general questions

[rhipidon]

that could turn pretty specific in a hurry, as I begin to understand this process.

Background first. Married, I've been with a geophysics company for 18 months, make about 48k/yr. Wife has had her own business for the past year or so, and is also a licensed notary and a licensed loan officer (Texas, as that is where we live).

Car situation is thus: 1 car, saturn 2 door coupe, paid off entirely and I have the title. 2nd car, 2k5 dodge minivan, paid off, and we have the title, but we took out a loan to do so through a credit union and have since defaulted on that loan. Loan was ~25k.

Student loan: ~8k, also defaulted.

As we live in Texas, I'm pretty sure if we meet the means test qualifications, we'll be safe with the homestead (foreclosure has not begun, however, we are about 2 months behind in house payments). We DO have annual property taxes coming up at the end of January, ~4k, and I highly doubt we'll be able to make that payment, and that's going to sting a bit.

Questions as follow:

1. Do we have to worry about losing either of our cars, as we hold the titles? The saturn was paid off validly and in full, so no worries there. The minivan, while paid off to the bank that financed it, was paid off by a loan from a credit union. Ergo, can the credit union seize the minivan, even though we hold the title?

2. Wife has, as mentioned, had her own business and also been a contract employee. This is going to be the tricky part, we realize, and are preparing a monthly profit and loss statement. As she was employed by two separate entities, AND is a notary, does she need to do a P&L for each entity, or can she do one aggregate one?

3. Can my wages be garnished under Chapter 7, if we qualify? Everything I've read about 13 scares me off, frankly, and I have no desire to use a court-mandated debt-consolidation when we were unable to make a regular debt-consolidation fly.

4. Will my insurance through my employer be affected? I would think not, as it's a European company operating out of Houston, but would be nice to know that my health insurance won't be affected.

5. WRT the 'must seek credit counselling/debt relief' within 6 months of filing for chapter 7, if we've consolidated our debt (partially; we put the car loan in there in order to get the title), will this count, or do we need to seek further credit counselling in order to qualify for chapter 7?

thanks in advance,

rhipidon

[Minnymouth]

Ok, regarding the autos..........one paid for the other has a lien against it..... The one paid for is an "asset" which you may have to purchase from the Trustee in order to keep it. He can sell it outright for cash for his creditors. The one with the lien against it thru the loan you can probably keep as long as your not behind on payments and owe a lot on it...

Your home (that you say is behind on payments for 2 months), in Chapter 7 you will not be able to keep as you have to be current on all house payments and auto payments to keep them.

In chapter 7 all assets are liquidated, unless you are current on payments and reaffirm on the debts (house and auto)....

If you plan on keeping your home, autos you will probably be forced into a chapter 13 in order to keep them..... and that means you also have to be able to pay the creditors a certain amount of what you owe them...

The Court decides whether you file a Chapter 7 or a Chapter 13.... If you have income to support a chapter 13, this is what the trustee will file....

I believe Texas is a no garnishment state, but I'm not really sure about that...others on the forum may know the answer to that. But Texas is a "bankruptcy friendly" state that favors the debtor.... not the creditors.

I see no reason for your health insurance to be affected by anything.....

The credit counseling is "special credit counseling" ordered by the Court...... this you will have to take...... Doesn't have anything to do with where you might have tried to consolidate bills.....

Hope this helps.........

[rhipidon]

Ok, regarding the autos..........one paid for the other has a lien against it..... The one paid for is an "asset" which you may have to purchase from the Trustee in order to keep it. He can sell it outright for cash for his creditors. The one with the lien against it thru the loan you can probably keep as long as your not behind on payments and owe a lot on it...

That's not good. If I'm reading this correct, that would mean I would have to purchase the car twice, once from the dealership, which was paid in good faith and ahead of schedule, and thence again from trustee? I think here in texas you are allowed one car per licensed driver in the family, but I could be wrong. We are scheduling a time to meet with the attorney for a briefing this week, so I'll find out more at that time.

