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[edv112233]

Hi...Glad to find this forum because we are feeling overwhelmed. I have a few questions, but will give a brief back story(probably similar to many):

*Built a house '07 put a good amount down(more than 20%) housing market crashed our house is worth almost 100,000 less than what we paid so we have no equity in home anymore.

*My husband has a largely commission based job and for 2 years was making $50,000 less(08,09) just before that time and also after we had huge medical bills, actualy we have had them for almost every year from 07 until now. Had 3 surgeries in our family, a baby, large hospital stay after one child had a seizure.

*We took out a Discover loan we pay $350 a month on to cut down medical debt(huge mistake)( a couple years back)
*Capital One Card we used to survive during those two years and for a year after thinking as my husbands salary grew we would catch up $700 a month(hasn't been used for 3 years)
*Citi Card $250 a month again for survival and medical bills( hasn't been used for 2 years)
*we do have some smaller retail cards Kohls, Lowes, Best Buy, Amazon we use but pay off or down yearly. We use this to buy clothes for kids when we need it, repairs in house, diapers supplies for kids(amazon). We have only a couple hundred from tv bought a couple of years ago because we pay $15 a month on it.
*One leased car and one we have a $217 payment on...probably have about $5,000 in equity in it.

*Besides the small cards we haven't used the other credit cards in almost 3 years. Discover loan was taken after we maxed out other two.

*Now my husband is back to making good money and I picked up a p/t job to help and even though we are current on all bills, we are barely hanging on by a thread. Any major medical(dental, glasses etc) we do not have extra funds to cover. So we are only one bad month away from missing a payment.....we do pay captial one late every month...due the first we pay the 15th. They will not negotiate anything with us...have begged and pleaded. Citi Card did make a deal with us and lowered our APR to 0% if we agreed to automatic withdrawl.

*We cannot sell our house b/c of the market being so bad in illinois. We would walk away with nada and it would take probably 3 years to sell at that price...most are selling at a price where we would owe $30,000- $60,000. Our mortgage isn't high so it would be stupid to leave b/c we would probably pay the same amount in rent(because of bad credit and no money we would never be approved for a new loan) We use our tax return every year to pay property taxes.

*We are not behind on any bills, but we are hanging on by a thread. We usually pay Capital one late, but they do get paid every month. We are just over the meadian income for a family of 5. We don't care about the bad credit rating because we plan to stay put and really do not use credit cardsanymore...and wouldn't need the small ones if we could get rid of $1200+ in CC bills each month. Will we be able to keep our house, 2 cars if we do this? We currently make after taxes $6500 a month from both our jobs, but pay out probably $6300 between mortgage all CC bills(even little ones), medical bills we still owe that didn't get put on CC from last two years, groceries utilities etc.

Her are my questions:

Are we likely to qualify for Chapter 7?
Can we keep our two cars and house?
With our current income will our wages be garnished?
Will our children's bank accounts be taken...their bonds? They each have $5,000 give or take in bonds and a few hundred each in the bank.
We are meeting with a lawyer, but I feel like there are hidden dangers to this. Can you share your wisdom with what they could be?
If we can qualify for 7 or 13 can we back out if the terms are almost as bad as what we have or they want us to give up our house or Cars or other possessions?
How long do you have to change your mind if you file? After your meeting with the trustee if you do not like terms.
We get $9,000 for tax return...can we keep it if we prove we use almost the entire amout for property taxes? We do not escrow taxes.

*We will be meeting with lawyers soon, but I am not super trusting. My husband really wants to do this, but I am nervous of the hidden pitfalls. Like at the last minute they will take our house or cars...what property they will ask for. We have no jewlery besides my wedding ring(worth $16,000) besides furniture that is all 7 plus years old. Besides the tv we have bought nothing new besides clothes, school supplies etc and a dishwasher when it broke this year(with our Lowes card) that we own. Even toys etc that the kids have all come from my parents and inlaws. They are the only grandkids on both sides so they do get nice things from them. Thanks for reading and any advice.

