Should I file? Recently separated veteran. Some questions.

[kerberosv2]

I just got out of the military in Sept 2012. While I was in I acquired quite a bit of debt. I have a $28,500 payoff on a new truck that is only worth $20,000. I owe $6,200 on a signature loan, $7,200 on one credit card, $1,600 on another, $1,400 on another, $750, $400, and $300. Plus my wife has Two credit cards in her name, one for $750, and one for $700. Both maxed out. We also owe about $850 to base housing at my last base. This puts us at about $48,000 in debt. Now, I am unemployed, and she works a min wage job and brings in about $200/wk. We haven't missed a payment yet, but if we ever want to get out of my parents living room (me, my wife, and our son) then I need to A. find a job that pay $18-20/hr so we can afford to pay our bills, and still have money for a rent and utilities/groceries payment. Or B. File Chapter 7, and then we will only have out cell phone bill and our insurance on our car. Our second car is a 2001 Neon that's barely worth $1,200. I am pretty sure it is exempt, but I may be wrong. As it is I have declined GOOD jobs because they only paid like $10/hr. It wouldn't have been financially sound to take it because we would be overwhelmed in debt. If I clear my debt, I can accept these jobs, and start to plan for a future.

I have a few questions. Should we file? Will my wife's two cards be discharged if I am the one who filed? We haven't stopped paying the bills yet, but if we ever want to save money, and get out of my parent house, and be able to accept a job that pays less then $18/hr we would have to be close to debt free. Also, our Tax Refund is going to be about $6k this year. Should we wait until AFTER we get it to file? Would we get to keep that money? I would use to to pay the lawyer, and the rest we would sock away to help us get on our feet. What should my concerns be with this?

Our only assets are the truck with the huge debt attached to it, the crappy car that I believe will not be taken (correct me if I am wrong), an enclosed trailer form 1974, a TV, a desktop, and a laptop. The rest is clothing (not good brands or anything) and a few pieces of furniture.

Just looking for advice, and if you have any questions that will help you help me, ask away.

edit: I am in Ohio. Another edit. I do not have hardly anything that was bought with those cards. Most times were sold to get us by the past few years and even recently. Will this be a huge issue?

[btbeme]

Welcome to the forums - and thank you for your service! Some quick answers:

First thought - did you use Ohio as your home of record while you were in the military? BK rules and exemptions vary from state to state, so your residency for purposes of filing is important.

Second - Ohio has pretty slim exemptions, but it would appear at first glance that your debts would be discharged and you would keep pretty much everything. As for the vehicles, the Neon is likely safe. If you wanted to keep the truck you probably could, but do not reaffirm it. However, keeping it would be a mistake in my opinion.

Third - you would most definitely lose the tax refund should you file before you receive it and spend it on appropriate purchases. Ohio allows $400 per person filing, plus a wildcard exemption of $1175. Any amount you have over that much will be taken for sure. So get your refund, use it to buy exempt items (food, basic living expenses, atty, etc) and do NOT use it to pay credit cards or truck payments.

In the interim, go visit a few good BK attorneys and get their advice during a free consultation. Pick the one you like best. Be sure to ask about the base housing bill - not sure how that would be handled.

Your wife's cards would not be discharged if only you file.

[kerberosv2]

Ok thanks for the info. We don't particularly want to keep the truck unless we don't have the payments anymore. Also, my state of residency during my service was still Ohio. As for our return. You say she won't be included in the bankruptcy, so should we use it to pay her $1,400 debt? What else could we spend it on that's exempt? That's a lot of money. We really wanted to hide it away to save for our own place. Ideas? Suggestions?

[keepmine]

Stop paying those credit cards and the truck right now and use the money for your living expenses. Go ahead and get one of those $10/hour jobs ASAP.
Get the tax refund and use that money for your lawyer, moving expenses, deposits,etc. Make sure that neon is in good operating order since surrendering the truck you'll need reliable transportation. I'd stay current on your wifes cards but not pay em'off until you're financially stable.

[kerberosv2]

Ok thanks for the input. Seems the Neon is running well, for now. I am making $400/week on unemployment. Should I hold out for a job that will pay better then that? Take the first that's offered?

[kerberosv2]

Also, the base housing bill. Should I let it fall into collections? That way I can claim it when I file? Probably the easiest way I'd think.

[keepmine]

Ok thanks for the input. Seems the Neon is running well, for now. I am making $400/week on unemployment. Should I hold out for a job that will pay better then that? Take the first that's offered?

