NJ. Own my house outright, 85K+- in cc debt. Conflicting advice, fresh help needed.

[bc40ton]

Glad to find this forum, I thank everyone in advance for their time and advice. I own my own home, $160K value. Married but home is in my name. Approx $85K in CC debt. I am unemployed going on 3 yrs (no construction in/ near our tourist town), wife made $32K in '09. I have been selling my toys, camper, motorcycle, tools, misc stuff I have collected over the years to help.
Called one lawyer for consultation and he talked so fast that I couldn't keep up, he seemed to think getting a mortgage was the answer. Going to call 2 more lawyers near my town for their consultations as I am slowly learning the proper phrases and wording in the world of Bankruptcy. Getting calls about 8 times a day from the Banks. I do not answer. I have rarely been late but we just can't do the payments anymore so we stopped paying about 2 months ago. There is 5 credit cards involved. 2 Chase, 2 B of A, and a GE. Some people say to wait and maybe they will take a percentage, some people say pay what you can afford (can't do it anymore). I WILL be going to a Lawyer but wanted to get some fresh ideas. As far as I can find out, here in NJ there is no home exemption.
So if anyone wants to post, please do. I am reading as much as I can find on this spot I got myself into. Thanks,
BC

[tobee43]

welcome bc40ton.....

i lived in nj... we owned our home there which is in foreclosure...still ( it's been almost 3 years now) .....but filed my bk in a different state...in nj the attys were terrible...but there are some good ones.

you just need to keep looking until you feel comfortable...your correct no homesteading in nj...however, you may want to not file nj but federal exemptions because nj allows you to chose either nj state exemptions or the federal exemptions...since nj is really more creditor "friendly" you may want to file under the federal guidelines.

take a breath.....don't let anyone fast talk you.....keep calling and calling until you find someone you feel comfortable with....unfortunately, during this most uncomfortable time, it's best to feel someone is there to help you the best way they can. do not settle...

[bc40ton]

Thanks for the encouragement. So it seems I will have to mortgage or get an equity loan on the house. Do I need to show I can repay the equity loan? If anyone needs any other info or to offer suggestions on which path to follow, please post your thoughts. Any and all are appreciated. Thanks again.

[tcreegan]

Hi bc40ton,

Cross Ch 7 off your list....the house gets sold, creditors get paid, you get the rest. Not a pretty picture.

Getting a loan in your present financial condition might be a long shot, but getting a mortgage and paying off the cc debt is an option. What works in your favor is not borrowing against the total house value, you could mortgage just what you need and there will be a large chunk of equity left to secure the lenders position.

Have you posted your situation in the Ch 13 forum? I'm clueless if Ch13 is an option, but the folks on the forum over there can tell you.

Another option is to move to Florida or Texas and wait 2 years....or to some other state where the homestead exemption is over your current $160K home equity. Sounds extreme, but if you are talking about 80K - 90K...might sweeten the pot some...

Welcome to the forum, hope you find something that will work for you, lots of good folks around here to help!

Tom in Colo

[tobee43]

Thanks for the encouragement. So it seems I will have to mortgage or get an equity loan on the house. Do I need to show I can repay the equity loan? If anyone needs any other info or to offer suggestions on which path to follow, please post your thoughts. Any and all are appreciated. Thanks again.

no , no.....don't get an equity loan at all.......please, you need to discuss the options with your atty.....and no...you can keep your house in nj.......if you want...if you don't..then that's a different ave. to explore.....


please nj is complicated and you need to understand your options.

[tobee43]

Hi bc40ton,

Cross Ch 7 off your list....the house gets sold, creditors get paid, you get the rest. Not a pretty picture.

Getting a loan in your present financial condition might be a long shot, but getting a mortgage and paying off the cc debt is an option. What works in your favor is not borrowing against the total house value, you could mortgage just what you need and there will be a large chunk of equity left to secure the lenders position.

Have you posted your situation in the Ch 13 forum? I'm clueless if Ch13 is an option, but the folks on the forum over there can tell you.

