Need Chapter 7/Divorce Advice!

[superruss]

Thanks for reading my thread. Here's my situation:

I separated from my wife in Jan. 08. She stayed in our house and I got an apartment. We have not filed for divorce, but have been physically separated for NC's required 12 months.

The home is deeded in both our names. The first and second mortage is only in my name. I am 30 days behind in payment.

We have 2 credit cards in both our names. I have several other non-secured loans. A few are current, a few are past due, two are severally past due.

Our plans included me moving back into the house and her getting a place of her own upon our divorce. We have no equity in the home. In fact, it needs some repairs (new A/C, deck, carpet) none of which I have been able to afford.

I also have a car loan on a vehicle and I am at least $5K in negative equity. It will soon need tires and brake service.

I really have no assets. Just past due bills.

I was laid off my job this week. I am facing a career change and will likely see 50-60% of the income in 2009 I had in 2008. A BK is the obvious move. I have filed for unemployment benefits which should amount to $475/week. I live in a poor economic area and it may take a month or two to find a job.

I plan to meet with one or more local attorneys specializing in BK's next week. My soon-to-be Ex-wife isn't happy about this and is worried about how these joint accounts and deed will affect her. In my opinion, she too should file Chapter 7. But, it's her decision.

I don't think I want to keep either the home or car and be burdoned with the repairs, lack equity, etc. My parents will loan me of their vehicles as long as I need it. I'm already living in a townhouse I like.

Although I will receive some legal councel, I plan to handle both the divorce and BK filings "Pro se". I would appreciate any insight or perhaps your own similar situations so I can better prepare myself for this. Thanks!

[JRScott]

Personally you need to resolve probably one or the other first.

File either BK jointly first, or settle the divorce first.

I assume there is no possibility of you reconciling? I ask because my parents were separated in the 70s during economic hard times but eventually got back together. (They were only separated 9 months).

As for immediate effects.

The lienholders would foreclose on the property when you bankrupt on them, and she'll be kicked out, that will take several months though. Her name on the deed has no bearing here. Since the mortgage will be defaulted on the bank can take the property back. However she would not be liable for the mortgages or deficiency balance.

Once the bankruptcy is discharged the credit card companies will come after her if she's a co signer on the account. They could actually start coming after her as soon as you filed.

If you live in the western district particularly the NW part of NC (Ashe, Watauga, Wilkes, Alleghany, etc) I could probably recommend a lawyer. PM me if you want that.

[superruss]

Thanks for your quick response. There's no chance we will reconcil. She was planning to move out by the end of Feb. anyway. I think she was mostly concerned about the deed and the 2 credit cards. I guess the biggest concern is how the two joint accounts will affect her. She intends on paying them off and doesn't want this to affect her credit. She has managed our bills and it would be beneficial to have her cooperation in putting this together.

I would appreciate any recommendations for a lawyer. I live in NW NC. Thanks!

[JRScott]

She'll take a hit on the joint accounts probably, however after your bk they won't be joint accounts she'll be the only account holder.

[JRScott]

I sent you a message for the lawyer

[Help!]

I'm sorry you're going through all of this at once. The only thing I have to say is that I think you're doing the right thing filing BK, but since your income is on its way down I would wait to file. I get the sense your past income would have been over the median, so maybe it makes sense to tackle the divorce first and file BK afterward. If it were me, I'd let go of the house and ALL other debt. That way when you emerge from BK you'll only have to worry about cash flow to take care of yourself, not to meet debt obligations. It's very good that you're here and planning ahead. Hang in there!

[superruss]

I've been thinking about the median requirements. I was making $4500/month up to this week. My income has declined from the $70K's over the last year. Now, a career change and further drop in income inevitable.

My wife on the other hand, has only been making slightly more than minimum wage. In either case, it's not good. I have been paying for two households during this separation. All the while my income decreased up to the point of my layoff.

If I filed prior to our divorce, wouldn't I have to include her income in determining our financial status? There's no way it can be viewed favorably. We could barely pay our bills when we lived together with more income.