Your home (that you say is behind on payments for 2 months), in Chapter 7 you will not be able to keep as you have to be current on all house payments and auto payments to keep them.

also not good. But I think here in Texas they have pretty favorable laws regarding homestead, and while they may tag you on secondary houses, the main homestead should be safe, but again, I dunno. Which is why I am here.

In chapter 7 all assets are liquidated, unless you are current on payments and reaffirm on the debts (house and auto)....

If you plan on keeping your home, autos you will probably be forced into a chapter 13 in order to keep them..... and that means you also have to be able to pay the creditors a certain amount of what you owe them...

The Court decides whether you file a Chapter 7 or a Chapter 13.... If you have income to support a chapter 13, this is what the trustee will file....

I believe Texas is a no garnishment state, but I'm not really sure about that...others on the forum may know the answer to that. But Texas is a "bankruptcy friendly" state that favors the debtor.... not the creditors.

I see no reason for your health insurance to be affected by anything.....

The credit counseling is "special credit counseling" ordered by the Court...... this you will have to take...... Doesn't have anything to do with where you might have tried to consolidate bills.....

Hope this helps.........

helps a lot.....this is a very well organized site, and quite obviously full of well-informed people and excellent links that have greatly assisted us in this. The kicker is going to be the means test; we will be within a couple k either side for the means test, so we'll find out.

The credit counseling that needs to be done is often included in the attorney's package for filing, I think. My question on that is that it stipulates that is must be done within 180 days from date of filing; as an english major, that can be construed two different ways; 1, it must be done, then wait the 180 days, or 2, it can be done and then filed at any time thereafter. My hunch is option 2, but if my hunches were accurate, I wouldn't be here, would I? ;)

thanks again for the rapid response, minny.....much, much appreciated on this end.

r

[keepmine]

To keep secured assets in a Chapter 7, you must be current and stay current.

[Minnymouth]

Texas law may allow you to keep both vehicles even if paid for depending on their exemptions. So one being paid for may not be a problem...... all states are different on how they treat their exemptions.

And yes, in Chapter 7 all payments MUST BE CURRENT and kept current thru out the bankruptcy if you plan on keeping the asset.

The credit counseling has to be completed before your 341 meeting, and then there is another counseling session that has to be completed before your discharged. This is something new that they have developed for the bankruptcy Courts to see that its done...

Have your consultation and let us know what you find out...

Good Luck,

[rhipidon]

thanks again to all. We've contacted an attorney, and are meeting with him on the 3rd, and will hopefully knock out that credit counselling that day as well. Depends on the fundage available, but we should have enough for that. I remember reading the average was ~50, so as long as that's not a bell curve consisting of a zillion people, we should be fine.

Will keep you all updated, and again, thank you very, very much for the assistance. This is obviously something that nobody wishes to do, as we all like to have our word be as good as gold, but sometimes life rears it's ugly head and smacks you around like a cat-toy.

We got our health, our marriage, and our son, so as long as those three are not 'fixed assets' that could be yanked by the trustee, I think we'll be okay in the long run regardless of what the outcome is.

The real kicker is going to be that means test and my wife's status as a contract employee. Still trying to find out if she needs a P&L for each job, or if we can go aggregate. If I haven't found a satisfactory answer by tomorrow, I'm just going to fill them out separately. Better safe than sorry, and I know excel well enough so that I can combine the two in about 3 seconds flat.

[rrockinggramma]

the best person to answer your question about your wife's business is the attorney who knows the bk workings of the trustee's in your state. As to your cars and home, a chapter 13 would allow you to keep all of your assets. If you are behind in your mortgage you can put the arrears into the plan and then make the rest of the payments on time from there. It would also allow you to keep both of your cars even if paid off. Now a chapter 13 means that for the next 5 years you make a payment to the trustee but depending on your disposable income, that payment might be far less. And I can guarantee that the credit union that holds your car loan WILL repossess if they can and you don't make the payments. A 722 redemption might be possible there if you go with a chapter 7. That way you can ditch the CU all together. They are tough to work with in BK.

