Thinking about filing chapter 7 in Alabama?

[briansmith]

I Don't really care about losing my belongings, but my wife has a car that's close to being paid off and a nice bedroom suite that she bought prior to our marriage. We also have a car in both our names valued around $1500. We both signed for it when financed in 1999.

My wife doesn't intend to file with me . From what I've read her belongings should be exempt. I passed the online means test. I have three assets, 1 car ~$8000, 1 Truck nada value~$15000 owe ~$10,000, and a boat worth ~$2500. We are current on mortgage and intend to keep our house that has maybe ~$5000 equity if any. I have over $40,000 CC debt and I'm 2mos behind on 3 of 4 cc's. We both have long term employment and were getting by until our second child was born and my wife took maternity leave.

If I file i will need to do so soon before the 6mos. average income no longer includes the months my wife took maternity leave. Otherwise it will be hard for me to pass the means test.

Am I correct in my interpretations that my wifes property is exempt? Does Chapter 7 look like a good option for my situation? It's kind of a now or never situation for me due to income.

I'm gathering bills, bank statements, and our paystubs for 6mos. before consulting with a lawyer. My wife has only been marginally cooperative up to this point i believe due to fear on her part. I have considered pro se filing but I believe this case my be too complicated for me to handle myself. I have a close friend of the family that was a paralegal but I'm unsure what area of law she worked in. I'm in need of advice and guidance.

[keepmine]

You do know how skimpy Al. exemptions are don't you?

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

I'd be upset as 'ell over giving up over $15K in assests.
Have you thought about selling the boat and the 2 vechicles and drive that jointly owned older car and use the proceeds to paydown that cc debt? You'll also get a jump in income due to not having to pay insurance.
If your wife is going back to work soon, your combined income might make paying those cards easier if, you've paid them down substantially.

[briansmith]

Her income doesn't even cover her portion of the bills. She has ~$25,000 cc debt herself and makes a little over half of what i make. I fear that if I pay the cc down I will be forced to use them again when murphy strikes. My wife has 36,000 in a 401k that i've been basically subsidizing She can use that to pay off her debt since I've basically used my money to pay bills to allow her to contribute to a 401k. I haven't used my credit cards for over a year and the balance has not moved.

Now with late fees and apr increases that are shure to come I'll be lucky to pay minimums. I see chapter 7 and taking control of the finances from my wife my only good option. I can't make her do anything. We've been here before but the profit from our home sale saved us then. I won't use a cc again and if my wife can't do the same we may have to part ways. She won't work extra unless it's mandatory, only works 2 days. I've increased my annual income about 30% 2 years ago and we have only gone deeper in debt. We have had an overdrawn checking alomst weekly for over a year now.

The joint owned car has 230,000 miles. The ~$8000 car has been on market before, and the boat has a small market this time of year and needs some work.

[briansmith]

At this point i don't feel like i even deserve to have my possessions. I used to pay cash for everything and deposit my portion of the bills. Since we are paid via direct deposit i lost some control over our finances. I intend to open a separate checking acct. and transfer money into our joint checking for needed items and bills. It may take missing a house note or a shut off utility to get her spending habits to change. I know this is sounding like a power play but it's time for more serious tactics

[AngelinaCat]

Her income doesn't even cover her portion of the bills. She has ~$25,000 cc debt herself and makes a little over half of what i make. I fear that if I pay the cc down I will be forced to use them again when murphy strikes. My wife has 36,000 in a 401k that i've been basically subsidizing She can use that to pay off her debt since I've basically used my money to pay bills to allow her to contribute to a 401k. I haven't used my credit cards for over a year and the balance has not moved.

Thank you for contributing to your wife's 401K. Now, DON'T TOUCH IT! That is an exempt asset and is for your future. Nor can a trustee take it, unless you take money out of it and co-mingle it with non-exempt funds. Plus you will have income tax consequences.

BTW, this Cat IS a Murphy....

[briansmith]

I was simply stating that she has a viable alternative to bankruptcy where as i do not. I'm aware of the tax penalties. I would prefer she not use the 401k money to pay her credit cards because in no time she would most likely run up the balances again.
I'm ready to rid myself of this immovable object known as cc debt.

Since no one answered, Are my wife's property( car etc.) exempt from the bk estate since i will be filing alone? We are a common law state I believe.

[Pjmax]

Hi Brian, sorry I'm not knowledgable in common law BK's, but I'm sure you'll get more advice soon. I do want to ask though, if you BK YOUR CC debt, will you be OK paying all your bills after BK? If there will still be a shortfall post-BK, it doesn't make sense to BK until you have a workable plan. Also, I think it's crazy to go into debt to fund your wife's 401K, when she might liquidate it to pay her CCs, and if she filed also, that 401K would be exempt.

Most BK attorneys offer free initial consults. Set up appts. now with 3-5. Type up a 1-sheet page of info, listing assets, income, expenses, etc. It doesn't have to be exact, just enough to give an attorney an overall look at your situation. We have some very wise experts here on BKF, but every district/trustee has their own peculiarities, and an attorney well-versed in your area should have first-hand knowledge of what will fly or not.

[Drazil65]

Hi, if you are going to file on your own then you will most likely want to open a separate bank account anyway. In case one of your creditors makes a move to freeze or seize the money in your account. At least her account will be ok provided your name is not on it at all. From the sounds of things it will be better for you two to have separate accounts as she will not have the money available to her to take. Although that may cause her to use her CC's more often at least she cannot touch what is in your account.

Cash is a wonderful way to go, not easy and you have to say "no" a lot but in the end the quality of life is so much richer. Good Luck.

[keepmine]

Her property doesn't need to be listed.

[briansmith]

I thought it was crazy too, contributing to a 401k when we were unable to pay cc bills. All I can say is we are married with kids so i can't stand as firm on issues as i once did. Once my debt is taken care of and I open a separate checking acct i think I'll be able to keep us or atleast me from going back into debt. Almost everything i pay in cc debt and car payment can go toward emergency savings, roth ira, tuition savings for my girls. Etc. We can't go on living the lifestyle my wifes friends and coworkers do. I offered to work 4 shifts if she would work 3 so we could eliminate this debt. We're both nurses and work 12hr shifts. She would not agree. She's got used to only working 2 shifts a week. So now that my 2nd was born and she recieved very little pay during a long maternity leave, I have the ability to file chapter 7. I'm seriously considering it.