[FijiTime]

If she's going to stay an EX then maybe you should focus on your own issues and not worry about what making your situation better does to her. Sorry, I don't want to sound like a jerk about it. It's human nature to still care for someone that you've been married to, but you've got to worry about yourself first!

You might look into getting yourself removed from the shared accounts. When I split most of my lenders were more than happy to break our accounts apart. They may want to qualify her alone for the accounts when you're removed but that shouldn't be your issue.

[superruss]

Should I complete the Statement of Current Monthly Income and Means Test Calculation to see when I should file? Will it make any difference to my credit bureau if I allow my home to forclose and my car go back prior to filing?

[TEW]

JMHO file before the divorce and see of you can get your wife to file jointly If she does not she may be able to have you pay her half as part of the divorce. Then you would be responsible for debt you had discharged.

[superruss]

Please clarify. Half of what? I have acquired most of the debt during this marriage and there are no assests. She won't file although she probably should.

I guess my biggest concern right now is my eligibility to file due to my past income. This will determine when I can file and what to do in the meantime with my creditors, auto and home.

[TEW]

Please clarify. Half of what? I have acquired most of the debt during this marriage and there are no assests. She won't file although she probably should.

I guess my biggest concern right now is my eligibility to file due to my past income. This will determine when I can file and what to do in the meantime with my creditors, auto and home.

do you have any joint debt ?
when you can file may depend on your last 6 month income.

[Help!]

Please clarify. Half of what? I have acquired most of the debt during this marriage and there are no assests. She won't file although she probably should.

I guess my biggest concern right now is my eligibility to file due to my past income. This will determine when I can file and what to do in the meantime with my creditors, auto and home.

If you don't have kids, your previous 6 month income puts you above median, right? You want to avoid filing Ch. 7 above median if you can avoid it. If you live in a community property state, it doesn't matter who acquired the debt - you can both be held responsible.

[superruss]

Thanks for the replies. I have an appointment next week with a BK attorney. My wife will attend, although, since we live in separate households, I (we) will have to file separately.

I did the means test tonight using legalconsumer.com. I'm sure I have missed some expense deductions but nothing major. Currently, I don't pass the means test due to past income. However, if I continue drawing unemployment benefits or make no more than I'm drawing, I should be able to file at the end of May simply due to being below NC's $3088 Median Income.

The credit union also called me today and offered to lower my primary mortgage ARM to 4.25% for 2 years (currently 6.25%), rebalance my loan, and defer 2 months of payments bringing me current. I estimate that this will reduce my mortgage payment by about $100. This sounds great, however, it is only temporary and it doesn't change the negative equity I have on an aging home that needs repairs. I still feel that surrendering the house is the best option.

This first meeting should be interesting. If nothing else, I can plan out the next 4 months and how to handle the bills. At this point, I am not planning on keeping the house and will remain in my townhouse. I suppose we can continue to pay the mortgage through April to avoid foreclosure. This will allow my wife to stay there while giving her more time to find a place to live. I have stopped paying my other non-secured bills.

[2Bshinyandnew]

since we live in separate households, I (we) will have to file separately.

Not to further muddy the waters, but you do not have to file separately. The BK attorney should look at your situation and advise which scenario will benefit your situation.

My husband and I have been separated for 2/1/2 years. We saw 3 attorney's together for consults. One said he wouldn't represent us both since we were separated and advice he gave may benefit one of us more than the other, or be detrimental to one and not the other. The other 2 were fine representing us both, if that was how we wanted to go about it. Go figure. Every situation is unique, and ours was downright strange.

For us, in our circumstances filing separately allowed us both the keep as much property as possible. On the surface that sounds weird because as couple you can usually double your exemptions and only pay one attorney/filing fee. We had some unusual deed titling issues. Your situation may be different though, so I would get a few opinions. I tell you, when my husband told me he was filing and including the joint debt, I about had a hissy I came around, eventually, though.