The time has come... ready to start the BK process -- need advice

[tacco]

I knew this day would eventually come, but now it's here...

I currently have ~ $57,000 worth of CC debt divided among 8 accounts:
$18,000
$14,500
$8,000
$7,300
$3,500
$2,900
$1,700
$900

And I have about $1,400 in unpaid medical bills.

After taxes and health insurance premium is deducted, I bring home $1,150 every two weeks. My mortgage payment is $1,200 a month. I am a single parent to 2 children.

I competely stopped using my credit cards at the end of September. I've been managing to pay the ~ $1,000 in minimum payments each month using money I got from selling about $7,000 worth of personal property, but now the money is almost gone and there is no other property to sell. I have almost $2,000 left that I was going to use to pay for my BK filing.

The thought of creditors calling my home (and especially my work!) is very stressful to me and I am tempted to use the $2,000 to put that off for another two months, thinking that I can get the money I need to file BK when I get my tax refund. (up until now, my thinking has been that I might as well spend the money making the minimum payments to avoid the creditors since I wouldn't be able to keep the money through BK anyway...) But now that I see how little money I have left and how difficult it is going to be to get by on $1,150 every 2 weeks even with all the credit card debt payments eliminated... I think I've finally come to the point where I need to stop paying the credit cards! And I need to call a BK attorney ASAP! (anyone have a recommendation for a BK attorney in the Twin Cities?)

Second part of the question is about my house. I don't think it is under water -- I owe ~ $106,000 on it (purchased it for $127,000 13 years ago, value went way up, then came back down.) Due to the huge number of repairs it needs (at this point, pretty much everything needs repairing or replacing,) I could maybe see getting $106,000 for it b/c the buyer would have to factor in the costs of all the repairs/replacements. What I'm thinking is to "pay and stay" through the bankruptcy and to continue to live here and make mtg payments as long as I can. And then when I can't, to let the house go into foreclosure (my understanding is that the foreclosure process in MN takes 6 months, so I could live here and save up money during that time?) Or would it make sense to include the house in the BK? Would it still go through the foreclosure process and I could stay here for the 6 months?

I know that these are all complicated questions and I do plan to consult w/ an attorney ASAP (again, any recommendations for one in Mpls/St. Paul?) I just wanted to see if I had a fairly accurate understanding of my options. And to also get some confirmation that it really is time to bite the bullet and stop paying the cc's...

Thank you for any support and guidance you can give -- it will be forever appreciated. (and I have read the pre-BK planning thread several times and have done a number of the things on there; I'm going to go back and re-read it now...)

[LadyInTheRed]

Welcome to BKForum, tacco!

It's against forum rules for people to recommend attorneys in the public forums. Once you have enough posts, if somebody has a recommendation, they can PM it to you. So, keep posting. In the mean time, try your local bar association for a list of bankruptcy attorneys.

If you are sure you are going to file BK, don't make any more credit card payments. You are throwing money away. Read the collections forum for lots of advice on how to deal with calls from creditors. They are nothing to fear as long as you learn how to be the one in control. Also, if you tell them you are not allowed to receive personal calls at work, they should stop calling. None of my creditors called me at work more than once.

If you want to pay and stay, you state in your Statement of Intentions that you intend to reaffirm the debt. But, you don't sign a reaffirmation agreement. Your personal liability for the mortgage will be discharged and you can stay and pay and walk away whenever you want. If you state that you intend to surrender the home, the lender may get a relief from automatic stay and foreclose before discharge or just wait until you are discharged. How long it takes them to foreclose is hard to say. How quickly they CAN foreclose and get you out depends on your state's foreclosure laws.

[AngelinaCatHub]

As LIR stated, bite the bullet. You should have done this before and saved that money for essentials. Your ideas are sound but late. Don't make it later as you will regret throwing your last 2K away.

The house is livable now, pay through until you can no longer. There are many houses now vacant that could be purchased cheaper I am sure. The problem is getting it financed. Government has a new mortgage way that I am yet familiar. I think it is HARP but not sure. Google it and see if that fits you. 'Hub

[mountanddo]

There are many houses now vacant that could be purchased cheaper I am sure.

