What a mess, need advice

[Will]

Hello Everyone. I've been doing a lot of reading for a couple of weeks now. Here's our situation. We've had credit card debt for quite a few years but have always been able to pay. Add more here and there and then pay it down again but never off. Going into last December we had about $40-$50,000 credit card debt but it was actually affordable. We then bought a foreclosed home in December. It was our dream home but needed a lot of work. I make good money at a regular job and then some side income for a part-time business too. The business has been down for a year or two but kept hoping it would come back. Well, we charged up a bunch more debt in a very short period of time until March. Probably another $50,000, maybe even $60,000 worth of credit card debt. About $40,000 of that was cash advances. Almost all of it was used to fix up the house. We got some good deals on a room expansion and repairs but we had to pay cash for most of it, that's why the cash advances. We also charged up a Home Depot card for supplies. Anyway, we way over did it, just got caught up in the project and now we just can't keep up the payments. We've been making the minimums so far but that isn't going to last much longer. I don't have the business income that I had hoped for and don't think it will turn around anytime soon.

What do we do now? My wife is worried to death and I'm concerned, for sure. I do feel better reading other stories here but it's very overwhelming. It's our fault but we just can't make it anymore. I did a rough means test and I think we would be eligible for a chapter 7. Our house payment is expensive and living expenses with the 2 kids is not cheap either. I think my income will just be enough to cover the expenses minus all credit card debt.

Any advice would be greatly appreciated. Thank you in advance.

[frogger]

Schedule you some appointments with good bk lawyers in your area. Good luck.

[backtoschool]

The 60k in cash advances might delay your filing for a few months. (to avoid an AP from the creditors) Whether you get put into a chapter 13 or a chapter 7 will depend on how your expense and income schedules turn out.

Once you take the means test you should have an idea if you will qualify for a chapter 7.

[Will]

The 60k in cash advances might delay your filing for a few months. (to avoid an AP from the creditors) Whether you get put into a chapter 13 or a chapter 7 will depend on how your expense and income schedules turn out.

Once you take the means test you should have an idea if you will qualify for a chapter 7.

How long do we need to wait to file to avoid any problems? We will probably have to start missing some payments if we wait much longer.

[backtoschool]

How long do we need to wait to file to avoid any problems? We will probably have to start missing some payments if we wait much longer.

You should put a full year between the advances and when you file. If you know you are going to file for sure, then you should stop paying on your cards and then use that money to pay for your lawyer, pay your expenses, etc....

[DeadManCrawling]

Will,

You have time, and it sounds like you need time. Certainly visit some attorneys for free consults.

I am betting they will suggest making at least a couple more minimum payments and then letting it all go to default. Then you will want to put as much time as possible between defaulting and filing BK. Adding time will help A LOT.

We built our CC detb gradually due to medical issues. We have not paid any credit card debt in nearly three years. There are other reasons for this, but one was to put as much time as possible between default and filing.

You may well be sued, which could cause you to need to file sooner. Usually, though, any suits take months to come to fruition, which also allows you more time. One suggestion would be: Do whatever the attorney tells you (of course), and be prepared to file just ahead of any court dates for lawsuits.

Best wishes,

-dmc

[LSUTiger32]

DO NOT miss house payments Will. You have to prioritize right now. Buy food, pay the utilities and your house payment. Then put gas in the car. Other than that everyone else can wait.

You said you have enough coming in each month to meet your basic needs, so just do that right now. Make sure you keep the house current though because if it gets behind you will not be able to keep it in a BK.

[OhioFiler]

You need to provide more info for us to really help you.

What is your current monthly income?

Have you completed an online means test?

Do you have equity in the home?

Do you have multiple mortgages?

[shabam]

Putting as much time as possible between the cash advances to filing is the key here. A good 3 to 5 payments on these accounts since taking out the cash advances is also ideal.

[OhioFiler]

Putting as much time as possible between the cash advances to filing is the key here. A good 3 to 5 payments on these accounts since taking out the cash advances is also ideal.

He's probably going to need a lot of time if he intends to avoid an AP. That's a lot of money in a short period of recent time.

[Will]

You need to provide more info for us to really help you.

What is your current monthly income?
Right around $7500 gross. That is my job and business.

Have you completed an online means test?
No.

Do you have equity in the home?
We owe $393000 and the house is probably worth about $460000-$490000 after all of our improvements. That's just my guess though, we haven't had a formal appraisal.

Do you have multiple mortgages?
One mortgage

Also, we live in Nevada, if that makes a difference. We don't have any car payments. We have a car worth about $6500 and a SUV worth about $12000. We are current on everything right now but money is just about out. We will have to stop paying some stuff soon. We plan to stay current on the house no matter what. Any problems keeping the house with the equity and payment amount?

I seem to be getting mixed opinions on whether we are in danger of an AP or not. From my reading here I was a hoping 9 months to a year from the cash advances would be enough. Anyone have any experience with this?

Let me know if anyone needs more info to better advise us? Thanks!!

[Chowder]

From my reading here I was a hoping 9 months to a year from the cash advances would be enough. Anyone have any experience with this?

I think 9 months is what I was told. I did end up waiting closer to a year for a different reason.

Had close to 100k in CC balances. About 40k of it was balance transfers.
No mention of any of it at the 341.

[Will]

One more thing I was thinking about. 2 of the cards that were used were brand new cards and immediately maxed out with cash advances. We have been paying the minimum on those for about 9 months now. Just wondering if this increases our chances of an AP?

Thanks for everyone's advice. Would love to hear from anyone with experience like ours.

[hereforinfo]

Why not sell the house and use the equity to pay off the debt? You mentioned the mortgage was expensive and your income is just enough to cover that and your living expenses, so it sounds like you would be better off financially to sell and purchase a home with a more affordable mortgage. Perhaps you could even settle for less than owed on some of the cards and walk away with a little cash after the sale.

[Will]

Why not sell the house and use the equity to pay off the debt? You mentioned the mortgage was expensive and your income is just enough to cover that and your living expenses, so it sounds like you would be better off financially to sell and purchase a home with a more affordable mortgage. Perhaps you could even settle for less than owed on some of the cards and walk away with a little cash after the sale.

Maybe in a better economy that would be a good idea. But after realtor fees and the bleak housing market here in Vegas I highly doubt it would be worth it. What it would appraise for and what it would sell for right now are two entirely different things. We looked into that option briefly and aren't considering it at this point, unless the housing market suddenly turned around. Thanks for the input though.