Will Appreciate Any Information

[harry49]

1. I am 26,000 dollars in credit card debt due to medical bills, the expenses from not working for 2 years, and money lost to gambling.

2. I work now and make appx. 28,000 per year.

3. I live in a house that was my mother's (deceased) and now jointly owned by myself and my brothers and sisters (do not live here).

I am 57 years old.


What are my options to reduce my debt? Is bankruptcy an option for me and how does my shared ownership of the house I live in effect that? I absolutely intend to pay down my debts but I know I am getting into a serious danger zone.

Anyone have advice for me.

Thanks.

[JRScott]

What state do you live in?
What was your income the last 6 months? (not your expected yearly but the last 6 months)
How many in your household?
What is the value of the house? How many joint owners are there?

As for reducing your debt you might could try to settle the debt for less than what it is worth. This is typically best done with smaller debts as you will get a 1099 for this year from them if more than 600 dollars is forgiven.

The bankruptcy question I need the info above....

I would however recommend that you speak to 3-4 Bankruptcy attorneys in your area. Most will offer an initial free consultation.

[Boscoe]

$26k in debt with $28k in income? Hate to say it, but I don't see anyway, short of winning the lottery or getting a big check from a relative, you are going to be able to pay this off in your lifetime.

The entire amount of the debt will go away and you will have a fresh start through a bk, assuming you go this way.

Questions on the house: What % owner of it, are you, and can you prove this? What is the house worth and what debt (i.e. mortgage loans and/or home equity locans) is outstanding against it? If the difference, or equity, is not too large, you should be ok.

But, you should meet with a few lawyers (at least 2-3) and tell them your story. Most all do initial free consultations.

Assuming you can exempt your portion of the house, you should be able to do all of this without losing any assets. And do NOT worry about paying the debt back. I am sure the cc companies have made plenty from you in interest over the years.

[harry49]

"Questions on the house: What % owner of it, are you, and can you prove this? What is the house worth and what debt (i.e. mortgage loans and/or home equity locans) is outstanding against it? If the difference, or equity, "is not too large, you should be ok."

I own 1/4 of the house, and live here. If I bankrupt, will we lose the house? I am in Illinois.

[harry49]

The house is worth appx 90,000 and is paid off.

[Boscoe]

Maybe not.

First off, is it really worth $90k? The market is bad and falling most everywhere. Find a realtor who will do a comparative market analysis on your property, taking an approach of "what price would we need to list it at to sell in the next 90 days?"

I bet it might be less than $90k, say $80k. If that is true, the bk trustee is only bankrupting you, so that would be $20k of your equity, which you can exempt using the federal exemptions. It was $18,450 per person, but I know they just raised it, and I believe raised it over $20k per person. One of the Guru's on this site can find the exact amount.

Assuming this is true, it would not be worth it for a trustee to go after the house. If you owned it 100%, yes. But since you are only 25% owner (and you say you can prove this, which you will need to do), then you may be ok.

[lrprn]

...which you can exempt using the federal exemptions.

Sorry, Boscoe - Missouri is *NOT* a state that can use federal exemptions. For the 15 states than can select their state or federal exemptions, see http://www.bankruptcyinformation.com/fed.htm'

Harry49, in Missouri using your exemptions you can only protect $15,000 home equity - http://www.bankruptcyaction.com/moexemptions.htm . Since the home is paid off and you own a fourth of a $90K house, you have more equity than you can protect if you file. Your trustee may require that you pay him/her your share of the equity above $15,000 to keep the house.

Also the fact that only you are living there and the house is paid off *might* make the house more attractive for the trustee to seize and sell, pay your three siblings their quarter shares, give you $15K in cash, and keep the rest for your creditors. Unfortunately this depends completely on the trustee you are assigned if you file.

You need expert legal help from 3-4 bankruptcy lawyers in your area who are familiar with how the trustees handle situations like yours to know what the best options are for you in the long run. Most bankruptcy lawyers give initial free consultations. Start making those appointments! And keep asking questions here - we'll help you sort things out as best we can. Welcome to BK Forum!

[JollyGG]

I am deffinately not sugessting any one course of action here I am just throwing some options out there.

What would you siblings think of selling the house. With your portion of the equity you could pay of a large part of your debt (or settle with the companies and pay it all off - though not good for your credit and has some tax consequeces). You could then rent for a while.