Well, you can't stay on UE forever. Plus, the longer you stay unemployed the harder it is to get a job. I'd just say don't worry too much about filing bk right now. Bk will always be there. You need to focus on supporting yourself and family post bk. Be sure you have some minimal safety net in place before you file. You or your wife need a job that offers health care benefits.You don't want to file bk and 6 months later someone gets sick and you have large medical bills you can't pay.
Just stop paying everyone that'll be included in the bk and start living on a cash basis and saving a few dollars.

[btbeme]

We really wanted to hide it away to save for our own place. Ideas? Suggestions?

I am sure you don't mean that you want to hide it from the Trustee, because that is bankruptcy fraud and a federal crime.

I believe that you mean that you would like to use it wisely within the boundaries of the law so that, post-BK, you have a small but growing nest egg, a budget and savings plan, and absolutely no debt to pay. Living within your means, having a track record of savings, and having a long-term job (2+ years) are the keys to being able to get (and afford) a mortgage payment.

[helpmeout]

Let's get to the BK later, I want to address the job issue.

If your only career has been the military and you have no college degree, you are lucky to be getting offered jobs that make $10 an hour. Demanding $18 an hour, which is $37,440 a year gross and without OT, without a college degree or the experience to back it up isn't going to work.

And the more you keep turning the jobs down, the longer it will be before you get the experience to demand that hourly wage.

Here is what I would do if I were in your shoes:

1. Take the job offer that is for $10 an hour. It's better than no paycheck.
2. Once you get that job, start saving (using the $6K refund for that) for an apartment. IMO, so as not muddy the BK due to living with relatives (you can still file, but it does get a bit more complicated when it comes to income and expenses), I would move out.
3. Stop paying all debt. It will be discharged in the BK anyway. Go and read the collections forum. They have some good info on dealing with the collection calls. If your wife isn't going to file, she will be responsible for any debt that has her name on it. And if you are in a community property state, that may muddy the waters. All of this is something that you would discuss with a BK attorney when you consult with one.
4. Do NOT pay any family members money that you owe them. The Trustee can go after that money. Better to pay it after the BK.
5. If you decide not to move, you will need to spend the tax refund on necessary items before you file. BTW, you really do need to adjust your withholding if you are getting that much back.
6. Can you survive with just one car? Can you afford to keep making the car payment after the BK? Because you will have to make the payments (I do not recommend reaffirming) to keep the vehicle. The debt is discharged, not the lien.

Good luck.

2.

[Charlie777]

Thank you for your service. Have you looked in to any transitional services that might be available to veterans in your situation?

I agree with those recommending you take the job.

You need to use the $6K for "necessities". There are six month and two year lookbacks where a Trustee can undo payments from that money. Stop using the credit cards to avoid any question of incurring debt while planning BK. You can either make the normal payments, or as some have said, stop making payments to save up money. I would pay the base housing item.

I think the most important thing to do is to find an attorney and take their advice.

[momofthree]

IMO, you need to move into your own place before you file. Use the tax refund to pay all the moving expenses and start-up expenses for your apartment. Reasoning is that when you file, your income vs expenses are filed with the courts and reviewed by the tt. None of the dischargeable debt is counted. So, if your expenses after bk will be your cell phone and car insurance due to living with family, then that is what will be reflected on your schedules, creating a fairly large dmi, even if you're just making minimum wage and unemployment. The tt will try to push you into a ch.13, essentially forcing you to live with family for the next 3 years.

Like a pp mentioned, stop paying the debt now, save up as much money as you can to set up your household. Get maintenance done on your neon to keep it running well. Ohio car exemption is up to $3450, not sure if that can be split between 2 vehicles or not, but if it can then it may be wise to buy a 2nd vehicle since you and your wife both work (or will be soon). Or, it may be a good idea to just put a new (used) car in your wife's name as she won't be filing, and then I don't think there will be an issue of needing to exempt it (experts, chime in here!). You certainly want to ditch the truck in the bankruptcy though. Keeping it would be a big mistake.

I see that Ohio also exempts household items up to $525 each for up to a total of $11525, so if you need any basic furniture pieces, you could buy those with extra money. I don't know how old your son is, but if he isn't in a twin bed yet, buying one once you're in your apartment, but before filing wouldn't be a bad idea, etc. Things like that eat up a tax refund fairly quickly.

Just some ideas. Good luck and keep us posted on your progress.