Bad decisions, Relocation, and now...BK?

[mixer99]

Due to divorce, I was forced to file chp 7 in 2000, and now, due to wife's pending job loss, and the failed sale of 2nd home (we were relocated), I am staring BK in the face again.

Here are some facts:

*Filed BK7 in 2000, May
*75K income for me
*35K income for wife
*$500,000 in home debt (2, 250K homes)
*125,000 in CC debt
*80K in car debt
*Wife has been told she will likely be downsized in 3 mos
*I will receive a 10K bonus next month
*My old home is up for sale via corporate relocation, but benefit expires in 90 days (could make 25K in equity)
*Currently getting 2K in rental for old house while waiting for it to sell
*99% of debt is in MY name solely and alone due to wife's credit being trashed (much better now) due to divorce

Questions:
*What type of BK would I qualify for now since new rules?
*Can I keep my spouse out of the filing?
*Owned new house since October of 06...can I keep it?
*Owned one car since March...can I keep it?
*One car is about to run out of warranty...can I let it go back?
*Can I keep my primary home...if so, what happens to the old house if it doesnt sell in 3 mos. Can it go?
*What is the best possible thing to do here from a merely BK perspective?

Many thanks to all in advance for advice, help, and encouragement!

[keepmine]

First thing, see where you stand on the means test.

http://www.legalconsumer.com/means-test-calculator/index.php

Secondly, it's 8 years between filings for a Chapter 7 per bk reform.
You may file bk without your spouse. Likely, you have no equity in your home or car so those could be reaffirmed. Since you're likely underwater in the car, you may think about letting it go in the bk.
What state are you in and what state did you move from? If you live in your new state for less than 2 years, you must use the previous states exemptions.

[SinkingFast]

If you file BK soon, it will have to be a Ch 13. New Law is 8 years between filings if you wanted to try for a Ch 7.

We'd need to know what State you live in and your total household count to give you an idea if you'd even qualify for Ch 7 come next May.

If you changed States, and you haven't lived in the new State for 2 years or more, you'll have to use your old State's Exemptions.

With 2 houses, you'll have to claim your Homestead on one. We had a Member who was in a similar situation as you. Moved from Iowa, I think, to Tennessee. Had 2 homes. They put down something like $10K on the new house. The Trustee allowed the Homestead Exemption on the Iowa house and wanted $10K cash from the people filing BK.

New Law is sticky when you own more than 1 house. You might be best off to wait until you sell the one to file.

Also, with the look back on income being 6 months,......... And you having Wife's income for at least 3 more months,.......... And getting a bonus,.......... You might definitely wanna wait until your income levels out to file.

[JollyGG]

I'm guessing with almost 100k annual income that you probably won't qualify for a chapter 7. What state are you in? What state did you move from? How long have you been in your new state.
You can file a chapter 13 as more than 3 years have passed since your chapter 7 in 2000. In either a chapter 7 or a chapter 13 you can usually keep your home and car. You can file by yourself even if you are married it just makes the means test slightly more confusing. Meet with several bankruptcy lawyers. Most offer a free initial consultaion. You will be able to learn alot about your situation and about your options. Then your wife and you can determine what your best course of action is.
The new bankruptcy law base a lot on your last six months of income. If your wife is going to be loosing her job you may be better off waiting until your income over the last six months shows her unemployment or new job situation. Waiting several months would also give you more options as by then 8 years may have passed since your chapter 7 bankruptcy and assuming you would pass the means test a chapter 7 might be an option.

To help us give you better advise please tell us the following.
What state are you in? What state did you move from? How long have you been in your new state?
How many are in your household?
How much equity do you have in your home and cars?

[mixer99]

Hi everyone...thanks so much for the replies...Here are some answers:

*Stayed in same state of Mississippi when relocated (now in Memphis, TN area, but still MS)

* 4 people in household (2 adults, 2 kids under 10)

* zero equity in cars...in fact, -10K on one and -15K on the other

* New house and old house were bought with zero down, 100% loans on interest only 80/20 loans...so, probably some equity, but not tons I dont suspect

*I dont have any savings, no 401K anymore...nothing but checking that gets sapped every 2 weeks. Completely maxed on all cards and lines of credit, but still 100% current on all obligations....barely.

