to File or Not to File

[ifly2007]

I'm now confuse after reading post to file or not to file.
my husband and I lost our home Nov5 due to foreclosure auction and my lender told me that we'll be receiving a 1099 at the end of the year. Below are all our expenses with credit to better explain my situation.
Car 1 $606 7.05% will be paid off in 3yrs
Car 2 $248 10.50% will be paid off in 5yrs
Cc1 $14,000 23.9% min pmt $398
Cc2 $5,000 23.9% min pmt $170
Cc3 $500 18% min pmt $16
Cc4 $1,000 0% til apr08

Do you think it's worth it to file a BK? We have a negative on the house more than 50K.

[HHM]

We need more information to even attempt to give you an informed opinion

1. What state do you live in
2. How big is your family
3. What is your total, gross, household income.

[ifly2007]

We need more information to even atempt to give you an informed opinion

1. What state do you live in
2. How big is your family
3. What is your total, gross, household income.

We lived in Las Vegas, NV
Just me and my husbnd
Gross income about 65K for both


Thanks

[HHM]

The bad news, the median income for a family of 2 in Nevada is $56,258

http://www.usdoj.gov/ust/eo/bapcpa/20071015/bci_data/median_income_table.htm

And your combined income is well above that amount which means you will have to complete the means test

http://www.uscourts.gov/rules/BK_Forms_06_Official/Form_22A_0407.pdf

to see if you can file Chapter 7.

Your credit card debt is a little less than 1/3 your gross annual salaries, so it is not inherently unmanageable. Plus, I believe NV is primarily a "power of sale" foreclosure state which means the bank cannot seek a deficiency balance against you, assuming your home was foreclosed with "power of sale clause" and not a judicial foreclosure. But you will have to double check that fact.
The 1099 is a different issue...even if you filed BK, you could not get that tax discharged in the BK. But keep in mind, you may be able to qualify as insolvent for IRS purposes (IRS Form 982) and not have to pay income tax on the deficiency balance.

You may want to discuss your situation with a couple of BK lawyers, consults are typically free. And I know rents are fairly reasonable in Las Vegas (3br 2.5ba houses, 1800 sq ft, for about $1,400). Thus, I am not sure BK is your best option at this point.

Read this thread and do the calculations for your debt.

http://www.bkforum.com/showthread.php?t=11328

[ifly2007]

to file or not to file?

I consulted a bk atty today and was told that I can file for ch7 both me and my husband, and that the 1099 will be included. If I will retain her I will have to pay $175.00 as down pmt ($1399 atty fee) She did ask me if we earn 57K in the past 6mos, (i was in diability for 2 months) Now my only concern if there's a possiblity that this can be converted to a ch13 which i'm hoping not to happen because i cannpt surrender one of our cars due to my step-dad co-signed me on this loan. and she didn't mention anything about the means test.. i wonder? any advise?

[HHM]

"Including" a debt and "discharging" a debt are different things. ALL debts are included in your BK because you have to list ALL debts. However, some debts are non-dischargeable. Income tax liability incurred in the prior 3 years before filing is non-dischargeable. Thus, the 1099 tax liability on a deficiency balance, being that it is income tax, is NOT discharged in BK. You still have to do Form 982 to demonstrate insolvency.

[CindyLou]

My 2 cents here would be if the OP files BK before the creditor writes off the debt then the 1099 cannot be issued therefore no tax liability created. I think that's probably what he and his attorney are thinking...It's all a timing thing.

[HHM]

My 2 cents here would be if the OP files BK before the creditor writes off the debt then the 1099 cannot be issued therefore no tax liability created. I think that's probably what he and his attorney are thinking...It's all a timing thing.

The house was auctioned on Nov. 5. The foreclosure is already complete.

[ifly2007]

to file or not to file

The house was auctioned on Nov. 5. The foreclosure is already complete.

I have another bk atty consultation tomorrow and I will ask if the 1099 will still be issued even if I file BEFORE or i will still received it due to foreclosure was done BEFORE filing. We just trade in my car last Oct of this year which was a month ago and we wanted to keep it do you think the trustee will have interest on it or will have me surrender it? the atty told me to keep the pmt current and we'll be able to keep besides there's no equity on it. the other car that my husbnad drives will be paid off in 3yrs we do have a huge monthly pmt on it but wanted to keep it because my step dad co-signed me on that and I dont want to ruin his credit because they ask me to surrender it. Do you thinks there's a possibility? Thanks