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I really need your help. I need to file for bankruptcy. Please help.

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    I really need your help. I need to file for bankruptcy. Please help.

    Hello,

    I am a 46yr old with a wife and three kids. The current economic mess has put severe strains on my finances and now I believe I'm in a hole in which I cant get out. No matter how much expense cuts i make, im severely in the red.

    Here's my case. (btw, thank you in advance for your help).

    - My wife and I make about $80,000 a yr.
    - I have three kids. (1 in college (duke), 1 at a community college, and a 7yr old)
    - My tuition contribution, even after financial aid, is about $990/month
    - I bought a house in 2005 for $400,000 but now its worth $300,000 (I live in FL). The problem gets worse, in 2006, my home was briefly worth $480,000 and due to unexpected car accident, i had to pull $70,000 in equity from my home
    - Thus now I have a mortgage/home loan for $470,000 and now I am $170,000 under. The interest rate will adjust in 1yr
    - I have two cars and together the payment is about $1700
    - Insurance (for my two kids, my wife, and myself) = $1000/month
    - Mortgage is $3600/month
    - Utility is $ 500
    - Phone (cellphones included): $240/month
    - Food/Clothes/other vital living expenses (gas and etc): $2800
    - Health Insurance for the entire family: $900
    - I owe about $30,000 on my first car and $25,000 on my second
    - I have $7000 in credit card debt
    - My 7yr old private school tuition: $12,000/yr (binded by contract)
    - Other expenses for my three kids and wife: $1000

    As you can see, I have mountain of debt, thanks to the housing bubble burst and other expenses. Due to the slowing economy, combined avg. monthly income for both my wife and I has come down from $125,000 to $80,000.
    Thus my option is very limited at this point and it seems filing for bankruptcy would be the only way out of this financial disaster.

    You may question why my 7yr old is at a private school at times like this. And sadly it's due to the fact that my son has learning disabilities. For years I've been sending my son to a private school because I believe he would receive a better care in a private institution than a public school. Unfortunately the school makes parents sign a full year binding contract that holds liable for all $12,000 whether my son attends or not at this point. And it only makes bankruptcy or moving out of state the only two exceptions.

    So the question is... Would I qualify for bankruptcy? What is the first step? What should I do?

    Please, I need many sincere advice as possible. I really appreciate all your help and you have no idea how much your words (insights) mean to me right now.

    Thank you,

    John.
    Last edited by wubbie412; 07-28-2008, 12:11 AM.

    #2
    What would happen to my debts, my mortgage (house), cars, and credit card debts if I declare bankruptcy?

    Comment


      #3
      First of all, as you already know by now, you are living way beyond your means and have been prior to this. The above on $80,000 per year (gross) would have you borrowing to keep up the the payments/expenses. You were headed to disaster prior to the economic decline. I think you already know this and were having difficulties that have just escalated to the point reality finally hit. I am assuming you have no savings buffer to get by on or have already utilized it to stay afloat. Most of us have experienced that and that is why we are on here or continue to stay on here. My hubby and I were in the six figure income bracket prior to filing also - at least up to a year before filing, but our situation was due to his company's merger and subsequent department cut resulting in his entire department losing their jobs. I understand fully what you are feeling now. I would highly recommend you getting BK consultations with a few attorneys in your area; most attorneys, if you have been reading on this forum, give free initial consultations and can advise you where you stand righit now as to what you can or cannot do as to filing BK.

      There are several folks on here from FL who post often and can hopefully give you some info to help you out as to your State information. Unfortunately, I would like to chime in more but I have to head on out to work; but you can be sure others will post and help you out as to most, if not all, your questions.
      _________________________________________
      Filed 5 Year Chapter 13: April 2002
      Early Buy-Out: April 2006
      Discharge: August 2006

      "A credit card is a snake in your pocket"

      Comment


        #4
        The median income or a family your size in florida is 80,509, so if your income is at 80,000 you would qualify for chapter 7. Are you prepared to give up your house and cars for a fresh start? You should be able to file easily, but....and this is the hardest part...at least it was for me and my hubby....have to put your pride in your back pocket and not care what your neighbors or family members think about your situation. For us, the stress level we were at was causing physical sickness (Shingles, stomach problems, headaches).....we finally decided that the fancy house and upscale neighborhood just were not worth the joy our situation was stealing from our lives.

        If you file chapter 7 you will probably lose your house...but maybe not since there is no equity in it. Your trustee may not look well on the large house payment though......thats what happened in our case. Our house payment is 2,300 per month and our atty thought it was too high and would not gel well with the trustee.....your credit cards will be wiped away and your cars...that depends too. It would be worth letting them go and get something cheaper. You can do this before the BK while your credit is still okay if you want.

        If your willing to make some real changes, you can file chapter 7 and your debt will be gone. You can find a more reasonable place to live....and still keep your special needs son in the school that he needs, make sure your children's tuition is paid and you will sleep much better at night!
        Last edited by berrymom31; 07-28-2008, 05:56 AM.

