Dead-DEAD-DEAD

[DeadManCrawling]

Divorce AND Bankruptcy-----

I have seen enough posts here now to know the obvious answers in my case. Consult an attorney and so forth, but I need to vent, blow steam, and, especially CRY. It is not generally acceptable for a man to shed tears, but I have been and will continue. I meet with an attorney in 4 days, but I can't sleep, eat or work NOW.

I am doubtful anyone has experienced the exact same thing, as all are different, but if you have any suggestions or experience, I would be very grateful if you would share with me.

Here's my story:


As I write, I am in the sweltering heat of Florida, with an income that dropped by 125,000 annually over the last three years. I still have an income of around 120,000 per year, and I am going into divorce as well.

I sit here now in 88 degree heat with my A/C turned off to conserve pennies.

I have been living like this for months now. Clipping coupons and working in the heat is reality for me now, and every penny is carefully scrutinized before it is spent.

During all this, my 380k mortgage (3800 per month) and other expenses stayed the same or went higher. Insurance doubled and taxes have nearly kept up due to my location-Florida.

My income has not kept pace and I currently am in the process of selling my home. But with the real estate market almost entirely stagnant, I have little hope of seeing it happen soon.

I refinanced my house and paid down considerable debt only to reaccumulate the debt over the last few years.

My issues cover THREE things actually:

BK

Divorce

A Business


I owe 70k in debt with a current income of 9k a month (company gross, not including some expenses amounting to perhaps 2k), and expenses that are legitimate and pass all the Means Tests and are reasonable. With a 3800 dollar mortgage, it is impossible to continue like this.

Heres the short story:

I hired a manager-well known and supposedly highly regarded in my industry, to manage my business so I could concentrate on my work, which is in the area of performing arts. I get paid for appearing at places or on recordings. I am not a celebrity or anything like that, but I am well paid for the work I do.

This manager took my contracts, as they expired, to renegotiate and get me a better deal. Problem is the better deal he got was for his other clients. Thus, I am half the man I was, and my bills tower over me.

I cannot sue him for this, as the industry and its top performers are not a quantifiable entity. Meaning, it is a matter of opinion as to who is good, great or crappy. What I can say for certain, is that his other performers (who also hired him) now have my old contracts at higher rates, he is making a higher commission, and I am near broke. In essence over 100k of my former contracts now reside with his OTHER performers, and he enjoys a much higher commission than he would have gotten from me.

After all this, my wife is angy and blames me.

I sit awake till 3am and cry, then wake up at 6am and cry more. Meanwhile the work I HAVE held onto is suffering.

I have the house for sale, but I am also incorporated. A trustee could come in and take everything, administering MY business. That would create a situation where I keep working and have no money for my mortgage and expeneses, meaning I love my home and want to keep it, but my COMPANY, ME, could be indentured slaves, while the trustee takes the money and pays creditors, while I am losing the 100k equity before I can sell the place.

On top of the divorce, we have some assets that are not exempt. Two cars, totaling a value of 30k. We have these paid off, from the better times of a few years back. If I declare BK before the divorce, creditors will seize them. I don't much care, I guess. However, I have paid these creditors 90k in interest over the last 5 years, with nothing to show for it.

I never IMAGINED this would happen.

My interest rates have skyrocketed and my income is half what it was.

I know I made serios mistakes in planning. No question there. But isn't that what BK is supposedly for?

I am considering giving my wife both cars and a 401(k) worth about 20k in the divorce just so these 30%APR vultures cant touch it. Her credit is fine, as she never incurred any substantial debt. It was all from my work.

Other isssue is this: A trustee can take control of my work.

Currently I am contracted for an average of $9000.00 per month, every month, for the next two years. A trustee has the RIGHT to take control of this. However, without me actually BEING there, at the appearances, there would BE NO MONEY. Anyone have experience in this?

I AM THE COMPANY-and now my company might well screw me over.