Another option is to move to Florida or Texas and wait 2 years....or to some other state where the homestead exemption is over your current $160K home equity. Sounds extreme, but if you are talking about 80K - 90K...might sweeten the pot some...

Welcome to the forum, hope you find something that will work for you, lots of good folks around here to help!

Tom in Colo

yes, tom it is...we did in fact, move to florida from nj.....however, we needed to wait the full two years...so it does depend on OP's position....and as usual you are such a wonderful help...but nj...is NOT...LOL!!

[despritfreya]

Question. . . and I am not being "cute", I simply do not know. . . How do you homestead a home in NJ if you move to Florida and live there 2 years to get access to the unlimited exemption? Have you not abandoned the homestead in NJ? I know in my State, abandonment is a real issue.

Ok, on to the post.

1. BC40 could file a Chapter 13 which would require the repayment of all allowed claims within the 5 years. Now, maybe out of 10 creditors only 6 file claims but you cannot count on that. A 100% Plan would protect all non-exempt property. The Plan could be structured so that BC40 pays what he can afford each month with a balloon at some point using the home to obtain financing to pay off all allowed claims. This works well and, if some of the creditors fail to file timely claims, potentially this option becomes the least expensive way to go (but add in legal fees and trustee fees).

2. BC40 could take out a mortgage and pay all creditors. A 30 year $85,000.00 or so mortgage at a reasonable interest rate is not going to be a large monthly payment. I do not have an amortization schedule but I'll bet the payment will be around $500/month. Plus he (at least for now - until Congress screws it up) will get an interest deduction - something you do not get in a bk. With the wife working and the amount of equity in the home, even by today’s standards, I would think a loan is quite possible. The problem I have with this option is, those who use their home to get out from under credit card debt simply run up those now paid off credit cards and two years later are in a worse situation.

3. I do not think working one-on-one with each creditor (depending upon how many there are of course) will work. BC40 will still have to tap into the home equity and, if any of the creditors asks for a financial (happening more and more), once the creditor finds out about the free & clear home negotiations may go out the window.

Next step is to sit down with several attorneys to discuss all options.

Des.

[bc40ton]

Thank you all for your quick responses. I really appreciate steering me in the direction I need to go. I knew this would not be easy and listening to all your points give me a lead on the next direction I need to go. So it seems no to ch7 so I will go read and possibly post in the ch13 section. I just thought an equity loan is how I had to go, I didn't know that I could get a mortgage on the house that was already paid off. Looks like much more reading in my future. As I stated I will be seeing a Lawyer, but I have to learn more so I can ask the right questions. Thanks again for everyone's help.

I am going to post this over in the ch13 section. If a mod wants to delete this, to save resources, please do.

[tobee43]

Question. . . and I am not being "cute", I simply do not know. . . How do you homestead a home in NJ if you move to Florida and live there 2 years to get access to the unlimited exemption? Have you not abandoned the homestead in NJ? I know in my State, abandonment is a real issue.

Ok, on to the post.

1. BC40 could file a Chapter 13 which would require the repayment of all allowed claims within the 5 years. Now, maybe out of 10 creditors only 6 file claims but you cannot count on that. A 100% Plan would protect all non-exempt property. The Plan could be structured so that BC40 pays what he can afford each month with a balloon at some point using the home to obtain financing to pay off all allowed claims. This works well and, if some of the creditors fail to file timely claims, potentially this option becomes the least expensive way to go (but add in legal fees and trustee fees).

2. BC40 could take out a mortgage and pay all creditors. A 30 year $85,000.00 or so mortgage at a reasonable interest rate is not going to be a large monthly payment. I do not have an amortization schedule but I'll bet the payment will be around $500/month. Plus he (at least for now - until Congress screws it up) will get an interest deduction - something you do not get in a bk. With the wife working and the amount of equity in the home, even by today’s standards, I would think a loan is quite possible. The problem I have with this option is, those who use their home to get out from under credit card debt simply run up those now paid off credit cards and two years later are in a worse situation.

