Trying to pick our path....few questions

[sacredgroove]

A few notes on our scenario:

House is slightly underwater, but want to retain it. We have arrears and are in a repayment plan after going through the loan mod process.

Most of the credit card debt we have is in the wifes name with me just as an authorized user. Is it possible, provided we pass the means test, for her to just file? The reason I ask is I have used the cards over the years so I am unsure if that changes anything in the eyes of the court. Most of the unsecured run-up was due to a perfect storm of buying a more expensive house when the market was better, her losing her job 6 months after (subsequently after financing many new things for the house of course), my business significantly dropping off during the recession, and the credit card companies tripling our interest rates when we fell behind.

If we cannot pass the means test, can she file a 13 alone and put the arrears for the mortgage into the plan, or since I am on that mortgage as well, will that force both of us to file to cure the arrears?

The repayment plan for 16k in arrears was 8k up front and 8k added to my original payment for the next 5 months. We paid the up front, but as soon as we did my business dropped substantially which will make it very difficult to cover the additional cost over the next 5 months.


Thank you for your help!

[SMinGA]

There is nothing to make you choose a joint filing vs. only one of you filing - that is just a personal choice. If you are only the authorized user on her cards, you are not legally responsible for those debts.

As to the house - if you are both on the mortgage then one or both of you could file ch. 13 and the arrears would be paid within the plan.

[nceguyfromne]

A few notes on our scenario:

House is slightly underwater, but want to retain it. We have arrears and are in a repayment plan after going through the loan mod process.

Most of the credit card debt we have is in the wifes name with me just as an authorized user. Is it possible, provided we pass the means test, for her to just file? The reason I ask is I have used the cards over the years so I am unsure if that changes anything in the eyes of the court. Most of the unsecured run-up was due to a perfect storm of buying a more expensive house when the market was better, her losing her job 6 months after (subsequently after financing many new things for the house of course), my business significantly dropping off during the recession, and the credit card companies tripling our interest rates when we fell behind.

If we cannot pass the means test, can she file a 13 alone and put the arrears for the mortgage into the plan, or since I am on that mortgage as well, will that force both of us to file to cure the arrears?

The repayment plan for 16k in arrears was 8k up front and 8k added to my original payment for the next 5 months. We paid the up front, but as soon as we did my business dropped substantially which will make it very difficult to cover the additional cost over the next 5 months.


Thank you for your help!

Regardless of whether one or both of you files, the Means Test remains the same. Your overall family size and income will be used to determine qualification for Chapter 7 for one or both of you. As SMinGA pointed out, you are not responsible for your wife's cc's as an authorized user. My wife was an authorized user on my account with the largest balance ($25k) and had probably charged at least a couple thousand over the period of time she had her card. Since she had little to no debt in her own name so she did not file with me and there were no problems.

[irb]

One piece of advice I can offer is to have your wife remove you as an authorized user if you plan to stop paying on the cards before you file. B of A put a ding on my credit because I'm an authorized user. My wife had to call and have me removed and also advise them to remove the negative reporting. I also filed a dispute with Equifax just to be sure it's corrected.

[sacredgroove]

As to the house - if you are both on the mortgage then one or both of you could file ch. 13 and the arrears would be paid within the plan.

That is incredible news, thanks!

[momofthree]

That is incredible news, thanks!

As a side note: If you end up walking away from the home at any time in the future, the non-filing spouse would still be held liable for any deficiency balance, although that spouse could then file bk to discharge that debt, but you could then end up with another ch.13 in your future and have to pay into it for another 3-5 years....Just some food for thought....

[irb]

As to the house - if you are both on the mortgage then one or both of you could file ch. 13 and the arrears would be paid within the plan.

I don't want to hijack this thread, but this leads me to a question. If we're both on the house but only one of us has the majority of the debt would it be possible for only the one spouse to file and still accomplish the lien strip on the second mortgage if we're both on the mortgage and 2nd mortgage as well or would we both have to file in this case to accomplish that?

[sacredgroove]

Thanks MomofThree, that is very good to know. In this economy that possibility certainly exists! I hope the house recovers to at least what we owe in the next 2-3 years, but no signs of rise yet (down about 15k from what we currently owe).