I would not be in this place as a sole proprietor. But as a CORP, the trustee can take over all my business. I have no offices, no equipment except a few computers and specialized items worth perhaps 15k. Since I live in Florida, I am allowed to exempt up to ONE THOUSAND in personal property, but no tools of the trade at all.

The 1k exemption won't begint o cover what I need. Imagine a painter who has a brush and paint set worth 15k. Without it, he CANNOT continue working, nor can he afford a new one. Creditors seize it and sell it, and he has no means to earn a living.

I am current on all my debts-for now-including CC's. That is about to change, and then I am very much afraid I will be screwed.

I dont qualify for CH 13, with monthly disposable income of NEGATIVE $9,000.00, my expenses, if my allowable mortgage reflects the reality, are way too high.

Two questions, I guess:

I still love my wife-beyond anything I can hope to explain. She is the air I breathe and the water I walk on when I perform. I dont want her to be burned by this, and am considering giving her my 401(k) and the two autos in the divorce. I obviously cant keep these things, and she could obtain the equity from them. I would rather see her be able to move on with SOMETHING than to see me lose it all. I have paid enough I think, and someday, when I am old and broke, this might be the thing that gives me a sense of peace. I have never screwed anyone, always paid my debts, till now.

Giving her these things would still leave my future income at the mercy of the trustee I guess, but if I die in this, I will die alone.

After the divorce is final, I would file Chapter 7. And maybe, just maybe rest in peace.
Please, tell me your thoughts.

[Frank]

Please, tell me your thoughts.

I think anyone who makes $120k a year can't be broke. Your mortgage is high. Move to a studio, man.

R U kidding?

[demismom]

Well, my first thought is PLEASE see a dr about some antidepressents, you don't have to take them long term and they are NOT a bad thing. I learned this the hard way after fighting them when I had post partum depression.

I don't really have any advice on the BK end (still in the pre-file stage myself), but I know that transfer of property before filing are scrutinized, but I don't know how a divorce affects this.

My next piece of advice, seek out the advice of a good bankruptcy attorney, you're going to need one and do please come and vent anytime!

[DeadManCrawling]

I think anyone who makes $120k a year can't be broke. Your mortgage is high. Move to a studio, man.

R U kidding?

Frank,

Anyone can be broke, its a matter of (I Think), the circumstances. I may make higher than normal, but my income, for the amount of DEBT is way too low. Also, I was easily able to pay these debts a few years ago. Not so now. Now I have other medical issues that total about 1.5k per month. The total expenses--before taxes--is nearly 8 grand. On a income of about 10 grand.

As I noted, I am trying to sell my house. I will be paying child support, and possibly alimony as well. In all likelyhood, that 120k income will drop to 60k in the next few months. I hardly qualify as RICH. I wish. My expenses are so damn high, that's not possible. If I can sell the house CH13 becomes a possibility.

Until them. Im screwed. And devastated.

[sofarindebt]

I don't know what to say

except you CAN be broke if you are used to living a lifestyle of that much money and it suddenly drops. What I don't understand is your high mortgage payment. We purchased our home for $370K ($$2100 payment) and refinanced to $460 ($2800 payment). If you have always paid your bills and have good credit, why such a crappy interest rate on the home? Is there any way to refinance and get a better deal?

[DeadManCrawling]

except you CAN be broke if you are used to living a lifestyle of that much money and it suddenly drops. What I don't understand is your high mortgage payment. We purchased our home for $370K ($$2100 payment) and refinanced to $460 ($2800 payment). If you have always paid your bills and have good credit, why such a crappy interest rate on the home? Is there any way to refinance and get a better deal?

We made a deadly mistake that perhaps others can learn from. We were offered a "lower payment" refinance on our mortgage. However, the "lower payment" was based on interest only and one option included principal. Neither option included escrow. After looking at it, and a lower rate, wife and I said, HEY LOOKS GOOD. LETS DO THIS. Well, we questioned the lender repeatedly, and too late, discovered the payment did NOT include escrow for our taxes, insurance and homeowners association fees, which added another TWELVE HUNDRED to the mortgage. We live in Florida, home of extreme insurance, and would love to unload this home for that very reason. Additionally, we did not understand one vital aspect of the loan. We were approved for a rate of 6.25, but it was adjustable. One of the terms of adjustment was if we were even one day late on the payment. We WERE. ONCE. Our rate went from the 6.25 to a rate of EIGHT POINT TWO FIVE the next month. Our payment jumped 400 bucks, not counting our escrow of 900. Shortly all of our CC's jumped to 30%.