3. I do not think working one-on-one with each creditor (depending upon how many there are of course) will work. BC40 will still have to tap into the home equity and, if any of the creditors asks for a financial (happening more and more), once the creditor finds out about the free & clear home negotiations may go out the window.

Next step is to sit down with several attorneys to discuss all options.

Des.

well...for us we did not homestead our home in nj....it USE to be a state where you could homestead your house...we understand no longer....

New Jersey Homestead Laws

New Jersey Exemptions
NJ Exemptions None, but survivorship interest of a spouse in property held as tenancy by the entirety is exempt from creditors of a single spouse
Freda v. Commercial Trust Co. of New Jersey, 570 A.2d 409 (N.J. 1990)


we never qualified but some would get "little" homestead rebate checks yearly...

Code Section 54: 4-8.57, et seq.; 2A: 17-19 personal property
Max. Property Value That May Be Designated 'Homestead' $1,000 personal property; Homeowner, $150 min. rebate if income is less than $70,000; min. is $100 if income is between $70,000 and $100,000 Renter, $65 min. rebate if income is less than $70,000; min. is $35 if income is between $70,000 and $100,000 ....this was in my notes from a couple of years ago...they since may have changed...however, all i know is nj is and was a creditor friendly state, IF we had filed in nj, it would have been "federal" and not state.


so we left....and the house was in foreclosure when we left...we waited two years and then filed in florida......using florida exemptions.

it's almost 3 years since the beginning of the foreclosure and it is still open with chase.

[BKlooker]

I agree with what others have said...getting a mortage is your best bet, in my opinion. CH7 is not likely to be a great option for you, since you have so much equity in your home, but a BK lawyer in your state may be able to advise you of otherwise.

If I was you, I would take out a $100K mortgage to pay off the cc debt. The excess 15K could be used to stop you from having to sell off more of your stuff to cover everyday expenses for quite some time, and maybe enough for you to consider going back to school and learning another trade, since it looks like construction is on the downslide in your area?

Just my observation....

[bc40ton]

"survivorship interest of a spouse in property held as tenancy by the entirety is exempt from creditors of a single spouse"

Can we touch on this just a bit? Right before my father dies, my parents sold me the property for $1 but I finished paying the mortgage on it but did not assume the mortgage. I just paid her monthly mortgage on the house till it was paid of. During this time I was married and my wife signed a "post nuptial" for no claim to the house if a divorce were to come up as this was part of my inheritance. She only has about $11K of debt so if this "tenancy by the entirety" is an option for me we should be able to swing the payments for her debt if she would retain ownership of the house and I just file ch13. As of now, my name is the only one on the deed. Other wise I like the idea that "despritfreya" wrote in his #1 paragraph in the post above. I think I will be ready to at least talk to a lawyer next week.

[tobee43]

"survivorship interest of a spouse in property held as tenancy by the entirety is exempt from creditors of a single spouse"

Can we touch on this just a bit? Right before my father dies, my parents sold me the property for $1 but I finished paying the mortgage on it but did not assume the mortgage. I just paid her monthly mortgage on the house till it was paid of. During this time I was married and my wife signed a "post nuptial" for no claim to the house if a divorce were to come up as this was part of my inheritance. She only has about $11K of debt so if this "tenancy by the entirety" is an option for me we should be able to swing the payments for her debt if she would retain ownership of the house and I just file ch13. As of now, my name is the only one on the deed. Other wise I like the idea that "despritfreya" wrote in his #1 paragraph in the post above. I think I will be ready to at least talk to a lawyer next week.

des...is ....i know this is just a personal opinion...however, des is one of the best attys on this site...i would follow des's advise 100%......

this is an extremely confusing issue....as most people attempting to transfer property to children do it with the limited gift amount annually....and then maybe adding them to the deed once the total amount is transferred. while the inheritance taxes may clear...gift tax is different....so actually this has nothing to do with the :


"survivorship interest of a spouse in property held as tenancy by the entirety is exempt from creditors of a single spouse"

since once your mother owns the property it is hers to do with as she wishes...however, i suggest you consult BOTH an atty and an ACCOUNTANT!!!

best of luck to you!!

