at that - I don't know. If the money is not there - it is not there.
Thanks also for the suggestion of bringing the kids to a lawyer's. Do you really think they would not have a problem with it? I have three kids and two of them are fairly boisterous. (A wrestling match would not be a surprise) I might be able to get my motehr up to watch the kids, but it would probably be at least a month before I could do that.

About the 70/90 rule - does it apply to any spending whatsoever? All of my charges have been for under $100, but unfortunately I made quite a few in December due to Christmas. Not anything major, we had a very small Christmas because I did not want the minimums to go up even further, but do they take what you used the cards for into consideration? (I remember reading that somewhere in here previously)
thanks!

[debitdork]

[QUOTE=BassBoy;77753]I would think that even though you have a joint account, the creditors could possibly tap into that, but normally, I've only heard of them filing a lawsuit to garnish wages or place liens. This takes time though. Even still, if you pay the CC's until you're told not to pay anymore, the CCC's will not get anything filed (judgements) before you filed your BK. Oh, and I wouldn't rush out and open any new accounts in his name only and transfer that money (assets). I also wouldn't say anything to any of your creditors about a BK either. Don't give them any ammo.
/QUOTE]

Oh no, we have no intention of getting any credit in his name. I do not think he could get any anyway considering his income.
DH asked this afternoon - and it is a darned fine question - would it be wise / unwise for him to open up a seperate bank account in his name now? Would it look suspicious even if he did not take money out of our current account to do it? He is concerned about his direct deposit being frozen or outright taken - then we would be in really big trouble.
Sorry for all of the questions & thanks!

[BassBoy]

What I meant by new accounts was opening up a new bank account. It's important that you do not transfer any money or items (assets). I didn't mean CC accounts, if that's what you thought. Sorry for the confusion if you thought that's what I meant.

I would think that your husband can open up his own account and he should be able to start his direct deposit to that account. And if it's his name only, it will not be part of the BK. I would leave the other account as it stands. There is usually an exemption that allows you to have so much in your account the day you file (i.e., $400). To be absolutely sure about how you need to handle this, speak with an attorney first.

BTW, what is your timeline if you do file? DO you need it ASAP? 2 months? 3 months? This may help us answer the question about your creditors getting garnishments and such.

[debitdork]

Well, I am a little worried about how I should handle the timeline as well. We should be getting a fair amount in tax return money for child tax credits,etc. We do every year, but it is money that is essentially spent before it gets here. (it primarily pays for my medical insurance and the excess in bill beyond what weekly paycheck bring in) I am worried about the timing of when I file BK v/s the time I file our taxes because I absolutely cannot afford to not have that tax money taken in the BK. I have read several different sides to when is the best time to file each strategicly in accord with the other, but am still fairly confused. Should I file taxes then file BK or should I file BK then file taxes?
As far as needing it ASAP - I cannot make the payments on the cards anymore, especially if I cannot use them to pay for groceries or gas due to the 70/90 rule. With that said I guess my timeline is however long it would take for the CCC's to catch up with me for nonpayment. Yes? No? As of right now- I am only a week or so behind on my CC payments, but will not be able to make them. (If that helps figure a timeline)
Any help is appreciated.

[BassBoy]

The reason I asked about your timeline is because maybe someone can answer the question of how long before any legal actions are taken. I didn't have this happen to me, so I can not give you a definate timeline of how long before you have legal issues with the CC debt. Hopefully, someone else can chime in here.

That aside, saying that you can not make the payments any longer tells me that may need BK in the near future.....if you know that BK is the only way to resolve this........it may only be a matter of months before the debt is turned over to a collector and then they take actions for non-payment.

[SinkingFast]

Yes, the house is in his name alone because he was the only one of the two of us that was a first time home buyer - so therefore qualified for better bonuses in the closing and loan terms. (I had previously been on a mortgage with my ex so I would have messed up some of the good deals had I insisted I be on the mortgage)
So, let me clarify here - even if we have joint checking there is no way that the CC's can touch his money to collect for my late payments?
Thanks so much!

Just because you are not on the mortgages does not mean you are not an owner of the house. You would need to check the Deed/Title to know who the legal owner of record is.

The reason I suggest this is because,........... When we refi'd our house, because I was a SAHM with no employment income, the Lender put the loan in Hubby's name only. When we originally bought the house, my name was on the Deed. So even tho Hubby was financially responsible for the loan, I co-owned the house.

So be sure to check at the Court House how the Deed/Title was originally recorded to know for sure.

Having a Joint bank acct, your Creditors could possibly get a Banking Institution Garnishment against you. They could then take money from your bank acct to pay your debts to them. So it is possible for your Creditors to, in essence, take money from your Hubby to pay your bills.

You might wanna ask attnys as you Consult with them about the implications of removing your name from the Joint acct. You have to disclose bank accts you've closed within a year prior to filing BK, but removing your name from an acct that stays open is technically not closing an acct. You could then open a new acct with the same bank, or possibly go to another bank and open an acct if you need one for any reason.

[BKTango]

Try not to wait so long to do some consultations, you said your mother may be able to watch them in a month, most consultations only last 30 minutes or so, the kids won't be a problem. The quicker you have the consultations the more at ease your mind will be, and you will have a better understanding as the where you stand in the BK process.

I can only tell you from my own personal experience with the creditors on how the collecting situation went. Keep in mind I had also joined a DMP at one point and had to stop making payments to the cc's to fund my "plan". I'm a stay at home mom as well and my cc debt was seperate from my husbands, but they still came after me because the house is in both of our names. With you it may be different, for that reason. Within 30 days I was already being sued by one of the major cc banks, never been late with any of them to that point that we stopped paying. Inhouse collections kept on until 6 months after non payment, then third party collections started, most of these being "debt collecting law offices". They may either start the lawsuit process at the six month mark(that's when the creditors charge off your account and declare it a loss) or wait until the one year mark. However as I said in my situation I was aggressively collected upon from day one, and being in Texas you would think different. So in reality each person will have a different way they were collected upon. Just remember it is best not to talk to them too much as any information you give them is ammo to proceed. When you obtain an attorney, just let the creditors/collectors know your attorney's name and number that's all you need to tell them and eventually the calls with stop. The timeline of collecting can vary greatly upon state, bank, and person. You just need to sit down and figure the best road for you and your family to go down, and start that journey as soon as possible.

On your income taxes, most times the trustees will take it or at least a portion, however if you have enough exemptions left over it is covered. I was concerned about ours, and the lawyer said it never was a problem, and the trustee never brought it up at the 341, it was exempted. This is again something that you will need to discuss with an attorney, as they will either let you know that it will possibly be taken, or you have enough exemptions to cover it.

As far on when to file, I am not sure. On one point it might be feasible to wait until after taxes, or it might not be. Like I said it may be that it could be exempted anyway, and this is something you will want to ask and attorney about.