No question we were dumb, which will never happen again. I plan to, if I can sell and get my equity, buy a condo for about 100k-if the divorce goes smooth. That would leave me with plenty of money to support it and let me continue working-divorced, I guess, but clear of this mess. With the real estate market the way it sits, I can only hope.

But great response, and perhaps this will help someone else. When the guy on the phone says, "YOUR PAYMENT DROPS BY 400 PER MONTH". make sure they factor in other things like taxes and insurance, if you have an escrow account to consider; many people need to worry about this.

[Walnut]

First thing is to go through the divorce as you said. Your soon 2BX needs to ask for the cars (401k is exempt). You cannot simply give them away as the trustee will definitely go after them. After the big D you will know your whole situation - child support payments and alimony and then you should hire a BK attorney.

Have you tried to negotiate with your creditors at all?

You stated you had $100K equity in your house? Selling the home will be an asset transfer also subject to review. If your total debts are $70K, the math says: sell house, pay all bills off, still have $30K for downpayment on condo, and reboot. Maybe I am missing something.

[DeadManCrawling]

First thing is to go through the divorce as you said. Your soon 2BX needs to ask for the cars (401k is exempt). You cannot simply give them away as the trustee will definitely go after them. After the big D you will know your whole situation - child support payments and alimony and then you should hire a BK attorney.

Have you tried to negotiate with your creditors at all?

You stated you had $100K equity in your house? Selling the home will be an asset transfer also subject to review. If your total debts are $70K, the math says: sell house, pay all bills off, still have $30K for downpayment on condo, and reboot. Maybe I am missing something.

Asset of home equity in Florida is, to my understanding, untouchable, by state law, I could sell for 356 million and they could not touch it in BK process. I have not yet defaulted on any CC debts, which is all of my debt, totalling 70k. I plan to seek custody of my son, perhaps demand support from HER, and place my untouchable 100k equity in a new condo. However, if trustee hears of this, he COULD transfer me to CH 13 and demand repayment. I would happily do this, except that my income is so unsteady, as contracts for appearances can be cancelled, that I would be very uncertain as to the REAL income I might have for such a plan.

[Walnut]

Your income is not steady, so a 13 would be hard to set up. A lot depends on whether the US Trustee takes an interest. Your debt load isn't too high. The income (depending on where in FL you are) isn't too big a problem. And you only have to show the past six months. You will need tax returns, but it should be plainly obvious that you have taken a financial hit. The cars are going to be a problem. Giving both away will raise an eyebrow. Start shopping for an attorney and get some upfront advice. It won't be free in your case since you need ADVICE, not just someone to do the BK paperwork.

[Granny]

Divorce AND Bankruptcy-----

I have seen enough posts here now to know the obvious answers in my case. Consult an attorney and so forth, but I need to vent, blow steam, and, especially CRY. It is not generally acceptable for a man to shed tears, but I have been and will continue. I meet with an attorney in 4 days, but I can't sleep, eat or work NOW.

First of all, there is nothing wrong with a man crying. More men should try it, they could release a lot of pent up emotions that way.

Secondly, Demismom is correct, but you may also be suffereing from anxiety. It definitely affects sleep and moods, and clouds thinking not to mention the obsessing. The obsessing can keep one from seeing things clearly, you get stuck on one point and can't see the whole picture. You need a clear head to be able to think through all of this. I had two attorneys tell me that my case was simple, and they both under estimated my #2 creditor, which is my 15K paint brush.

