Can we do Chapter 7? Any other advice?

[sincity]

Hello Everyone. This site is amazing! I've been reading constantly for the past couple of days and already feel like I've learned so much. I'm still very stressed out though.

Here's as much detail as I can think of. Let me know if you need more info to provide accurate advice. Thanks for your help.

-2 Mortgages - 1 House we live in and the other is a rental that we loose about $200 a month on. We bought our residence about 1.5 years ago and really, really don't want to lose this house. The rental we owe maybe $20-$30,000 more on it than it's worth. Mortgage 1 is $2500/mo, Mortgage 2 is $1900/mo with rental income of $1700/mo.
-Income: I don't work (not for money anyway!). I stay home with our young kids and take care of the household, bills, etc. My husband works full time and has some side jobs he does. He probably brings in around $80,000/yr from his job and another $10-$15,000 from his side work. There are expenses we write off for the side work so it won't be quite that much.
-We have 2 cars. One is paid for but it's getting up there in miles. The other we pay around $450 a month still have 5 years left on a 6 year loan. Would need both cars so my husband can drive to work and I can run around with the kids.
-We have, I'm guessing, around $75,000 in credit card debt.
- We've been using our cards constantly for the past couple of years. I don't remember what all we've purchased but in the past few months, just small things because we literally make a payment and then use up any credit that becomes available after the principal is applied. We have made some cash advances and balance transfers. Cash advances were well over a year ago. I think we might have done the balance transfer 6-9 months ago after I got a new card and of course they are both full now.

We kept hoping that things would turn around truly thought we could afford everything but my husband's side word has gone from about $30-$40,000 a year to well under $20,000 now. We've obviously over extended ourselves with buying the house plus we charged work that's been done around the house to credit cards including a cash advance. Everything keeps snowballing and we are starting to overdraft our bank accounts and don't have the money to pay our bills. I have the money for both house payments in the bank right now and they are due today to avoid a late charge. Should I make them both? If I do, I have no money to pay any other bills for a couple of weeks.

More questions
-When should we stop paying our credit cards, or should we?
-When should we contact a bankruptcy attorney?
-Can we do a chapter 7? I tried to do the means test but got a little overwhelmed.
-Can we keep our primary residence? Do we keep making that payment even if we stop paying the credit cards?
-Our bank accounts are tied to auto payments for most of our credit cards. What should we do there?

We haven't done our taxes for last year yet. Kind of afraid to. My husband set it up about a year ago so that less taxes were taken out of his check so we had more money every month. We also cashed out our 401k's (except for one 401k loan) to buy our primary residence. We've always gotten a refund from the IRS but I'm afraid we may owe some this time.

That's all I can think of right now but please ask questions and give advice, it's soooo appreciated!

[keepmine]

Contact a bk attorney ASAP. Most will give free or lowcost initial consultation. If you wish to keep your primary residence, you need to pay that mortgage. I'd let the mortgage on the rental go. Also, stop paying all debt you'll discharge in bk and use the money for your basic HH expenses. You need to get used to life on a cash basis.
What don't you understand about the means test? Try this one:

http://www.legalconsumer.com/bankruptcy/means-test/index.php

Here are Nv. exemptions:

http://www.thebankruptcysite.org/exemptions/nevada.html

[angles]

I would also recommend taking care of your taxes. By not filing they will not go away. Plus there will be interest and penalties if you owe. Better to face that issue now rather than latter.

[sunshinepa]

Stop paying rthe cards and rental mortgage as previously advised. Start seeing attorneys (consults are usually free), save up the attorney fees and once you find one that you are happy with, get it done.

You will feel so much better once it's filed. Also, welcome........you will find great advice and support on this forum.

[lichteda]

Your situation is very similar to me and my wife. Expect a few number adjustments... My advice, run the means test calculator. If you qualify for the 7 and this is the way you want to go... then don't let any law firm convince you otherwise. We just spent 2 1/2 years in 13 when we qualified clearly for a 7 from the begining. Our experiance has been very difficult in 13. We've now converted to the 7 and hopefully; "Lord willing", we will be done in 70 days.

You will have to decide what you planning to do on the real property. If there is equity... the 7 limit for married couples is $22k (i think) protection in 7. As for the CC's and what you decide to do with the real property... stop paying for several months before you file. Sock away the funds in cash or pay off the non-dischargalbe debt.

[sincity]

Thank you all for your advice and input. We did not pay our mortgage payment on the rental property which was due on Sunday to avoid any late charges. We've never been late on a Mortgage payment so that was actually very uncomfortable for us. How should we handle the rent received for the property if we are not paying the mortgage?

Also, I assume we should completely stop using the credit cards now, right (especially if we stop paying)?

