Our situation (long)

[Mynameis]

Okay, I have spent the last hour or so reading through posts, and I have learned a few things, I have also been scared by a few things.

I'd appreciate any feedback. All we have done so far is researched online a little.

It all started last year, actually 2 years ago. We put our house on the market, and even though it took about 10 months to sell we still managed to take zero time in thinking over the purchase for the new house. BIG MISTAKE. We are in over our heads with the mortgage and have racked up credit cards over the past year to live lavishly. Because of a personal issue my husband quit his job of 7 years last July and didn't get a new job until Nov (a much lower paying job), and I had not worked in 4 years. I just got a job in Feb that I LOVE, it's an amazing company with definite long term potential. I read another post that stated the person was told to QUIT their job. This is NOT an option. What is the reason for not working until after this "341"?

Well here are the very depressing numbers...
income
me- around $1700/month take home (and I can usually work about 5 hrs of overtime a week on top of that-but not guaranteed)
husband- $2000/month take home + bonus of $0-$600+/month
total $3700/month

Now the fun part... EXPENSES
mortgage 2 loans-totaling around $2000
Hoa- $85 ( I hadn't made any payments. I just got a letter something about a Lien, so I had to send them $435!)
car payments-$300/month to my mom who's name the car is in (I can't have this included in the BK)... in fact we REALLY don't want to tell any family about this b/c of how bad we screwed up last year.
My husbands car was purchased with cash about $5000 03' Ford Explorer. WE NEED 2 cars
Utilities $200/mo. avg
water/trash $50/month
Daycare....... we were paying around $830/month! The kids will be put in a home daycare in 2 weeks and that will drop down to about $500/month
Internet/phone/cell phns $200/month (We could probably survive with out these services for alittle while, although the cell will be hard.
Groceries- A shot in the dark would be about $300
Gas $200/month
I think thats it... total is $3835 ..... BEFORE CREDIT CARDS! YIKES!

Credit Card balancesTotal $30,100 HOLY SH*T... That's the first time I've seen it totaled up.
question- The Am ex $1500 & Musicians friend are both under my husband and they have not been paid in quite awhile maybe January atleast. We are receiving calls and letters from this NCO group, but hen we are also still receiving the statements from the company. Who do we pay? If we could pay that is.

Now our house was supposed to be $350K, but we almost backed out so they knocked it down to $309K, and that's exactly what we owe due to an interest only loan. The markets gone way down, and not sure if we could sell it and make the $309K especially after realtor fees.
But we would really like to keep our house. 4 years being homeowners and last month was the first time ever paying over 30 days late. This month will be over 30 days late, and May will more than likely be over 30 days late.

Wow... if you made it through to hear I will tell you something else, as far as possessions my husband has quite the studio in our home, all paid for in cash, Retails probably around $10K, Now used and resale Val more like $5-$7K... He REALLY doesn't want to have to get rid of it. He lives for this studio & making music. Do we have any choice?
I can't think of any really significant purchases made on the credit cards except for a breast augmentation that was $5800.
When these things were purchased we had pre paid our mortgage payments and were sitting on a good amount of money. This was when both of us were not working from July-Dec due to extreme personal circumstances.

That's that. If you made it through, Thank you so much!
Advice/Input on what we will/should/have to do?

[jal1129]

Welcome! Biggest thing you left out that we need to know in order to help you is what state do you live in and have you lived there at least 2 years. The state exemptions and median income will be the biggest indicator in if you can file chapters 7 or 13. I know in another thread you said you were a couple of months behind on the mortgage. If there is any hope of going 7 you must be current on your mortgage when you file.

edited to add: Also how many kids to you have?

[jal1129]

Sorry just reread you post and you gave your take home income, but what is your gross income?

[Mynameis]

Wow Thanks for replying!
I'm in AZ we have lived here over 2 years. We have 2 kids.
My gross monthly is $2208
My husbands gross monthly $2253

If we don't pay towards the credit cards we could probably pay May mortgage before 30 days late. Now do we have to keep it current through out the entire process? And is it okay to not pay on any of the credit cards at all during the BK process, it's the only way we'll get on track w/ the mortgage?

[rrockinggramma]

ok, number 1, pay the mortgage and the car (use a check or money order so you can show that you make the payments on the car, even though not in your name) Keeping your house is number 1 so don't be late on that payment. Let the credit cards go. then gather up all your info, tax returns for last couple of years, last 6 months of pay for both you and your husband, all of your bills, all of your expenses (300 on food for 4!!! wow, that could be a lot higher) and then make an appointment with a good attorney in your area. He/she will be able to let you know if you qualify for a chapter 13 or a chapter 7. Stay current on that mortgage and car and forget the rest (except utilities). And, in my opinion, because of the studio etc, I would file a chapter 13. That way you get to keep your assets but the kicker is that depending on what it is worth (if the trustee took it and sold it etc) is what your creditors (included in your chapter 13 and who file claims) would have to be paid. As you have no equity to speak of in your home, then you might be able to exempt the studio and the vehicles, depending on FMV etc. But all this is detail and a good attorney can tell you what is best option for you.