Not in Minneapolis unless you want to live North and you really don't. The streets are littered with for sale signs. I'd stay in your house as long as you can because for 1200 and 2 kids you can't hardly rent cheaper than that.

[btbeme]

Hi Tacco, and welcome to the forums.

Some basic suggestions, in line with what has already been posted:

- Stop making payments on your cards. Save the cash.

- If you sell or have sold personal items of any value (say, over $300) then it would be good to be able to show what you sold, for how much, and be able to show the money coming in and what you did with it. Like I said, this is "good" to be able to show, but not absolutely necessary.

- If you want to stay in your house, you can. "Stay and Pay" is your best option. Yes, include the mortgage on your Ch 7 (you have to, anyway) but do NOT reaffirm the mortgage. This will give you the ability to leave later on if you choose to.

- Speak with an attorney or five ASAP to plan your roadmap. They will have some specific advice on what to do with your assets and money, according to your state exemptions and the Trustees in your area. We can offer some general guidelines, but your attorney's advice should come first.

- Make your plan for after Ch 7. Yes, your credit card and medical debts will be gone, but you need to plan for your good financial health afterwards. Can you make mortgage or rent payments and still have money for necessities and emergencies? Plan accordingly and take this opportunity to make whatever adjustments may be necessary for your future success. Spending over 50% of your take-home pay on a mortgage is a big chunk - I suggest you plan to trim that down if you can

- Foreclosure takes time. There are a lot of ways to delay that as well. And, there are federal programs that can help you trim your mortgage payment if you plan to stay. Rent subsidies are also available.

- creditor calls are a pain, but they are part of the process. Take them every now and then so they know how to reach you at home. If they call at work (or at relatives homes) tell them to contact you only at home - that is your right. Signing up for Google Voice will allow you to filter your calls. But, do answer them every now and then to keep them from drilling down into your work and relatives numbers to find you. Just tell the caller that you will do what you can when you can if you can. Don't pay them or promise to pay them.

Taking this first step is the toughest part of a BK filing. You will feel better as time goes on and you get a chance to start over fresh!

[keepmine]

Spending over 50% of your take-home pay on a mortgage is a big chunk - I suggest you plan to trim that down if you can

Wholehardly agree with the previous poster. You got something you can't afford post bk.

[JessMN]

Hi Tacco
you sound like me! Single parent (only 1 kid), had a townhouse in Brooklyn Center that was being foreclosed (didn't want to stay in it anyway because of the area) and too much debt, both due to a bad relationship. I filed last May - my house was just in the final stages of being foreclosed - Moved in July and am now renting in Eagan for less than my house payment and association fees were. Plus now I don't have to worry about house maintenance. My closet door came off the slider last month - called maintenance and that was that. Before, I would have spent an afternoon struggling and swearing to fix it. I still owed $120k on my house - and others in the association were selling for $46k - yes you read that right! - so there was no way I would get anything out of it. I'm not saying that you need to do what I did, just that I took my bk as an opportunity to truly start over and I am much happier.

As for lawyers - are we allowed to say??? - the one I used is kind of expensive, but I have legal insurance through work and they took that so cost wasn't an issue. There are a ton of lawyers in the cities, you will want to interview some to get a feel for who you are comfortable with.

And foreclosure in MN goes like this. You miss payments. They send you letters. After 4 or so months they start the process. You get a sheriff sale date (Mine was Nov 4, 2010). From that date is a 6 month redemption period. Meaning if you magically come up with the money in the next 6 months you can have your house back. You can live rent free during that time. When the 6 months are up (Early May 2011 for me) they start the eviction process. This is where they offer you cash for keys - for me they offered $3000 if I left in 30 days, $2000 for 60 days and I think $1000 for 90 days. I took the 60 days so I could get my stuff together. Moved over July 4th Weekend (HOT!) So the entire process for me, from first missed payment (which was, I think August, or was it July??) to moving out was about a year.

PM me if you want to know anything else about my situation. I am not a lawyer but I can tell you what I did and why I am 100x happier now than a year ago!

Oh, and I agree - stop paying your cards! once you make the decision to file BK, you are just throwing $ away if you keep paying. Ans as soon as you file, the creditors can't call you anyway.