[Pjmax]

Hi, I can't give much advice, just wanted to say you've come to the right place. The folks here are super helpful, and just the emotional support is priceless.
I do know it's good to schedule a few free consults with BK attorneys before you settle on the one that's right for you. Get all your paperwork together and organized, in the meantime. One factor in choosing my lawyer; he was the only one that put his fee in writing on the first visit, and gave me a few pages listing what that fee included, what would be extra, and a list of what I needed to do. He was the only one I spoke with that did that. I went to my appts. with a typed page of all my basic info, income, CC debt, medical, taxes, car, property, etc. It doesn't have to be exact or itemized in detail at this point, but more like your situation-at-a-glance. I also typed up a few questions that were important to me. I tend to forget things so this made the process easier for me.
Read through a lot of posts on this forum. You will find you are not alone, and it will help you face your fears.
You are taking the first step in getting your life together. You can get through this, and you will have help here. I could't have done it and maintained any semblance of peace in my head without this forum.

[df04527]

Hi..Welcome....deep breath....what size family are you is one question you will be asked as well as what is the family income?

[edv112233]

Thanks for the response. We are a family of 5 and before taxes make around 100,000. My husband does get a lot taken out of his monthly commission check. We probably have between 5500 and 7000 a month. We try to pay down a little more when we have more but we have to save a little for bad months so we don't fall behind on anything on bad months.

[btbeme]

First thing... Have you had the opportunity to run your numbers through the Means Test? I suggest that you start there so you can see if you would qualify for a Ch 7, or if you might have enough disposable income for a Ch 13. Being over median income is not a deal-killer for a Ch 7, but run your numbers anyway.

Next - sometimes, having secured debt can be of great help to you. Car payments and house payments you can afford are OK and may actually help you qualify for a Ch 7, so keep paying those. Work out a budget to see how you would live after a Ch 7 discharge - can you afford the house, taxes, other expenses as well as being able to put away enough for a cash reserve?

Last - go visit a few competent attorneys. If they stiff-arm you because of the median income, move on to the next attorney. A competent attorney will look at your whole picture and advise you. The best time to plan for a BK is before you NEED to file BK - you want to go in with a strategy and an exit plan that you can live with.

Now, to answer a few of your questions. Nobody takes anything in a BK, unless you allow it to be taken. By that I mean that if you have an asset that isn't protected by exemptions, you will have the opportunity to "buy it back" from the Trustee. And, believe me, your stuff isn't worth anything close to what you think it is worth...even your wedding ring.

Kids' bonds - a good question for your atty, who will know what the local Trustees do in cases like this. If they are in the kids names or in a trust, probably OK. Otherwise, your atty will advise you.

Wages will not be garnished - a BK discharge will make that possibility go away. However, until such a time that you get a BK discharge, you can be sued and garnished. That is what you want to avoid, and BK is the way to avoid that.

No "hidden traps" in seeing a few attorneys. Make sure you tell them everything. They cannot have any surprises pop up.


I also suggest that you spend a few minutes reading the Stickies at the top of this forum. Those contain some of the best wisdom and experiences you can find here.

[TBA]

Hi Edv, and welcome. You have come to the right place for sure. First, take a deep breath, and relax. I am going to make a few comments to your questions, but i am by no means an expert, so dont take my words as legal advice. I am also in FLA and i dont know the rules for IL.

In order to determine if you qualify, the attorney will give you the best advice. As for keeping your house and cars - we did a "stay and pay" or "ride thru" on the house - we paid the mortgage on time and never went late but we did NOT reaffirm the mortgage. You will probably want to read more about that (there is a thread in the stickies about it) - but basically it gives you the ability to walk away at any time because the debt was included in your BK - if you reaffirm - it means you agree to keep paying the debt and you are still liable. As for your cars, do you have equity in your cars? Also, does IL have an exemption for vehicles? If you dont have any equity, and you want to keep them, you probably can. I did reaffirm my car because i "bought back" the asset - i had equity in it that i didnt want to lose.

I dont think they will "garnish" your wages - that is usually done once someone obtains a judgement.

I think your kids accounts are possibly at risk if your names are on them - confirm with the attorney.

You dont want to be changing your mind after you file - You should have your mind made up beforehand and be committed.

This is a business decision. You have to do what is best for you and your family.

GL momma!