[SinkingFast]

According to the Median Income chart:

http://www.usdoj.gov/ust/eo/bapcpa/2...anstesting.htm

The Median for a family of 4 in Arizona is $63,076/year.

http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm

Based on the gross you told us, you and Hubby earn $53,532/year. You should be able to qualify for Ch 7.

As RrockingG and Jal said, any thing you wanna keep thru Ch 7, you must be current on. House and car(s). You wanna keep them, you gotta be current.

[Mynameis]

Okay cool. Thank you.
You think we will have any problems along the way that I should be prepared for given our situation?

Also, is it hard to rent a house after a bankruptcy? We want out of this mortgage, so when the market levels off we'll be selling it and paying half on rent for the same size house. Unless of course we both get raises and can live comfortably b/c we do love the house.

Thanks so much for your guys' input!

[spell]

So, just to get your details. You're looking to file a Ch7 and get out of the house. Based on your % of takehome pay, it doesn't fit.

Rentals after BK aren't that hard. Expect some LLs to not even look at you, don't take it personally. Aim less at large corporation style apartment and more at ones that will look into your details. If you can show that you dropped a $2000/month payment in favor of their $1200 payment in addition to the rest of your debts, it'll explain itself.

[sofarindebt]

The only thing I can think of

is that you understated your expenses. What about?

-vehicle maintenance/tabs?
-haircuts
-hygiene products
-any pets?
-medical expenses (including tylenol, etc.)
-insurance


I think you have a lot more expenses than you think.

[SinkingFast]

That house payment is HUGE in comparison to what you have to live on. That house costs you roughly 50% of your monthly net.

You seriously need to step back and take a look at your overall situation.

As much as you love this house, when did your debt really start building?? If you think back and realize your debt started to build after you bought this house, that should tell you something. The house is literally eating you alive. You're paying to live there and charging other necessary expenses in your life.

If you quit paying all CC's, can you manage a "Cash and Carry" lifestyle??

Doubtful.

It takes every penny Hubby brings home just to pay for the house. Then half of what you net goes to pay childcare.

If you don't take a moment for a serious reality check and commit to some lifestyle adjustments, then you have a far bigger problem than filing BK can address.

[Mynameis]

So, just to get your details. You're looking to file a Ch7 and get out of the house. Based on your % of takehome pay, it doesn't fit.

Rentals after BK aren't that hard. Expect some LLs to not even look at you, don't take it personally. Aim less at large corporation style apartment and more at ones that will look into your details. If you can show that you dropped a $2000/month payment in favor of their $1200 payment in addition to the rest of your debts, it'll explain itself.

No, we want to keep the house.... for now. How does that work including your house in a bankruptcy? Its $309K... An apraiser could probably justify an appraisal around $309K, but it would sell for about $280-$290K probably.

I was asking how hard it is to rent b/c we will probably sell this house eventually. Which raises another question, when the time comes and we can make enough to cover the entire mortgage can we sell our house to get out of it if we've done a recent bankruptcy?

[Mynameis]

Wow...aren't you the blunt one...
Thanks actually, I love when people tell it how it is.

That house payment is HUGE in comparison to what you have to live on. That house costs you roughly 50% of your monthly net.

You seriously need to step back and take a look at your overall situation.

As much as you love this house, when did your debt really start building?? If you think back and realize your debt started to build after you bought this house, that should tell you something. The house is literally eating you alive. You're paying to live there and charging other necessary expenses in your life.

I know our mortgage is huge, but it was going to be $50K more, we almost backed out and they ended up taking $50K off the sales price a week before we signed the papers. Plus it was supposed to be even lower b/c we were going to put the money we made form our old house that we sold towards the 2nd mortgage which is like 10 or 11%. Long story short, last year my husband had to quit his job (or else we wouldn't still be married) and he stayed home for awhile with me. We worked on our relationship with each other and with our kids. We were able to make it through a ton of painful issues and now have an incredible marriage. I totally realize this was a stupid, irresponsible, and immature thing to do. But I also know I'd be a total train wreck and 4 peoples lives would be COMPLETELY turned upside down if things hadn't played out like this.

If you quit paying all CC's, can you manage a "Cash and Carry" lifestyle??

Doubtful.

My husband and I are the type of people who can do anything we put our minds to.
Apparently we were putting our minds to spending a lot of money over the last year or so.... ;)

It takes every penny Hubby brings home just to pay for the house. Then half of what you net goes to pay childcare.

If you don't take a moment for a serious reality check and commit to some lifestyle adjustments, then you have a far bigger problem than filing BK can address

What might that be? Not being sarcastic or anything...
Just curious what this bigger problem is that you talking about?
Being completely clueless about money? Addiction to spending? Please do tell!

