New to Bankruptcy

[mkruel]

Hi all,
I am contemplating if I should file for bk. Here's my situation, I recently lost my job last October. I have about 80-90k in cc debts plus 45k in student loan. I was doing ok with paying the credit cards when I was working. It didn't hit me until I received this month's statement from one of my cc that my next min payment is $941 because I was late on a payment for Dec. On top of that I looked at the last payment I made which was $554 and the finance charge was $640 which basicly tells me that I didn't pay anything toward my balance. I am a co-owner of the house (brother is the primary owner) I currently live and financed a car which is about to be paid off in full this March. Any suggestions or advice on this matter whether I should do Chp. 7 or 13 and if doing bk, will I lose the house or car. The mortgage payment has been paid on time each month. Any help is appreciated. Thank you.

[JRScott]

How much equity do you have in the car?

How much equity in the house? (Your share of the equity would be whatever the equity is divided by the number of owners)

Student Loans cannot be discharged in a bk. If they are current, I'd call and ask about the deferment policy.

[Trixie007]

Hi mkruel, and welome to BKForum!

Keep reading here, there's tons of great info & support!

Hi all,
I am contemplating if I should file for bk. Here's my situation, I recently lost my job last October. I have about 80-90k in cc debts plus 45k in student loan. I was doing ok with paying the credit cards when I was working. It didn't hit me until I received this month's statement from one of my cc that my next min payment is $941 because I was late on a payment for Dec. On top of that I looked at the last payment I made which was $554 and the finance charge was $640 which basicly tells me that I didn't pay anything toward my balance.

I've read on here that if your cc balance is more than 40% of your income, your a good candidate to dump that debt. If your rates were anything like mine prior to late pays, your interest rates may now be tripled, quadrupled or more what they used to be! Start doing the real math on your cc's once that happens - they become nearly impossible to pay. In fact, your minimums on the card you mention are very similar to my WAMU account - it went from 1.9% to over 28%!! That was only the jump in minimum payment the first month after default... then it got worse!

Now is the time to take a serious look at your entire situation and figure out your plan, before you shell out the big bucks trying to make these huge payments. I don't think you posted enough info for anyone to really be able to tell -see JRScott's questions, plus --income, where you stand in regards to median/means test for your area.

I wish you well - and keep reading and asking questions!

[Never_Again]

We would definitely need to know how much equity you have in the car and house, and which state you live in, before we could answer if you will lose the house and the car.

[mkruel]

I am from San Diego, CA. I believe the equity of the house is about 400k. I'm not sure because I don't manage the payment. Just know that we are current on the payment each month. As far as the car, the last time I appraised it, it was valued at 7k that was done in July of 08. I am currently unemployed and collecting $900 a month and my min payment on all my cc total is about $1800. Another thing I am thinking of taking some cash advance out to help with my living expense and to pay some of the cc, is that a good idea?

[mkruel]

By the way, thank you for those who have replied. I look forward to hearing more.

[Trixie007]

If half that equity is yours, it sounds like you have too much equity in your home to file a 7... but it sounds like your income may put you in a good position for a 13. Of course, that depends on your previous 6 months income.

Generally, it is not a good idea to take cash advances to live on and pay credit cards but I think you'll read on here that many of us have fallen into that trap! Read all the posts on here about using cc's prior to filing - you shoud be able to glean enough info to point you in the right direction.

[mkruel]

My bad. I misunderstood on the home equity. The approx value of the house is $250k and the loan on the house is $170k so the equity of the house would the difference of the two which is 80k, am i right?

[Trixie007]

Oh! Yes, that's right, and should be fine for a 7! Big difference...

[liz417]

My bad. I misunderstood on the home equity. The approx value of the house is $250k and the loan on the house is $170k so the equity of the house would the difference of the two which is 80k, am i right?

Hi there and welcome! Are you sure that your equity is around $80k? I live in Calif too and the house prices are falling weekly. To give yourself a good idea, go to: zillow.com to check an approx. value of your home. Also Calif has a wildcard exemption as well as a equity exemption. A good place to start here: http://legalconsumer.com/ punch in your info and find out what you qualify for. Good Luck!

[catleg]

You should probably stop paying the cards immediately and if you have anything left on them spend it preferably on "necessities". Probably should try to refi the car to pay the student loans, or get a new car on credit. The loan payment helps eat up your budget.

Finally and I cannot stress this enough, do not file too quickly. You only get one shot every 'x' years. Make the most of it. Clear the decks.

[mkruel]

trixie007 - thanks for the replies

liz417 - I did go to zillow.com and got the approx value of the house which is $250k

catleg - I am nearing my final payment on the car. It will be paid off in full March of 2009. So I won't be refi the car. Also by stop paying the credit card and maxing out or near the credit limit, wouldn't that raise a flag for the bk court.

I am not looking to file bk until prob in 3-4 months when my car payment is done. I have about 4k in credit available to spend on my credit cards. 2 of my cc which are BofA are already closed by them so I prob won't be making payment. BofA was the cc that sent me the statement with a $941 min payment, 27% apr at default because I was a day or two late on the payment in Dec.

[JRScott]

My bad. I misunderstood on the home equity. The approx value of the house is $250k and the loan on the house is $170k so the equity of the house would the difference of the two which is 80k, am i right?

So its 80k total equity. You'd then divide that by the number of owners, if just you and your brother 40k is yours. That is below the allowed amount in California System 1 Bankruptcy Exemptions.

The bad part is your car that you say is worth 7k. Be sure to do a Kelly Blue Book value for the car (or NADA). California's exemptions are not to generous with vehicles. System 1 only allows up to 1900 in equity of a vehicle to be protected. (It might be possible to claim it under Tools of the Trade though and protect up to 5k equity in the car....depends if it qualifies).


System 2 allows slightly more for the car but much less for the house and you couldn't protect your home under it.

You should consult with 3-4 bankruptcy to be sure which option is best for you.