[pamkev]

Like others have said take a deep breath it will be okay. I can't suggest strong enough to see at least 3-4 lawyers to see what they say. I really thought we were going to be in a Chapter 13 as we were over median income. Out of all the lawyers we saw only one said Chapter 7 we went with her not because of her saying Chapter 7 but because she was the one who actually listen and took the time to talk to us. She was right we could file a Chapter 7.

Please read the boards here the members here are awesome and have a wealth of knowledge. Pam

[edv112233]

Thank you again for the responses. I am kinda numb to this whole situation and afraid our fragile house of cards will blow over at any moment. I didn't realize we could buy back things. My ring probably wouldn't sell for anything close that much, but because we have paperwork and it is on our homeowners I thought they would hold us to it or take it. It just feels sad and scary. We used to have savings and for years I've had to sell my kids clothes and toys just to get them some new things. I did do the means calculator and we do have some money left...it said do ch 13, but once I added a few changes it id say we qualify. Some of our bills are way more that what the average is. How flexible are they on that? We have burned through all of our reserves so I feel like it is now or never or we will start missing payments. It is sad that we have literally begged(Capitol One) to lower our interest rate and they won't. Our mortgage company won't let us refi...we could get at least 3% lower than what we have. Nobody will doing anything to help us unless we default. It just seems so backwards.

So if we do qualify for Chapter 7 and we are able to wipe out those big guys...what happens to that 1200 a month we will now be saving? Do they just allow us to save that and move on with our lives? I just feel like in a way it is too good to be true. We are literally paycheck to paycheck right now(and sometimes negative), but with those gone we could actually be saving 1000 a month back into our savings. Is that really possible?

Also we use our tax rebate to pay for our property taxes. Will they take that money, or will they let us keep at least enough to do that. We have never done escrow. We are up to date on our property taxes as well right now.

Thanks again. It is good to find this place.

Sorry for all the questions. We have the first meeting Wednesday.

[syd74]

I'm no expert, but I've read here that you need to time your filing right with tax returns. File after you have received it and used it to pay for acceptable expenses (like real estate taxes). The stickies at the top will give you much more information!

Timing is everything with BK. If you plan correctly and choose the time when you will file, you will feel much more in the driver's seat and be able to remain calmer through the process.

[btbeme]

Thank you again for the responses. I am kinda numb to this whole situation and afraid our fragile house of cards will blow over at any moment. I didn't realize we could buy back things. My ring probably wouldn't sell for anything close that much, but because we have paperwork and it is on our homeowners I thought they would hold us to it or take it. It just feels sad and scary. We used to have savings and for years I've had to sell my kids clothes and toys just to get them some new things. I did do the means calculator and we do have some money left...it said do ch 13, but once I added a few changes it id say we qualify. Some of our bills are way more that what the average is. How flexible are they on that? We have burned through all of our reserves so I feel like it is now or never or we will start missing payments. It is sad that we have literally begged(Capitol One) to lower our interest rate and they won't. Our mortgage company won't let us refi...we could get at least 3% lower than what we have. Nobody will doing anything to help us unless we default. It just seems so backwards.

So if we do qualify for Chapter 7 and we are able to wipe out those big guys...what happens to that 1200 a month we will now be saving? Do they just allow us to save that and move on with our lives? I just feel like in a way it is too good to be true. We are literally paycheck to paycheck right now(and sometimes negative), but with those gone we could actually be saving 1000 a month back into our savings. Is that really possible?

Also we use our tax rebate to pay for our property taxes. Will they take that money, or will they let us keep at least enough to do that. We have never done escrow. We are up to date on our property taxes as well right now.

Thanks again. It is good to find this place.

Sorry for all the questions. We have the first meeting Wednesday.

We are here to answer your questions. No apology needed.

A few points more:

- The Trustee will want a copy of your homeowners policy. If that policy has a rider to specifically protect your ring or other jewelry, make sure you bring that up with the attorney. Most items are worth what you would get at a garage sale or pawn shop. Something specifically insured will draw the Trustee's attention for sure, so you will want to address that with an attorney.

- If you are in a situation where a good deal of your property is stuff you want to keep rather than liquidate, a Ch 13 might be a better option. If it is covered by exemptions, that is good...but if not, you will have a tough decision to make. Sure, you can "buy back" some of your stuff if necessary; however, the goal of a Ch 7 BK is to be declared a "No Assets" case so you can fly on through. If your file has property, bonds, and income that are in question, a Ch 13 may be a smoother ride. Again, after talking to a few competent attorneys, you will have a better feel for this.