[Boscoe]

lrprn, if you read his post, you will see that his home is in Illinois, not Missouri. Where I live, we can do either Fed or state - my error for not reading his state first.

Either way, $15k vs. $20k....after closing costs and realtor commission, he should be ok.

[lrprn]

lrprn, if you read his post, you will see that his home is in Illinois, not Missouri.

Obviously I was having a "senior moment" when I posted my reply....looking back I have no idea how I got the idea that harry49 lived in Missouri.....my mistake....sorry about that. However, given that Illinois is a state that can't take the federal exemptions either, looks like I was only partially grazed by the 'stupid' bullet! lol!

Either way, $15k vs. $20k....after closing costs and realtor commission, he should be ok.

Yep, I agree that when adding on closing and commission *PLUS* a really bad sellers market at the moment, harry should be ok keeping his house if he files. Just he should expect that the trustee is going to want him to pony up the $5-7,500 difference to keep it.

Harry49, to find out about what your house is worth on the local market, contact several realtor companies in your area and tell them you are investigating whether selling your home is a good idea or not. Have them come out and walk through the property and tell you (1) what they think it's really worth, and (2) how much you can price it at in today's market. You really want to know (1). Afterwards if they contact you, just say you changed your mind and are not going to sell now. It's a quick and fast way to get an idea of what your house is REALLY worth.

What you DON'T want to use is the county tax appraiser's estimate of your home's value. These are routinely over-estimated to get as much tax money from you as possible!

The only way to get a TRUE estimate of the home's worth is to have the home professionally appraised. That costs several hundred dollars, but might be worth it if the result saves you thousands paid to your trustee because of an over-valued home.

[HHM]

The shared ownership is tricky...assuming their is a good paper trail, i.e. Will (or probate) and the deed has been updated to reflect all owners, then you will probably be ok, as your share (the share the trustee would be entitled too) would probably be exempt.

However, if there is not a good paper trail, or the deed does not reflect all the owners (or has been recorded incorrectly) a BK could be very problematic.

Do you think your siblings would allow you take out a mortgage on the house to cover your debt? Normally, I would not recommend making unsecured debt, secured debt, but you may have to if BK would not work.

[harry49]

What if the house were no longer part in my name? Or is it too late for that?

[JollyGG]

What if the house were no longer part in my name? Or is it too late for that?

Pretty much to late for that. At this point it would be considered a fraudulent transfer to an insider if you signed it over to someone else. Now, keep in mind, we are not saying that you can't keep the house, or that you can't declare bankruptcy. We just want you to be aware that with equity in a house that excedes your state exemptions there are certain risks.
An experience bankruptcy lawyer would know more about how homes such as yours are usually handled by your trustee's. Schedule appointments with 3 or 4 and see what they say.

[harry49]

To tell you the truth, my intention is not to declare bankruptcy unless I have no alternative. I may just try to work more and pay the debt down over time. I understand 28k per year will not pay down 26k in debt. I need to work a 2nd job for a couple years and pay it down.

I have no reserves. I am worried about declaring bankruptcy and then not being able to access any credit if I have an emergency. Right now, my credit rating is 750 even though I have all this debt. I have never missed a payment and have only been late a couple times. The problem is, without savings, I'm going in the wrong direction.

[SinkingFast]

I am worried about declaring bankruptcy and then not being able to access any credit if I have an emergency. Right now, my credit rating is 750 even though I have all this debt. I have never missed a payment and have only been late a couple times. The problem is, without savings, I'm going in the wrong direction.

Harry, dear,.......... You're 57 years old. And have a fabulous credit history if that score you posted is even half way accurate. Chances are good that if you do file BK, you'll recover very quickly.

We were 49 and 50 when we filed. 26 years of very good credit history. Owned several homes in several different States. All paid for. No Foreclosures. No repos either. All car loans paid in full.

We got Credit offers immediately after we filed. We even accepted a CC before Discharge fully expecting it to take a while to process. It didn't. Cards came immediately. We waited until after Discharge to activate the cards.

Crunch the numbers. Look at your options. If you can get a 2nd job and pay off your debt in a reasonable amount of time, then that may be the way for you to go.

Do not fear filing BK because of your Credit. As HHM said,........ A proper paper trail on the house is a bigger concern than getting Credit post BK.