        Comment


          #5
          For us, the stress level we were at was causing physical sickness (Shingles, stomach problems, headaches).....we finally decided that the fancy house and upscale neighborhood just were not worth the joy our situation was stealing from our lives.
          That's a fact, Jack. Truer words never spoken........'Hub
          If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

          Comment


            #6
            You should definitely go talk to a couple of different lawyers. Remember, you are not alone as you can see on this board. Look at this as a fresh start and a way to learn from your mistakes. I know I am.
            Filed: 7/17/08
            341 Meeting: 8/25/08
            Last Day of Objections: 10/24/08
            Discharged: 11/08

            Comment


              #7
              thank you guys.

              when we were making little over $120,000 a yr, we actually were able to get by. things were bit tight sending my kids to college/school, but we somehow made it with minimum debt, (beside the house and the car), i only burned $6000 in cc debt out of a $100,000 credit line. but now that i received a 40% pay cut coupled with home price declining $180,000 in 2 yrs, i cant afford to live at current levels. Also 6 months ago, my mortgage interest rate adjusted, bumping my mortgage up from $2900 to $3600 and the $70,000 equity loan only exacerbated the situation.

              who would have thought i would go from making 120k to 80k in just short 6 months? already we've burned what was left in our savings the last 6 months.

              hopefully by declaring bk, we will be able start fresh and be able to adjust our lifestyle to current income and seriously conserve. someone mentioned that "sometimes living in a nice neighborhood and etc. is not worth the sickness that takes your joy of living away".

              you are absolutely right.


              ---------

              I have another question though. Currently I'm receiving some help from my brother. He sends me $1000 every month to help with bills. Is that ignored by the trustees or would that count as an additional $12k in income per year?
              Thus in total, that would bring our income to $92,000 a yr.


              Thank you guys.
              You guys are awesome.
              Last edited by wubbie412; 07-28-2008, 07:39 AM.

              Comment


                #8
                Originally posted by wubbie412 View Post

                I have another question though. Currently I'm receiving some help from my brother. He sends me $1000 every month to help with bills. Is that ignored by the trustees or would that count as an additional $12k in income per year?
                Thus in total, that would bring our income to $92,000 a yr.


                Thank you guys.
                You guys are awesome.
                The answer to the question kinda depends on how you list the money. You have to list it. It can 1. count as income or 2. as a debt.

                If it is counted as income, you are correct it puts you above the median. However, you may be able to take six months. Except no more money from your brother, decide what to do with the house and cars. Take some practice time to get used to dealing with your new reality then file.

                If you count it as debt, your brother will recieve notice of your filing and that debt will be legally discharged (after BK you are free to pay anyone you want to pay, you simply no longer have a legal obligation to do so).

                I would deffinately bring this issue up with a lawyer when you meet with them and get their take on your situation.
                Filed: 10/26/2006
                Discharged: 03/05/2007
                Closed: 5/19/2008 - Asset case due to balance transfer and income tax refund

                Comment


                  #9
                  I borrowed money from my father and it was counted as debt. However, my situation was a one-time occurance and not an ongoing situation. Talk to a lawyer about it and get their take.
                  Last edited by catdance23; 07-28-2008, 11:29 AM.
                  Filed: 7/17/08
                  341 Meeting: 8/25/08
                  Last Day of Objections: 10/24/08
                  Discharged: 11/08

                  Comment


                    #10
                    Hi, I understand what you are going through. You are not going to lose your house. Are you up to date on your mortgage payments? Just cause you file chapter 7 does not mean that you are going to lose your house. Some people told me that too, but when I spoke to my attorney, he said no you won't, They do not want the house if it has no equity. Just stay current with your mortgage. Please go and see a few attorney's. Ask ALOT of questions. I went to my attorney with alot of questions and he answered everyone. They will probably say something about your childs private schooling. That is defiantely over the top. Thats a college tutition payment. You should probably look into other schools. Maybe you should put him/her into regular school until al of this blows over. Goodluck to you...

                    Comment


                      #11
                      Originally posted by wubbie412 View Post
                      - My tuition contribution, even after financial aid, is about $990/month
                      -.
                      You will not be able to add this as an expense. Unfortunately ,for those of us with kids in college the BK law does not allow us allowances for helping our children as far as secondary education goes. I think there is an assumption that they 'can' do it on their own therefore any help from parents is just a gracious gesture of generosity. I, for the life of me, cannot figure out why this is not an allowable expense! your $990 a month is basically considered a luxury expense.
                      Last edited by momof5; 07-28-2008, 10:12 AM.
                      5/29 Filed 7~ 341-on 6/24
                      8/27-DISCHARGED
                      11/2 - CLOSED
                      EQ-604 EX-605 TU-560 ~4.5 months after discharge

                      Comment


                        #12
                        Originally posted by wubbie412 View Post
                        thank you guys.