Actually we have been more responsible and well off on average jobs than most people our age (up until now). Since I was 18 I've had rent, credit cards and & other bills, that I never once paid late. When I met my husband at 18 1/2, I took responsibility of helping him pay his bills on time. We bought our first house when I was 21, had two kids, and bought our 2nd house last year (at 24, hubby was 28). We NEVER made one mortgage payment late for the 4 years we've been homeowners. We paid off 3 car loans and various lines of credit & equity through our bank. Our credit was around 710 when we bought this house.

The whole situation was unforeseeable... (is that a word?)

Anyways, we want to live a simpler life. But if we include our house our families will know and that will devastate them... my parents are pretty well off, have always made smart decisions financially, and tried to help educate me and give us lots of advice along the way. I'm pretty sure they would either A)Offer to take equity out of their house (they have about $500K equity) and help us pay off our debt...
or B) Have a heart attack and then offer to take equity out of their house, they have about $500K equity and help us pay off our debt...Oh, and never let us live this down...
I'd rather have option C) keep it private

Over the next few years our lives will change a lot...we will receive pay increases at work, both our kids will be in school full days (no daycare $) and we'd like to get rid of this house at some point (Its forecasted the market here will increase by 11% in 2007)...all we want to do is break even, and rent something the same size & less than half what we pay here.

Am I still out of my mind?
Obviously we're not the best decision makers (insanely impulsive).
Its good getting feedback, especially such honest feedback!

Thanks!

One more question will this car be an issue in keeping the BK under wraps. Its financed by my grandma and my mom has power of attorney and full control over her finances.

[wrinkleigh]

I truly dont mean to sound harsh -- but I really believe that you need to face the gravity of your situation, and get over worrying what other people think about you.

If you cant afford the house -- get out of it, file bk and be done with it so you can start over. Dont keep putting on a happy face for your parents when you are being eaten alive. Your house payment is so high -- if you borrowed the money from our parents, you wouldnt be able to pay it back. Then you put their house in jeopardy.

As for their opinion -- if they want GIVE (not loan) you the money with no strings attached -- then they can have a say so. If not, tell them you are doing what is best for your family and they need to respect your decision as an adult.

You have also admitted that you are an impulsive shopper. You have got to cut up those cards, and maintain a cash and carry lifestyle. It is a lot easier to say no to a $100 purchase, if you only have $25.00 in your wallet. Believe me, as a fellow impulsive buyer, I understand all to well. It literally hurts me when I cant buy what I want. But I get over it, and it will serve me well in the long run.

I have learned many lessons during my bkruptcy, and I didnt enjoy a single one of them. But they were necessary to put me on track, and I hope to take my fresh start (hopefully) and not repeat my mistakes of the past. One of these lessons included telling my parents the truth about my financial situation.

Good luck to you, it sounds like we have a lot in common. We are all here for you during this difficult time.

[tay666]

My husband and I are the type of people who can do anything we put our minds to.
Apparently we were putting our minds to spending a lot of money over the last year or so.... ;)

If you quit paying all CC's, can you manage a "Cash and Carry" lifestyle??

Doubtful

The question here isn't if you have the resolve to do it.
But if it can even be done.
If you eliminate all the CC bills.
Do you have enough to pay all the bills (mortguage, utilities, insurance, etc) and still have enough left to put gas in your car, and groceries on the table?
You need to sit down and look at the hard numbers here.

[SinkingFast]

Life gets more expensive when kids go to school. There's clothes, school supplies, lunches, goodies for the class for birthdays, class dues for parties, etc. The older they get, the more expensive it gets.

There's gonna be Little League and Soccer Club, and whatever outside sport/activity sign-up forms come home. Scouts and such. Some of those things, your kids are gonna want to participate in. Even tho Civic Organizations don't have the high "membership fees" there's still extra expenses.

Scouts go on trips. Camping, rock climbing, horse back riding. Soccer,....... you have to buy cleates and shin guards, and most likely a pair of shorts to match the team uniform jersey. Baseball and softball,......... Minimum you have to buy cleates, socks, pants/shorts, and a glove.

With kids, there's always something. Instrumental music program at school and your kid wants to play the trumpet, sax, violin. Poof! You've gotta rent an instrument.

And as if the formative years aren't gonna be expensive enough, just wait. High School is coming. They start driving. And your insurance rates go out of the roof.

Not to mention High School sports, band, theater, speech, debate, whatever they get involved in. And Homecoming Dances, and Prom, and the Senior Class Trip to Cancun. Costs for clothes and fees and tickets you haven't even begun to consider.

Letter jackets and class rings. And WooHoo if your Son happens to be on the first ever, in School history, State Champions football team. The Booster did pay $100 of the cost of the Championship ring for everyone on the team.

That's not even counting the book from the Library your child damages with paint because they're trying to reproduce the pretty pictures they see. Or the rock, or baseball, little Jimmy throws thru the neighbors window. Or your daughter takes a flying leap of the neighbor's dune buggy and breaks her arm. The little rough patches in every child's life that come along.

It's real easy to think it's gonna be cheaper once you don't pay for Daycare.