[rhipidon]

okay, got more info.....as i figured I would, once I talked to the CFO (wife ). What we have done is taken out a personal loan through an established bank (NOT a CU, as I mentioned earlier), and with that personal loan paid off the minivan in it's entirety and received the title. So we have an outstanding personal loan, but I don't know yet if it's secured or unsecured. I would imagine it's unsecured, as we didn't put any collateral down as, at that time, our credit was still in the 700's......now it's dropped a few points.

The thing about 13 I'm rather leery about is I've read a few bad stories where the payments made to the trustee left you with roughly doodly/squat to live on, and in some cases garnished your wages. That I don't want, obviously, as it would reflect negatively upon my career, I would assume. And I also don't want the court to set our payments to the point to where we are stuck living hand to mouth for 5 years with a toddler who is convinced that gravity is nothing more than an option that doesn't necessarily apply to him; obviously, at some point in time, there's going to be a cast in the near future. Already almost gave himself stitches.

But that's my fears about 13, founded/unfounded as they may be.

Either way, we'll see. We're meeting with the attorney on Wednesday, the credit counselling on Monday. So after all this, one question:

1. How much should we reveal to the credit counsellors? Do they need to know everything, including monetary gifts from parents, or is this just a 'counselling' session in order to get the certificate?

again, thanks for all the assistance. Learning more about the subject than I really want to, but I guess knowledge is power.

r

[aachudneymiles]

sounds like a 13 to me... with wife having her own company and you making 48000 which is ok for TX use to live there my self..unless you can make the means test work for you... good luck.. but with all the stuff you trying to keep you sound like you want a 13 anyways also dont know you state expemtions for cars but 25000 lets just say 25k is the worth for both cars .. well i dont know alot of expemtions that cover that much on cars.. but maybe if you have a wild card exemption in TX .... .really need to see a att. a good one..25 k is alot of car to own ...

okay, got more info.....as i figured I would, once I talked to the CFO (wife ). What we have done is taken out a personal loan through an established bank (NOT a CU, as I mentioned earlier), and with that personal loan paid off the minivan in it's entirety and received the title. So we have an outstanding personal loan, but I don't know yet if it's secured or unsecured. I would imagine it's unsecured, as we didn't put any collateral down as, at that time, our credit was still in the 700's......now it's dropped a few points.

The thing about 13 I'm rather leery about is I've read a few bad stories where the payments made to the trustee left you with roughly doodly/squat to live on, and in some cases garnished your wages. That I don't want, obviously, as it would reflect negatively upon my career, I would assume. And I also don't want the court to set our payments to the point to where we are stuck living hand to mouth for 5 years with a toddler who is convinced that gravity is nothing more than an option that doesn't necessarily apply to him; obviously, at some point in time, there's going to be a cast in the near future. Already almost gave himself stitches.

But that's my fears about 13, founded/unfounded as they may be.

Either way, we'll see. We're meeting with the attorney on Wednesday, the credit counselling on Monday. So after all this, one question:

1. How much should we reveal to the credit counsellors? Do they need to know everything, including monetary gifts from parents, or is this just a 'counselling' session in order to get the certificate?

again, thanks for all the assistance. Learning more about the subject than I really want to, but I guess knowledge is power.

r

[rhipidon]

definitely am not going to go 13.....if we can't pass the means test, we will just knuckle down and pay it out without the trustee waiting for us to default, thanks very much.....met with the atty today, the kicker is going to be the contract info for the wife's job, but he is 'somewhat' confident we will pass the means test. The w-2's show that we've not cleared that much in the past couple years, and the other thing in our favor is that we've had about zero credit card purchases in the last 6 months, so it's obvious we are trying to pay this off, but just can't.