We are also incorporated and no one has ever asked anything about the corp, but then again, they determined that my hubby owned all the stock. All they wanted to know was how much he earned from the corp. Texas is a community property state, so I don't understand their thinking, but I'm not asking questions as this point. Of course, I am in a ch 13 so that may make a difference.

Please Please research your attorney thoroughly and think about the mental health side of this.

Oh one more thought...I'm in Texas and our heat is similar to yours. We have lost one of our A/c's a couople of summers ago and run a window unit in the bedroom. Can you restrict your living to one room and run a 110v a/c? Oh I also found some really good fans at Target. These little fans put out a lot of air and don't make much noise. It is the Honeywell High Velocity 7" Turbo Force Table Fan. http://www.target.com/gp/detail.html...sin=B000FIJ32I

Good luck and please feel free to vent anytime.

Granny

[SinkingFast]

You've taken a couple of good blows in the gut. There's no doubt about that. But you've got to start working on your situation.

See a doctor if you need to for help with your depression, anxiety, whatever medical condition is going on. Take care of you mentally, so you can lift your chin, puff out your chest, and move on with putting together a new life.

There's a 1215 day Rule on the Homestead Exemption.

If you purchased your home within the last 1215 days (3.3 years), your Homestead Exemption limit is $136,875 (up from $125K effective April 1, 2007).

http://www.usdoj.gov/ust/eo/bapcpa/d...x.htm#uscourts

See the updated Form B6C where the new Exemption amount is shown.

If you purchased your home MORE than 1215 days ago, then your Homestead Exemption is not limited.

Depending on when you purchased your home will decide your Homestead Exemption allowable.

The 401K money is expressly exempt. You don't have to worry about loosing that to the Creditors.

If you need money now to live on, sell a car. Or both of them. Take one, or both cars to a car lot or 2 and see what Dealers will give you. Cash. On the spot. If that buys you several months to live, that's fine. Just CYA yourself with documentation. Get a receipt for selling the car(s). Put the money directly into your bank acct. Then your bank statements will show you paid bills and regular living expenses with the money.

Call around and schedule at least 3-4 Consults with attnys who specialize in BK. Consults are generally free. It's a way for you to research and learn while you "meet and greet". Find THE attny you're most comfortable working with who will do the best job for you.

[DeadManCrawling]

You've taken a couple of good blows in the gut. There's no doubt about that. But you've got to start working on your situation.

See a doctor if you need to for help with your depression, anxiety, whatever medical condition is going on. Take care of you mentally, so you can lift your chin, puff out your chest, and move on with putting together a new life.

There's a 1215 day Rule on the Homestead Exemption.

If you purchased your home within the last 1215 days (3.3 years), your Homestead Exemption limit is $136,875 (up from $125K effective April 1, 2007).

http://www.usdoj.gov/ust/eo/bapcpa/d...x.htm#uscourts

See the updated Form B6C where the new Exemption amount is shown.

If you purchased your home MORE than 1215 days ago, then your Homestead Exemption is not limited.

Depending on when you purchased your home will decide your Homestead Exemption allowable.

The 401K money is expressly exempt. You don't have to worry about loosing that to the Creditors.

If you need money now to live on, sell a car. Or both of them. Take one, or both cars to a car lot or 2 and see what Dealers will give you. Cash. On the spot. If that buys you several months to live, that's fine. Just CYA yourself with documentation. Get a receipt for selling the car(s). Put the money directly into your bank acct. Then your bank statements will show you paid bills and regular living expenses with the money.

Call around and schedule at least 3-4 Consults with attnys who specialize in BK. Consults are generally free. It's a way for you to research and learn while you "meet and greet". Find THE attny you're most comfortable working with who will do the best job for you.

I have been hit very hard-you are correct on that. Mental health, doctors, it simply isn't in the budget. I am fighting with all my energy, and exhausted reserves to HANG ON. I am certain this is nothing new on this board, but it IS new to ME.

I doubt a divorce with wife getting the cars and 401 will affect my BK. I have not yet found a case where a divorce has been thrown out for that. Also, with a 100 k equity in the home, that seems like appropriate payment since I can't pay her anything else.

