Very long question, advice needed

[poorhouse]

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[SinkingFast]

Here's a link to the list of BK Exemptions allowed in VA:

http://www.bankruptcyforum.com/showthread.php?t=281

Note the post about applying for the Homestead Exemption as part of BK. I read about that at a couple of other websites.

Here's a link to info about Means Testing, Credit Counseling, and Debtor Education:

http://www.usdoj.gov/ust/

You mentioned yourself, your wife, and a new baby. Your current income level is well below the Median for a family of 3 in VA.

If you're able to file a Ch 7, the Trustee may want a prorated amount of your 2006 refund, if you have any. With a Ch 7, your 2006 Return is the only year the Trustee will be interested in. If you take money out of your retirement savings, you could wind up owing big time next spring.

There is a 70/90 day rule in the BK Law. CC use within that period of time, the burden of proof that you did not commit fraud falls on you. Outside that time frame, the burden of proof shifts to the Creditors. But generally speaking, the longer you can wait to file, the better. The more time you put between filing BK and your last charges, the better.

I don't mean to sound harsh here, but, you are gonna have some decisions to make.

As it stands right now, your current house payment exceeds 50% of your family's gross income. That's way out of kelter. That's not even including your car payments.

Even if you secure new employment, there's no guarantee your income will return to your pre lay-off level. Many of us here know that all too well. Loose a good paying job and cannot replace the income level and/or benefits coverages, or both.

You need to step back and take a good, long, hard look at your house, the vehicles you're making payments on, and your total financial situation. I know giving up your things is hard, but it's something many of us here have had to do.

[Peevee]

If you decide to get rid of that 69 bronco. I know someone who might be interested.

[poorhouse]

[Peevee]

I had a classic bronco I restored and ended up selling it and have always regretted it.

[SinkingFast]

Your Homestead Exemption is $5000/debtor. Husband and wife may double. So you'll have to get a pay-off figure from your Lender and a fairly accuate FMV of your home to know where you stand there.

There was also some little statement about dependents being able to claim $500 each on the Homestead Exemption. You'll have to check with an attny to see if you'd be allowed $10,500 since you have a small child.

Any unused portion of the Homestead Exemption can be used as a WildCard to protect any other property you choose. Say after you get your pay-off and you know the FMV of your home, you only have $2K in equity, that would leave you $8K from your Homestead Exemption to apply to cars if you want.

The Vehicle Exemption is $2K for household use. It is not clear if you can double that or not if you file a Joint BK. You'd have to ask an attny.

BUT,.......... Depending on what you do for a living, you may be able to use $10K from Tools of the Trade to apply to a vehicle. If you are in Sales, and a car is necessary for your job, then you could apply that $10K to one of your vehicles.

You'll have to determine the value of your vehicles and then deduct out the pay-off on the one to know how much Exemptions you're gonna need to cover the vehicles.

I hear you about loosing your things. Been there, done that, don't care to wear the T-shirt. We lost our house, a truck, cashed out our retirement, and I sold my jewelry. Including my wedding rings. We sold it all trying to avoid filing, so there was nothing left for the Court to take.

[poorhouse]

Well now we have a problem - Our house appraised for 294,000 we owe 205,000. Thats 89,000 in equity! It would be to much of a house payment to take it all and pay off debts and from what I've read we have to much equity/assets to do chapter 7 without losing them.

Can we even do Ch13 with all that equity and assets?

Will the Trustee/creditors object if our payment is relatively low?

Could they make us sell the house to repay the creditors?

What can we do? The plot just thickens! Is there light at the end of the tunnel? Will we ever see the light at the end of the tunnel?

Any thoughts would be nice... I need an Attorney, unfortunately for us consultations are not available until later next week or after the holiday.

[lrprn]

See my comments below....

Well now we have a problem - Our house appraised for 294,000 we owe 205,000. Thats 89,000 in equity! It would be to much of a house payment to take it all and pay off debts and from what I've read we have to much equity/assets to do chapter 7 without losing them.

Yes, in your state you could have too much equity in your house to file for a Ch 7 and keep your house.

Can we even do Ch13 with all that equity and assets?

Yes, but you'll have to see where you come out on the Means Test. If you don't have enough disposable income to make a monthly payment to the trustee that would equal what your creditors would get in a Ch 7, then you can't file Ch 13.

Will the Trustee/creditors object if our payment is relatively low?

If you have sufficient disposable income showing on the Means Test for a Ch 13, then the trustee won't care if the payments are low as long as it's all your disposable income and the creditors don't have a thing to say about it, even if the payment is so low that your non-secured creditors get nothing.

Could they make us sell the house to repay the creditors?

Not in a Ch 13. Possibly in a Ch 7 - you need legal advice to know for sure.

Although you are thinking bankruptcy right now, I have to ask you a tough question. With $80K in equity, if you sold your house, could that pay off your unsecured debt and get your family back on your feet financially? I know that is a very painful option to consider, but filing bankruptcy is a very serious step with long-term impact on your financial life for the next 10 years too. If your two mortgage payments are geared to a $90K income and now you make $36K, then you are only delaying the inevitable if you can't qualify for a Ch 13. It's hard but necessary to take the intense emotion out of this decision and do what's right for your particular situation to survive financially as a family for the long term. This needs to be a cold, hard-hearted business decision. Think about what you would advise a close friend to do if he offered you the same situation you are telling us about yourself.

If you are just now missing your first payments for your non-secureds, then there's no emergency. You have time to meet with 3-4 bk lawyers after Thanksgiving and discuss all your options.

You might start getting a few creditor calls after missing your credit card payments this month - don't worry no matter what they say, don't promise payment, and don't mention anything about filing bankruptcy until you know whether that's best for you or not. Once you know the harassing creditor's phone number, don't feel like you have to answer the calls either - you don't. And if you want to hang up on them mid-sentence, it's perfectly fine to do so.

Hang in there - keep us posted on what you find out, ok?

[CindyLou]

Selling the house and paying your creditors sounds more sensible to me. I know its hard to lose something, but it sounds like you are in a NO WIN situation in trying to keep the house at your current salary. Also, do you need 3 vehicles? Even if two are paid off you are still paying maintenance and insurance on all three. Sounds like a little liquidating and downscaling might be more beneficial to you than declaring BK because it doesn't appear your assets will be protected. Good luck.