[Drazil65]

Hi and welcome. If you think that BK is an option that you are heading for then stop paying the credit cards now. If you want to keep the house you will have to stay current and then just "pay and stay" BUT if you are going to include it in the chp 7 then stop paying that as well. Start stock piling your cash and open a new checking account with a bank you have no other affiliations with (no other credit cards, loans etc). Start using that account.

Do a search for "Google Voice" online, research it and then set it up! This will be a lifesaver and give you so much peace in your life with regards to the calls from the creditors. Make sure you go into all your accounts and "update/change" your phone number in your profile to the new Google Voice number (this is all free), it will be one of the best things you do during this process.

This is a business decision for your family and there are many of us here from all walks of life. Read everything on this forum you can and ask questions. Good Luck!

[daytona]

I would also buy a little digital voice recorder to have for recording the calls when you get them, specifically at work. Olympus WS-700M is a good one, they are about $80.00. Minnesota is a one-party state, so you can do it without telling them. Usually they will advise you that they are recording the conversation anyway. Next state to them that you cannot and will not accept their calls at your place of employment. Any further communications to your place of employment will result in you pursuing them for violation of FDCPA. Usually they will then try to say that you will have to send them a certified letter, etc before they will honor your request. If they do this, advise the person that they are already in violation for their previous statement (verbal is fine) and that you have recorded your request. (technically the OC does not have to honor your request, but often do... a 3rd party collector certainly has to.)

If it's the OC calling, which it will be at first, just advise them that they have your alternative contact information and you will not discuss personal business at your place of employment and if they continue to do so you will pursue them for harassment. The only problem with NEVER talking to them, like with google voice is that they will pursue you harder through other means (like work) or start calling neighbors, relatives, etc to try to get you "contact" information...which they can legally do. My advise would be to take their calls every once in awhile just so they know they have your contact info. You don't really have to tell them much...it will all be about setting up a pmt plan, when can you pay, etc. Use your imagination on what you want to tell them. Once you file, all you should do is tell them is your case number and they shouldn't call again.

[tacco]

Oh my goodness... I am so incredibly grateful for each one of you who took the time to respond to my question -- I can't even tell you how relieved I feel...

Okay, so I'm steeling my nerves and I'm NOT going to make any more credit card payments starting RIGHT NOW. I did get a cell phone and a google voice # and have been figuring it out over the past few months... I will start notifying all my non-creditor contacts of the new number. We'll start using the cell phone only. And I'm going to turn the volume off on the home phone and answering machine and put them in the laundry room and only deal with taking calls from / returning calls to creditors using the home phone # and I'll do it when the kids are not around (they are 12 and 8 years old and I don't want them to worry...)

I have an appt for tomorrow morning for a free consult w a BK attorney. This attorney is one of the three that were recommended to me last year when I PM'd a few MN posters. I think this one is the most expensive option. They seem very slick (not in a bad way,) and well organized -- I was able to enter my basic info on-line this morning as an inquiry, they followed up w/ me almost immediately, and were able to schedule me a consult appt tomorrow morning. They asked me to bring a list of my debts, my last two paystubs, my ID and my SS card.

I also set up a consult w/ another one of the three recommendations (seems like they are a few hundred dollars less,) for next Wed evening. They don't seem as slick or friendly, but they do seem more thorough up front. Wed was the earliest appt they would give me b/c they have paperwork they are sending me that they want me to fill out and come in with: list of debts, last 7 mos worth of bank statements (I think that's what she said...) last 2 years of tax returns.

I'm thinking I should make an appointment with the third recommendation I got just to be thorough...

As for the house, I definitely know that over 1/2 my take home pay for mortgage is crazy! I did apply for a loan mod last year but, after jumping through endless hoops, I was denied -- I think it was b/c I had too much debt compared to my income. Perhaps after BK I'd qualify for a loan mod, but I think it would only get reduced to something like $1,000/mos which is still not affordable for me.