- Anytime you have to "shape" your file to fit under the limbo bar of the Means Test to get into a Ch 7, you run the risk of being forced into a Ch 13. Not that all is lost there, but you really ought to file the chapter that fits rather than force the issue. That is an opinion; however, that opinion was formed after a three-year read of this forum. And, if you end up with a thou or more a month on the Means Test, you can bet that a Ch 13 will be seriously considered by all parties. If you have necessary expenses that are larger than the federally sanctioned estimates for your area I can guarantee that they will invite very close scrutiny, especially if you are relying on those expenses to cast you into Ch 7 rather than Ch 13. Not that you would "lose" the argument, but you had better have your ducks in a row to fight that battle. Herein lies the value proposition for a good (read: usually more expensive) attorney who can help make your case.

- Tax refunds - if you file in the last four or five months of the calendar year, your refund will absolutely be at risk unless it is covered by an exemption. That said, if you routinely get a large refund, your refund may be at risk at any time that you file, as a tax refund is essentially income that you gave to the government to hold for you until you asked for it back at tax filing. Trustees rightly see tax refunds as earned income, so if you routinely get large refunds I suggest that you adjust your withholding immediately - like yesterday, if possible - and make that refund as small as possible. Yes, it will add to your monthly income on the Means Test, but you won't fool anyone by keeping your withholding large and hoping the refund escapes the Trustee's notice. It won't.

- Here is my very, very best advice... Tell the truth, get a good attorney, hide nothing, and plan ahead. You will NOT like some of the answers you get when filing for BK. Accept that much as gospel. But, whether Ch 7 or Ch 13, you have friends here; and as long as you have a post-BK plan that works, you will always include us as your sanity check and cheering section.

[btbeme]

One last thought.

I would not be the first or last to bring this up, but for the sake of all who may be reading this while considering bankruptcy...

DO NOT spend your reserves without specific dollar-by-dollar advice from an attorney. Savings/Retirement plans such as IRAs, 401(k) and SEP plans, etc may very well be exempt from any consideration in a bankruptcy filing. Do not spend your retirement savings to pay the minimum payments on your credit cards. Period. End of freakin' story. No. Don't. Ever. Really. Period.

[pamkev]

Yes DO NOT pay any bills out of your retirement fund. Period.

As for your bills that are over the average we had the same issue with heating cost. The TT wanted proof we sent in 4 years worth of bills so as long as you have the paperwork to back up the claim you should be alright.

Pam

[TheBajan]

One last thought.

I would not be the first or last to bring this up, but for the sake of all who may be reading this while considering bankruptcy...

DO NOT spend your reserves without specific dollar-by-dollar advice from an attorney. Savings/Retirement plans such as IRAs, 401(k) and SEP plans, etc may very well be exempt from any consideration in a bankruptcy filing. Do not spend your retirement savings to pay the minimum payments on your credit cards. Period. End of freakin' story. No. Don't. Ever. Really. Period.

Ditto that.

Welcome. While it is possible to qualify for a ch 7 over the medium, you really should be prepared to file a 13. It does sound like you have some things that may bring scrutiny and that's okay but you just need to understand and be prepared for a 13 if that happens. I'm going to echo Btbeme and say that a ch 13 is not as horrible as it may seem to you right now. We qualified for a ch 7 and chose to go with a 13 because in our case, it was the better option. Yes, it means we have a payment for the 3 years (in most cases it's 5 years), but that payment is under $300 a month vs the more than $3000 a month we were paying on cc debt and the $770 a month we were paying on a second mortgage.

The best advice I can offer is this....

Have a post BK budget planned out and be sure it includes saving for a rainy day (it's gonna rain)

Talk to SEVERAL BK atty's for free before choosing one. Even if you find one you really like, talk to a few more before you decide.

Do not re-affirm anything!

Read as much as you can here. This site has been a tremendous help to me. It will be for you also.

Welcome! We are here for each other even if all you need to do is just vent. We've all been there, done that.

The Bajan

[edv112233]

Thanks again. First meeting is today.