[bc40ton]

My apologies on my error in my last post. I am still married to the same woman. My Mother has no interest in the house. I was referring to my wife and the post nuptial she signed as the benefactor of using the tenancy by eternity, "TBE right". I better reread some more. I am confusing myself.

[despritfreya]

[QUOTE=bc40ton;482763]"survivorship interest of a spouse in property held as tenancy by the entirety is exempt from creditors of a single spouse" . . .Can we touch on this just a bit? . . . my parents sold me the property. . .I finished paying the mortgage on it but did not assume the mortgage.. . .During this time I was married and my wife signed a "post nuptial" for no claim to the house. . . [I]f this "tenancy by the entirety" is an option for me we should be able to swing the payments for her debt if she would retain ownership of the house and I just file ch13. . . As of now, my name is the only one on the deed. . .[QUOTE]

I do not pretend to understand “tenants by the entirety” however, as it sits right now your wife has no interest in the home and has effectively "disclaimed" an interest through the post nup. A transfer of any interest in the home to her without valuable consideration ($$$) is a fraudulent conveyance that a bk Trustee can set aside.

If you are considering the Chapter 13 option there would be no need to play with the title as you will pay 100% of all allowed claims. If you transfer some or all of your interest in the property you will still have to pay 100% in a Chapter 13 as you are required to pay to your creditors what they would have gotten if you had filed a Chapter 7. Since the Chapter 7 Trustee would set aside the transfer (and you would lose any exemption you may have been entitled to) all creditors would get paid.

And, by the way, while tb43 thinks highly of me (something I do appreciate), not everything I say is correct or to be taken as gospel. We all make mistakes - and I have made a few on this forum. You need to explore all options and choose the one that best suits your needs after discussing the issues with several attorneys.

Des.

[tobee43]

[QUOTE=despritfreya;482846][QUOTE=bc40ton;482763]"survivorship interest of a spouse in property held as tenancy by the entirety is exempt from creditors of a single spouse" . . .Can we touch on this just a bit? . . . my parents sold me the property. . .I finished paying the mortgage on it but did not assume the mortgage.. . .During this time I was married and my wife signed a "post nuptial" for no claim to the house. . . [I]f this "tenancy by the entirety" is an option for me we should be able to swing the payments for her debt if she would retain ownership of the house and I just file ch13. . . As of now, my name is the only one on the deed. . .

I do not pretend to understand “tenants by the entirety” however, as it sits right now your wife has no interest in the home and has effectively "disclaimed" an interest through the post nup. A transfer of any interest in the home to her without valuable consideration ($$$) is a fraudulent conveyance that a bk Trustee can set aside.

If you are considering the Chapter 13 option there would be no need to play with the title as you will pay 100% of all allowed claims. If you transfer some or all of your interest in the property you will still have to pay 100% in a Chapter 13 as you are required to pay to your creditors what they would have gotten if you had filed a Chapter 7. Since the Chapter 7 Trustee would set aside the transfer (and you would lose any exemption you may have been entitled to) all creditors would get paid.

And, by the way, while tb43 thinks highly of me (something I do appreciate), not everything I say is correct or to be taken as gospel. We all make mistakes - and I have made a few on this forum. You need to explore all options and choose the one that best suits your needs after discussing the issues with several attorneys.

Des.

des, i do need to clarify something to you.

i do understand that many times i personally am more a "cheerleader" and attempt to give support or hold a hand rather then use the fact i was a paralegal for so long....but i have worked for excellent, lousy and terrible attys....so....you'll have to trust my experience here...the MOST excellent atty's make mistakes....but i do believe i am qualified to voice my opinion based on your answers and more importantly what REALLY makes an atty excellent.....and that is a caring attitude to help people through their hard times, giving choices, pointing in a direction...so....i'm not saying your always correct...i just saying your one of the best...just accept it and move to florida..... and while your at it give me a job too...LOL!!!