Mountanddo is totally correct about the cost of rent in the Twin Cities. But, if I can find a place where heat, water/garbage, and electric are included, that will make a huge difference. And I won't be living in constant fear of something breaking that I can't afford to fix. I have heard of something called Section 42 housing and I'm trying to learn more about that -- it's just difficult to identify which complexes have it since there isn't a centralized list. I live near the border of Minneapolis and St. Paul and was considering looking in St. Paul as well, but realized that my childcare assistance is county based and wouldn't automatically carry over -- I'd be a new family in the new county and it would depend on the funds the new county had available. Finally, I'm also trying to explore the possibilty of finding a big house to rent and share with another single parent.

The more I thought about it today, the more I realized that I wanted to get out of the house as soon as possible because I feel like I'm in a race against the possibility of something truly essential breaking (right now I'd say the two main candidates are the 14 year old water heater, or the toilet in the house's one bathroom -- due to previous water damage it is sinking into the bathroom floor.) Also, with a 6 month timeline in mind, I was trying to figure out how to avoid having to move in the middle of winter, 2012/2013.

But with the timeline Jessica outlined, I'm wondering if I can manage to stretch things out so that I end up moving in spring/summer of 2013. I'm thinking that 6+ months of not paying mortgage will give me a chance to save a chunk of money that I'll need to move (I'm guessing that I'll have to pay an extra month's rent or extra deposit in order to find a rental after declaring bk and going through foreclosure,) and I'll need to pay somone to help me move and I may have to obtain some new furnishings / household goods (like the house, pretty much all of my stuff is ancient and at the end of its useful life...)

Also, two other things I've done in preparation... I opened a new bank account at a bank other than the one where I owe $1,700 on a line of credit and have gradually been moving everything over to the new account. But I continued to pay the cc bills out of the old account so that the cc companies wouldn't have the new bank account information (probably paranoid, but...) Also, about 15 months ago, when I realized that my financial situation was not good and that I was going to be a single parent very soon, I bought the least expensive but reliable new car I could find to replace my 16 year old clunker that was on its deathbed. I could not believe that the car dealer extended me credit so easily! I definitely do not plan to surrender the car.

Thank you to anyone that is actually still reading this post -- any and all advice is welcome and incredibly appreciated.

[JessMN]

But with the timeline Jessica outlined, I'm wondering if I can manage to stretch things out so that I end up moving in spring/summer of 2013. I'm thinking that 6+ months of not paying mortgage will give me a chance to save a chunk of money that I'll need to move (I'm guessing that I'll have to pay an extra month's rent or extra deposit in order to find a rental after declaring bk and going through foreclosure,) and I'll need to pay somone to help me move and I may have to obtain some new furnishings / household goods (like the house, pretty much all of my stuff is ancient and at the end of its useful life...)

I think, if I remember correctly, that if you file bk before the sheriff sale you can get it pushed back. I don't know the specifics because I was already past that point, but you probably can stretch it. Definitely ask your lawyer


Oh, and to your point about the house, I absolutely agree - its really hard to take care of a house as a single parent. It took a lot of emotional stuff on my part to come to terms with losing my house and *gasp* renting but I finally realized that just because the "american dream" is to own a house that doesn't mean its right for me, at least right now. I also recently read that you can expect to spend 10% of the value of your house for maintenance every year! Definitely something that would have been nice to know before buying a house

[JessMN]

found this: http://hocmn.org/Stock/Editor/file/F..._FAQ_Final.pdf

" In a Chapter 7 filing, the automatic stay halts the sheriff’s sale until after the bankruptcy case is closed"

[tacco]

Thank you so much Jessica!

I tried to PM you, but I don't seem to be able to do that...

Anyway, the more I obsessively think about this, I'm wondering if I should also stop paying my mortgage now too? I would go for however long I could without paying CC or mtg, then file the BK to start the automatic stay to delay the sheriff's sale, and then I would get another 6 months after the sheriff's sale.

(my initial idea was to file the BK fairly soon and keep paying on the mtg, and then stop paying the mtg after the BK is discharged...)

It seems like option one would give me longer in my house by adding in the automatic stay time?? I will definitely ask the attorney tomorrow.

Thanks all!

[ValleYum]

I tried to PM you, but I don't seem to be able to do that...

You need more than 20 posts to send or receive a PM. Not sure of the exact number but it is north of 20.

[JessMN]

MN Foreclosure Process: http://www.capsh.org/media/fp_process.pdf