New here, can't find answer to my question!

[Buckeye060]

I am considering a chapter 7.
My situation is this.
I pass the means test for Northern OH.
I have about 65k in unsecured debt, but I own my house outright. It is appraised at 130K.
Can I still file chapter 7 on the insecured debt?

[Dennis1971]

I'm not a pro, just a lurker around here. From everthing I have read on here you will have to file a 13.

[AngelinaCat]

Welcome Buckeye060:

I'm in Florida and have homestead exemption here, so I cannot answer your question. But be patient. There are several posters here including some Mentors and Gurus who hail from the Buckeye State, and I am sure they will be answering soon.

My best wishes to you in your situation.

[HHM]

Well, since you are in Ohio, you are screwed. The homestead exemption is only $5K, but Ohio recognizes tenancy by the entirety, but you would need to be married and the deed would need to specifically state that ownership is by tenancy in the entirety.

Without more info, you are NOT a BK candidate. You are a lending candidate. Take out a mortgage against your home, pay off your credit cards, and tear up all your credit cards.

[Buckeye060]

Appreciate the replies so far. Is it smart to trade unsecured debt for secured debt?

[Buckeye060]

In response to HHM, my wife will never agree to any loan involving equity in the house. Are there valid reasons I can't qualify for some type of BK?

[keepmine]

In response to HHM, my wife will never agree to any loan involving equity in the house. Are there valid reasons I can't qualify for some type of BK?

In either Chapter of bk you're going to pay a lot of money. In a 7, you'll lose the house in a 13, you'll be at a 100% payback. Unsecured creditors can't get less in a 13 than, they'd have gotten in a 7.
While it's not a good idea to trade unsecred debt for secured debt, this is the one exception if you can't manage the cc payments. If your wife isn't agreeable to a loan against the house, you'll need to just buckle down and work 2 jobs if you have to to get this under control.
The sad fact is, bk won't help you a bit.

[JRScott]

In response to HHM, my wife will never agree to any loan involving equity in the house. Are there valid reasons I can't qualify for some type of BK?

As the others said your situation is unique in that you have a non exempt asset that is sufficient to pay off all creditors...your house.

Thus if you filed Chapter 7, the trustee would seize and sell the house and then distribute money to the creditors and he'd probably start the bidding at whatever is owed to the creditors, not the actual value so its unlikely you'd get any money out of it.

In a Chapter 13, you'd have to go for a 100% payback since in a Chapter 7 they could recover all their money. This would mean a 5 year plan. You'd have to deal with lawyer and trustee for 5 years, and most people fail in their Chapter 13s.

So for you while it is normally not a good idea to trade unsecured debt for secured debt the best option is to actually take a loan against the house and use it to pay off the Credit Cards. Then as HHM says you must cancel all the cards and tear them up or you could be in the same situation a few years down the road.

[HHM]

In response to HHM, my wife will never agree to any loan involving equity in the house. Are there valid reasons I can't qualify for some type of BK?

Bottom line, with $130K in home equity and only $65K in unsecured debt, you are going to end up paying that debt one way or the other.

Here is what would happen if you filed BK:

Scenario 1: you file chapter 7. The trustee takes your house (because of non-exempt equity) and pays your creditors in full.
Scenario 2: you file chapter 13, the trustee will REQUIRE you to pay $65K over 5 years. If you do not have the disposable income to do so, your chapter 13 will be dismissed. The reason being, a chapter 13 plan must at least pay an amount equal to what unsecured creditors would get in a chapter 7, which in your case, is full payment.

Bigboy2U already spelled out scenario 3, i.e. do nothing and see what happens.

You are correct, normally it is not advisable to turn unsecured to secured, but in your case, you don't really have any other options. You have two choices, and both entail paying the debt.

Choice 1: Simply keep making the payments and pay down the debt over time.

Choice 2: take a mortgage on the house, pay off your cards.

In both cases, you MUST RESOLVE to stop using credit cards.

The only thing that could get you out of this dilemma is if you own your house by tenancy by the entirety. However, that is something that would have needed to be done at the time you and your wife bought the house AND only one spouse has the credit card debt.

[deafbroke]

If I were in your shoes I'd tell my wife we either take out the loan on the home or we lose the house, take your pick.

Contact a local attorney to be sure you don't have other options.

Just my opinion

DB

[Cali]

You need to tell your wife unless she has 65k laying around somewhere, you will have to do what is going to help your situation.

[Frogge]

Oh my goodness, I would kill to be in your situation and HAVE the equity to pay off my unsecured debt.

I don't mean to sound harsh, or disrespectful of your wife, but it would be a terrible idea to try & go through bk instead of getting a loan on your home to pay off your credit cards at this point, let alone it sounds next to impossible to pull it off in Ohio.. I know I'm new at this, but I know that much! I'd see if there's someone close to your wife that she can trust (besides you) that can explain this to her.

Good luck

[tay666]

Well, since you are in Ohio, you are screwed. The homestead exemption is only $5K, but Ohio recognizes tenancy by the entirety, but you would need to be married and the deed would need to specifically state that ownership is by tenancy in the entirety.

IF you are married.
And your house falls under tnancy in the entirety
And the debts are in your name only

Then

You may have a chance of doing a chapter 7 on your own.
With your wife not involved, then the house would not be open to seizure by the trustee.

[ssdsco]

I would consult with 3-4 attorneys including a trustee/attorney about turning your non-exempt asset into exempt assets. I'm waiting 2 years to file BK on the advice of my trustee/attorney so I can convert assets and put more time since some fraudulent transfers ( support for elderly parents).

Your wife needs to get onboard and go to the consults with you.

Good luck !