ok guys... met with BK lawyer...

[trader19]

i have made several posts on here and you all have been SOOOOO helpful. i actually look forward to getting this all over with so that i can come back on and pass on my experience to newbies like me.

anyway, met with a lawyer. as some of you who read my posts... my situation is 100k in CC debt... 37k in tax debt....recent large preferential payments... no assets... no equity... and self employed.

his suggestion... wait a year. don't pay CCs anything. let them harass and sue and do whatever. he seems to think that the CCs will spend 6 months trying to get $. then 3 more in a collection... then 3 more in another collection. he said, if they sue... "who cares". so what if they get a judgment... i am not paid on a W2, so there is nothing to garnish. wait the year using nothing but my debit card. don't borrow money... don't pay any back. come back in a year and file chapter 7 to get rid of the debt/judgments.

he also said he would not make any payments on my mortgage. my house is valued at about 460k. i owe 465k. i am already behind 2 payments. he made it seem like it would take up to 3 years to get me out. why not live rent free for 3 years instead of throwing 3500 a month at my mortgage. he made it seem like a calculated risk. worst case... i live in a house rent free 24 to 36 months saving up to $125k in payments before walking away. best case... i live in the house 18/24 months rent free and i get a loan mod or work out a deal with the bank with a sweetheart deal.

he also said if i make some money... i can dump it into my taxes since that would not be a preferential payment and a trustee certainly isn't knocking on the IRS's door asking for the $.

so, does this all seem logical to everyone? any flaws i should know about? also, if i don't pay my mortgage, should i still pay my property taxes?

thanks for any info!!!

[Lilyat108x]

How old is the IRS debt? Is it old enough to include in the bankruptcy? If not, have you thought about maybe attempting an Offer In Compromise with the IRS before or after the bankruptcy? (They won't look at an OIC during the bankruptcy).

[frogger]

Some advice that's pretty spot on.

A few things to consider:
Credit cards - correct. Stop paying, let them sue, and if they do and win, change bank accounts.
Mortgage - correct or not? Big bank, small bank? Big banks, you may get a year or 3. Small banks, they may foreclose in a matter of months. Have a backup plan available to CYA. Rent free? I like it!
Taxes indeed. Good suggestion.
Property taxes? No. The taxes will go with the property when it sells. A waste of your money to pay.

Other - while you have online access, change your info. Get google voice and change your phone number. Be prepared to move money if necessary. It's ok to hide money from your creditors, just don't hide it from the trustee.

Good luck.

[trader19]

my bank is not a big bank... hudson city. is that a problem?

[frogger]

my bank is not a big bank... hudson city. is that a problem?

Smaller banks tend to foreclose faster. Your mileage may vary.......

[ValleYum]

Don't leave money in a bank that you owe $$ to or who you don't plan on paying. If you bank at Hudson City - open another account.

Happy to hear your good news!!

[Floridagail]

Good news, sounds like a solid plan. I removed all my bank account info and phone numbers from the online sites i could still get into.
I lived in fear for 2 yrs before I filed of my checking account disappearing. I opened a new bank also before my credit tanked. Good thing I did my Cu stopped my checking debit card (because I included a CL with the Cu in my bkrptcy).

[trader19]

guys.... u have been such a big help. thanks again!

[Pandora]

only would add to the above posts that IF you dont pay your real estate / property taxes it may be possible for the county to foreclose well before the bank does; also if you are in an HOA - that foreclosure possibility is also there. YMMV of course, but just wanted to throw the scenario's out there.

[tobee43]

my bank is not a big bank... hudson city. is that a problem?

sorry frogger darlink...

not in nj...it's a judicial state and it will still take them at the VERY least 2-3 years. our house in nj is still sitting and it's over 4 years. i know our circumstances may be a bit different, but really hudson bank is not that small in the tri state area, i mean it's no Chase of BOA, but it's not tiny. plus, they still have to go through the court system, although, their paperwork is more likely to be in order, but it doesn't push the process up that much.

i know someone in nj got served and kept going to court and the judge told the bank to leave them alone and let them pay what they can and work with them. so they did this started making some payments and then stopped...got served again went back to court...they did 5 times!!!!!!!!!!!! stayed in the house almost 4 years that way. although, i'm not suggesting you do that!