Good news is he verified that our cars and home are safe; matter of fact, my 97 saturn with 150k is actually a liability, as KBB in their infinite wisdom lists it at 4k retail, which tells me someone at KBB is into the sauce.

We'll see. Creditor meeting on monday to get the certificate, and then we'll see what the atty says....if he can give us a reasonably high percentage that we'll pass the means test, then off we go...

again, thanks to all for your assistance.....we're learning a lot about this, as well as better managing our personal finances.

thanks,

r

[rhipidon]

another quick question, as the filing day approacheth ever so closer; how long, AFTER filing, should my wife wait before accepting a position? Our attorney stated one month several times, but that seems to me to be a bit positive, as if the creditors held the meeting AFTER she accepted the position, then she would have to divulge that info.

So should she wait the full 60, or is it okay to accept a job after 30 or so?

thanks,

r

[FreshLikeADaisy]

Rhipidon, I used NADA myself for the auto estimate, because KBB did seem very high... as in smokin a bowl high... but I digress.

Since you will *very* likely have your 341 within a month of filing, it seems like a moot point. After the 341 is best, but if she accepted a position the week prior it might not have much effect. If she accepted it the day after you file, well, it might be entirely innocent but it wouldn't look that way.

You were asking your atty about timeframes, which was good, but a better question for him might be what he thinks will be the result if your wife accepts a new position and the trustee finds out about it, by whatever means. Don't let him answer "the trustee won't find out" because the trustee may ask your wife at the 341 himself. Ask him what he has seen in previous situations where this has come up. Short of asking the trustee himself, I think this is your best bet for a specific answer. Good luck!!!

[ameliabedilia]

How long ago did you take out the personal loan to get the van?
This is interesting to me because it seems as though the loan would be considered nonsecured, which would mean you got a car for free or almost for free depending on how long you have paid for it.
Did the bank ask what you were using the loan for? If not, I can't see how they could object to keeping the car.

[rhipidon]

Rhipidon, I used NADA myself for the auto estimate, because KBB did seem very high... as in smokin a bowl high... but I digress.

Since you will *very* likely have your 341 within a month of filing, it seems like a moot point. After the 341 is best, but if she accepted a position the week prior it might not have much effect. If she accepted it the day after you file, well, it might be entirely innocent but it wouldn't look that way.

You were asking your atty about timeframes, which was good, but a better question for him might be what he thinks will be the result if your wife accepts a new position and the trustee finds out about it, by whatever means. Don't let him answer "the trustee won't find out" because the trustee may ask your wife at the 341 himself. Ask him what he has seen in previous situations where this has come up. Short of asking the trustee himself, I think this is your best bet for a specific answer. Good luck!!!

I'm assuming the 341 is the creditors meeting....if she accepts after the 341, is she in the clear? I want this to be as error free as possible, so if we need to wait for her to accept a position until post-creditor meeting to ensure that, so be it. It's only a matter of weeks anyhow.

Thanks, and I'll ask our attorney that.

r

[rhipidon]

How long ago did you take out the personal loan to get the van?
This is interesting to me because it seems as though the loan would be considered nonsecured, which would mean you got a car for free or almost for free depending on how long you have paid for it.
Did the bank ask what you were using the loan for? If not, I can't see how they could object to keeping the car.

I would say a year or so.....I do not think that they did ask, and if they did, I cannot remember what the answer was. My wife generally handles the finances, although we are currently learning more about them then either of us wished to.

You stated "If not, I can't see how they could object to keeping the car." Who, precisely, would keep the car? We do have the title, after all; granted, we used one loan to pay off the car debt, but that did get us the title.

Just curious about all this, and again, thanks a zillion for all your help regarding this; we knew nothing going in, and you folks have been an invaluable resource that is actually a bit more prompt than our attorney is.

thanks again,

r