                        when we were making little over $120,000 a yr, we actually were able to get by. things were bit tight sending my kids to college/school, but we somehow made it with minimum debt, (beside the house and the car), i only burned $6000 in cc debt out of a $100,000 credit line. but now that i received a 40% pay cut coupled with home price declining $180,000 in 2 yrs, i cant afford to live at current levels. Also 6 months ago, my mortgage interest rate adjusted, bumping my mortgage up from $2900 to $3600 and the $70,000 equity loan only exacerbated the situation.

                        who would have thought i would go from making 120k to 80k in just short 6 months? already we've burned what was left in our savings the last 6 months.

                        hopefully by declaring bk, we will be able start fresh and be able to adjust our lifestyle to current income and seriously conserve. someone mentioned that "sometimes living in a nice neighborhood and etc. is not worth the sickness that takes your joy of living away".
                        you are absolutely right.
                        Wubbie - the more we make the more we spend; it took my hubby and his job loss to make us face reality that we were living on the edge of disaster. We all do it, spend more than we should or can afford to and blame it on the job loss, stocks going down, rise in cost of gas....but something eventually occurs that makes you face what has been going on for a while. My fear for you is your adjustment to a whole new lifestyle that will occur after all the credit is gone. It's a big adjustment and many people have difficulty with it who previously relied on credit/loans to get by. It's the major cause of Chapter 13 failures. Let's face it - hardly anyone does serious budgeting anymore until they go through filing a BK. BK will allow you to dump the debt baggage and give you a fresh start - some people revert back to their old ways and get caught up again having to file again in several years; many do not want to see a credit card again.

                        An attorney can give you a full evaluation as to all your bills and where you stand as to filing BK. Make a complete listing of all your bills, monthly payments, sources of income, paystubs for last six months, assets and get copies of your latest tax returns, state and federal. Schedule a few appointments with some Bk attorneys. If you have no idea who to call since the phone book is stuffed with them and all sorts of discount places, look in your phone book under your State Section for Florida and locate your State Bar Association. Call and tell them you believe you need to investigate filing BK and you have no idea as to a reputable attorney. They can give you several names of attorneys in your area. Most give free initial consultations so it won't cost you a cent.

                        Florida is one of the top states with foreclosures right now so there are lots of folks feeling pain in your state. Let us know how you make out with the attorney....
                        _________________________________________
                        Filed 5 Year Chapter 13: April 2002
                        Early Buy-Out: April 2006
                        Discharge: August 2006

                        "A credit card is a snake in your pocket"

                        Comment


                          #13
                          At $3600 a month for his mortgage payment that is $43,200 a year and more than half his income and that is just the mortgage. Add in $500 month for utilities and its almost $50K a year just for the house. As hard as it may be, dump the house and get an affordable rental. Or find out how long the forclosure process is in your state and keep paying it long enough to let your son finish out the school year. Now would also be a good time to research the local school districts and see which one has a good program for students with learning disabilities.

                          TS

                          Comment


                            #14
                            Welcome, wubbie.. Good to have you here. Flamingo and others have said it best, we are all in such a similar (sinking) boat! I too have blamed a lot of our financial demise on the state of the economy, when in fact we lived beyond our means and fooled ourselves into thinking everything was fine. In reality, we had no "back up plan" to support any job loss, housing crunch, or injury. We were living in our own surreal bubble.

                            I can tell you that things are going to change, there will be a lot of decisions to make and things to adjust in your lifestyle. This forum will be a big help with your research and questions, in addition to a skilled attorney that you trust.
                            "You can never get enough of what you don't need to make you happy."
                            6/16/08: Attorney approached lenders to surrender old home
                            8/26/08: Met w/attorney RE: filing BK
                            9/29/08: Filing Chapter 7

                            Comment


                              #15
                              Welcome!

                              Sounds like if you put off filing for 6 months, stop accepting money from you brother asap, then file when you income reflects the decrease, you would qualify for a C7. Is he doing this out of kindness or do you have to repay this money? You will need to talk to your attorney about this money and what he/she thinks. I am unsure but if you want to keep your house I have to ask why? You are so far upside down on it, keeping it is a huge mistake. You need to let it go and find a new place. Rent if need be. Nothing wrong with renting for awhile.

                              I think the tuition could be a problem, but that is something an attorney can answer, perhaps with your sons disability it would be consider a necessity. You really need to meet with a few attorneys and let them way out your options.

                              Not sure if you're still current on bills, but if so, you have a little time to get things in order and then once they are file. If you're serious find your attorney asap, meet with more then one, find one who makes you feel confident in them and their skills. You biggest question has to be the house.

                              Good luck and hang in there!
                              Last edited by justplaintired; 07-28-2008, 12:22 PM.
                              Filed Chapter 7 June 4 ~ 341 July 20 ~Last day of objections Sept 18~Discharged/Closed Sept 21

                              Comment

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