Did I leave any answers out? If so, please remind me of my ommissions.

[SinkingFast]

The Median Income for Mississippi is $49,268/year for a family of 4. So, it sounds like you're way over that. Looking like a Ch 13 if you file.

But still, there's the income issues. Wife's income for possibly 3 more months and the bonus. If you can wait 6 months past the time those drop out of the the 6 month CMI, your Ch 13 payment will be lots lower.

You can file sooner, and as changes occur, you can try to amend your Payment Plan, BUT,........ A lot of what can happen depends on the Trustee and/or Judge you draw. You file with the higher income and the bonus figured in there and you may be stuck with a higher payment structure.

Since you're current on payments now, I'd ride things out for a while. Let your income settle down. Get the house sold. Take the proceeds from the sale of the old house and convert non Exempt cash into Exempt assets that can't be touched when you do file BK.

If you don't have a 401K with your new employer, start one. Roll money into that. Pay some extra principal on your current residence.

Take time to Consult around. Find the attny you wanna work with. Gather your docs. Get ready to file when you need to.

[mixer99]

Thanks for the reply. Question on the 'exempt items'. Are you saying I should take the home sale proceeds and pay towards principle on the house...since cash is non-exempt? Can you give me some more examples of exempt items or point me to a sticky please?

Also, from an income perspective in chp 13, how much are u allowed to contribute to 401k? Obviously I would rather be paying myself via 401k and my take home pay be less, thus interpreted as less income by a BK trustee, but I dont know what the rub is here?

[lrprn]

Question on the 'exempt items'. Are you saying I should take the home sale proceeds and pay towards principle on the house...since cash is non-exempt? Can you give me some more examples of exempt items or point me to a sticky please?

Take a look at the Mississippi exemptions here - http://www.bankruptcyaction.com/msexemptions.htm . They are very straightforward - you can only use state exemptions, your homestead exemption is $75,000, and your personal property exemption is $10,000. That's it.

It can be risky shifting large amouts of money around before filing. You really need expert legal advice from an excellent Mississippi-based lawyer to know if it's safe to take proceeds from house #2's sale and plow it back into house #1's mortgage.

Also, from an income perspective in chp 13, how much are u allowed to contribute to 401k?

Recent bk court decisions have supported making retirement payments during Ch 13, but how much you can contribute every month varies from district to district and from trustee to trustee. For example, in our bk district, our Ch 13 trustee caps retirement contributions at 5% for each debtor. Again, this is a good question to ask an experienced Mississippi bk lawyer who is familiar with local bk court and trustee customs in this area.

[mixer99]

Great advice everyone. Thanks bunches! I will update everyone as to how this turns out...Obviously, this isnt an overnight situation, good or bad, so I will be lurking, posting occassionally, and reading a lot, along with talking to a reputable (?) BK attorney as advised.

Many thanks again!

[lrprn]

a...long with talking to a reputable (?) BK attorney as advised.

Actually we would recommend that you make appointments for free consultations with at least 3-4 experienced bk lawyers in your area. You have a complicated situation with two homes and high income. You are going to need a good lawyer to see you through this.

Interviewing more than one will give you a great opportunity to run your unique situation through several lawyer "filters" plus get a sense of who you think you can work with best. Retaining a good bankruptcy lawyer is *not* a "hire the lowest bidder" operation!

[JRScott]

I'd suggest talking to 3-4 bankruptcy attorneys for free consultations. Most likely due to your income you'd be put into a Chapter 13.

You'll want to wait until at least 6 months after the bonus is paid. This is so that it will not figure into the household income for the bankruptcy. The lookback is 6 months now and then they double that to determine a yearly.

Your situation is very complex and I'm not sure what other advice I can give. I'd start scheduling those consultations. Be prepared for your interest rates on the credit cards to skyrocket if you have them all maxed out due to that universal default clause. If your income was lower I'd suggest just stop paying them, but given your income and that it looks like a chapter 13 I'm not sure that's a good idea .

[yeahdischarged]

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