[SMinGA2]

Certainly research on whether or not the taxes could be dischargeable. If they were properly filed, and so much time passes between filing the taxes & filing bankruptcy - it could be.

Otherwise it all makes perfect sense. One other thought on the house... If you do decide to stop paying, consider whether or not you need to increase withholdings to avoid having to pay additional tax debt for the 2012 tax year. You won't have much in the way of mortgage interest to deduct.

[frogger]

sorry frogger darlink...

not in nj...it's a judicial state and it will still take them at the VERY least 2-3 years.

Works for me! In GA, they will have you out in 60 days or so.

[btbeme]

only would add to the above posts that IF you dont pay your real estate / property taxes it may be possible for the county to foreclose well before the bank does; also if you are in an HOA - that foreclosure possibility is also there. YMMV of course, but just wanted to throw the scenario's out there.

This is absolutely true. Most banks will continue the tax payments to ensure that it doesn't happen, but I have seen the tax sale more than a few times. HOAs are a different story - they seem to have more power than the US Attorney General. So, check the state tax website to ensure your bank is keeping square with the world, and if HOA fees are due then you might consider paying them (arrears are dischargeable in BK, but anything after the BK is yours to pay).

[memama]

Well, one thing I wish my husband and I would have done is made the decision to stop paying LOOOOONG before we actually did. We were current on EVERYTHING until a month before we actually filed for bankruptcy. Stupid, stupid, stupid!

It seems like the lawyer gave you some solid advice and I think your logic is pretty sound...live rent-free for several months, save the money from the mortgage payment, and buy something else with cash or, like you said, work out a deal.

I also second the suggestions to go with google voice. My husband and I switched a few months before we filed for bankruptcy because we could no longer afford home phone, but it was a WONDERFUL feeling knowing that absolutely NO ONE had my phone number.

[BankruptinNJ]

i have made several posts on here and you all have been SOOOOO helpful. i actually look forward to getting this all over with so that i can come back on and pass on my experience to newbies like me.

anyway, met with a lawyer. as some of you who read my posts... my situation is 100k in CC debt... 37k in tax debt....recent large preferential payments... no assets... no equity... and self employed.

his suggestion... wait a year. don't pay CCs anything. let them harass and sue and do whatever. he seems to think that the CCs will spend 6 months trying to get $. then 3 more in a collection... then 3 more in another collection. he said, if they sue... "who cares". so what if they get a judgment... i am not paid on a W2, so there is nothing to garnish. wait the year using nothing but my debit card. don't borrow money... don't pay any back. come back in a year and file chapter 7 to get rid of the debt/judgments.

he also said he would not make any payments on my mortgage. my house is valued at about 460k. i owe 465k. i am already behind 2 payments. he made it seem like it would take up to 3 years to get me out. why not live rent free for 3 years instead of throwing 3500 a month at my mortgage. he made it seem like a calculated risk. worst case... i live in a house rent free 24 to 36 months saving up to $125k in payments before walking away. best case... i live in the house 18/24 months rent free and i get a loan mod or work out a deal with the bank with a sweetheart deal.

he also said if i make some money... i can dump it into my taxes since that would not be a preferential payment and a trustee certainly isn't knocking on the IRS's door asking for the $.

so, does this all seem logical to everyone? any flaws i should know about? also, if i don't pay my mortgage, should i still pay my property taxes?

thanks for any info!!!

Not paying your mortgage anymore is a good idea. New Jersey is notorious for being one of the slowest states to foreclose. If you can't pay for the house anyway . . . Even if you get judgments, you have nothing they can take, right? CC's usually spend a long time on collection activity before they sue. I didn't get sued for three years! Your credit will already be shot with the CC debt, tax debt, and foreclosure. Use the money to save for an apartment, and use cash to pay your bills, especially your taxes.

I'm a little worried about the taxes, though. You say that you owe 37K in taxes? What kind of taxes? The IRS would always frighten me. I don't know if you can discharge taxes in a BK? You can use the cash to pay your taxes?

Do you have a 401K or an IRA? Can you put some of the cash into that?

What were the large preferential payments?

ETA: Ok, I read your other thread about the preferential payments and how you've lost your job. I'm sorry. You will very definitely have to wait to file because of those payments. Meanwhile stop what you're doing! Simplify.