Couple more things... Our cell phone bill is behind and we just made a payment to keep the service but I'm thinking to port our numbers to google voice and maybe get some cheaper pre-paid phones or buddy up on a family member's plan. Any problems with this and putting a couple hundred dollars of cell debt in a bankruptcy?

I've tried doing the means test and is there anyway to include our real mortgage payment of $2500 instead of the allowed $1400? We really want to keep our house and feel that we could afford it without all the credit card debt.

Any recommendations on a good bankruptcy attorney in Vegas/Nevada?

Sorry for all the questions but I really, really appreciate everyone's help. I'm scared to death but feel a little bit of hope because of this forum.

[keepmine]

Cell phone debt is dischargeable. Yes, if bk is a viable option stop using those cards.
The bk code does allow you to use your actual mortgage payment as well as your actual utility bills.

[btbeme]

In a nutshell, you will need to hire an attorney who can and will help ensure that you can pass the Means Test. I suggest that you speak with several (maybe up to a dozen) competent attorneys before making a choice. Your case (like ours did) sounds like it will have a few hurdles to clear. Without a lot of specific details it would be difficult to give specific answers - but it sounds like there wouldn't be anything insurmountable and you always have a Ch 13 option.

[daylate]

"I've tried doing the means test and is there anyway to include our real mortgage payment of $2500 instead of the allowed $1400? We really want to keep our house and feel that we could afford it without all the credit card debt."

On line 42a you enter your mortgage payment, the worksheet will drop the allowance of 1400 and use the paymnet instead. That you are 1100 over the allowance may cause the US Trustee to question it and try to disallow a Chap 7.

Best advice is to go talk to some attorneys who offer free consults-even if you talk to a few bad ones, you'll soon be able to start to tell the difference and be able to select a good one.

Some on here have talked to trustees ( a list of which can be found on your local districts website-I think) about who is a good attorney. In fact some have hired trustees because some do client work in addition to their trustee duties.

Good luck.

[sincity]

Update and need more advice, please.

We are finally making arrangements to talk to a couple of bk attorneys next week. We've completely stopped paying all credit cards and the mortgage on the 2nd house (rental house). We have still received rent payments for the rental house and we are planning to use that money to hire an attorney. Do you think we will run into any problems if we continue to accept the rent and not pay the mortgage? We are going to the bank later today or tomorrow to try bring our accounts to a zero balance and close out our bank accounts. We are in the negative now and don't want to keep accruing fees and have other auto pays try to go through and make it even a bigger mess. Do you think this will be a problem? Of course, our phones are ringing off the hook already with creditors calling so the sooner we can get through all this the better. Thanks for everyone's help!!

[keepmine]

Does your mortgage have an assignment of rents clause?

[sincity]

Does your mortgage have an assignment of rents clause?

I have no idea but I will certainly check it out. Hopefully it doesn't have anything like that since we originally bought the house as our primary residence and then rented it out so we could buy our current primary residence. I'll let you know what I find out.

[sincity]

UPDATE:

Ok, could use more input please...

Well, we haven't been dealing with this too well lately. Mostly ignoring the whole situation but we've got to do something. We went to see one lawyer and they wouldn't even consider a chapter 7 because my husband's income is over the median. We tried to ask about the means test and seeing if we can possibly qualify for a 7 and they just blew us off. Haven't seen another lawyer yet but will be making more calls today. Talked to one attorney's office that would cost $300 for a consultation but the attorney is actually a trustee too. Didn't know that was possible but would it be worth it to try that attorney? Don't have tons of time to go see several different attorneys. It would be nice to find one that will try the chapter 7. If anyone has any referrals that would be great!!! Thanks!

[ValleYum]

sincity?

Did *you* try the Means Test Calculator? Plug in your zip code & number in your family and a few figures from the UST website and you should have a very good idea if you can file a Chapter 7. Yes you are over the median by $10-20k (depending on hubby's side job income) but that is not insurmountable.

You should be able to use your $2500 mortgage payment without a problem (are you current on your house payment? did you file for homestead?) since it is a secured debt. Same with your car payment of $450.

Lots of folks swear by using an attorney who is also a Trustee - since they know what will "fly" as far as expenses, etc. in your district. That may very well be the best $300 you could spend.

Taxes. Have you done those yet? You can't file unless you have filed your taxes.

Hang in there!!! The first step is the biggie!!!

[btbeme]

Sincity, the WORST thing you can do is ignore or delay your important decisions. It is the same as delaying or ignoring the parachute ripcord.

Get to see some competent attorneys, ASAP. Making some of the choices you have made is a step in the right direction, but you need to do this is a calculated and organized fashion. Timing can be critical with some issues. You really don't want decisions made for you if that can be avoided - and an attorney who is also a Trustee might be a good person to tell you exactly how to sort these things out.

We can help you with some specific decisions, and we will as you move through the process, but you must get this started without delay. Even if that means finding the time to talk with attorneys.