My daily income is suffering in a fashion that can't--CANNOT-be considered by a BK court or trustee. My loss of confidence and composure translates to lost INCOME--for appearances I cant do or are cancellled before the fact. I am at wits end.

THEN, if a trustee controls my scheduled appearances-which cover ALL my income, they may as well collect my house key and leave me dead under a bridge. There is no other income-NONE.

There are, perhaps, other jobs I could apply for, though I don't know what they would be. I am untrained for anything except public relations work and have trusted this my whole life.

"I complained that my feet were sore. Then I passed a man with no legs who could not walk at all."

My injury, if you wish to know, is that I have ruptured discs in my back-7,including 5 with serious damage for the nerves according to the MRI's- precluding me from everything but miniscule lifting. I cannot even lift a box of burgers from a fast food restaurant's freezer for fear of being paralyzed, from the waist down, forever.

When I was younger I poo-poo'd such things, and when I saw a man (or Woman) who said this, I laughed. I was young and strong,and thought NO ONE can be in such distres. I was WRONG-and am now learning to the extent how wrong i was. Shame on me.

I have owned this home for the last five years, in Florida, so no abuse or fraud exists. I simply can't keep it going much longer. It is the home of my dreams, and I was priveleged to live here the past fives years or so.

[ilovemycaitybug]

I don't have any real suggestions, but I do sense the pain you are in. I hope you are able to find peace in all areas of your life. It is there, you just need to find it. One day at a time.

[Walnut]

There could also be a wildcard - your wife's attorney and whatever he/she talks your wife into. Forcing the sale of the house and splitting the proceeds is a possibility. Giving her the cars and 401k may be enough to cause the Trustee to look at other things instead. For the means test, not having car payments may hurt. You get to use your mortgage payment, taxes withheld, but no property taxes or insurance - since those aren't escrowed you are going to have some trouble there. If they were you could've added them in - without them they are nowhere to be found in the means test. There is an online means test on LegalConsumer.com that I suggest you fill out. Take your monthly income as an average of what you earned the last six months. There are IRS limits on utilities, food, etc. Fill that out and see what you end up with.

[lrprn]

So sorry to hear about your personal and professional problems, DMC. When life overwhelms us on all fronts, it's almost impossible to see things clearly. We're glad you came here to vent, and hope it is helping a little to explain your situation and hear our objective opinions. We may not all have been where you are, but each of us has faced our own financial and often personal hells too.

I doubt a divorce with wife getting the cars and 401 will affect my BK. I have not yet found a case where a divorce has been thrown out for that.

It isn't your divorce that will be the problem - it will be your bankruptcy. If you transfer assets like cars before you file, especially to a family member, that's considered attempting to hide assets and can get your case dismissed. You want to avoid that at all costs. Most bankruptcy lawyers will advise you to get the divorce first, then the bankruptcy. Bankruptcy before divorce makes the division of assets during the divorce much more difficult.

Right now you are seeing all of this very emotionally, wanting to make amends to your wife any way possible for the shame you are feeling for disappointing her and self-hate for not seeing this coming. One of the hardest parts of the bankruptcy journey is learning to see filing as a cold, emotionless business decision. Emotion clouds the judgment, and clouded judgment means you lose your objectivity and make poor decisions on the spur of the moment to trying to push away the guilt and shame.

You need to make 3-4 appointments for free consultations with different experienced bankruptcy lawyers in your area as soon as possible. They can provide the objective, cold, emotionless view of your situation that you can't at the moment because it's too personal and too new. Also you will learn a lot about your options - options you can't see for yourself right now. On Monday start making those calls and get those free consultations set up. You will be glad you did!

All of us have been where you are now to some degree. Although I don't expect you to believe me right now, time does helps. Talking with several different bk lawyers really helps. Keep coming back here and talking with us too. We want to help if we can as well. Just don't let your emotions overwhelm you to the point of inaction. You stand to lose everything if that happens. We're here for you when you need us.