Question Multiple accounts with same lender and filing bankruptcy

[Naomi]

Hello, I found this site last night and have been reading through as much as possible because I really had absolutely no clue what is involved in a bankruptcy. But, we're headed for bankruptcy and it's taken me a long time to admit and start doing the research. So, here I am.

My question (probably the first of many to come) is that we have a lot of debt with one bank - USAA. As of now we are current on all bills, but due to a drop in income later this year I don't think it's going to be possible to pay everything.
So, through USAA we have:
Mortgage - 100,000
HELOC - 11,000
Auto loan - 10,000
Mastercard - 17,000

Unfortunately, this is not our only debt. There are other credit cards, but for now I'm wondering how bankruptcy would work regarding USAA accounts.

We would like to stay in the house and keep paying the truck loan ( 3 yrs left) and I don't know how the HELOC works? If we want to keep the house, does it have to be repaid?

Ok, so if we don't pay the Mastercard, is USAA going to get "mad" and can they do anyything with our other loans? I read on here that one poster with USAA had their vehicle insurance dropped after filing. We do have auto/homeowner's insurance with them, but I know that we have to carry insurance on the house and truck...

I'm trying to look at this not so emotionally and more as a business transaction, but I can't help but think of the creditors getting mad at us. I've never been late paying any bill so have never had to deal with the phone calls and threats of collections and whatever else we're going to have to deal with if we decide to file bankruptcy.

[LuciluS]

I did a 'Search' on this forum regarding USAA. Below are some links which might be helpful for you.

http://www.bkforum.com/showthread.php?t=37031&highlight=USAA

http://www.bkforum.com/showthread.php?t=37116&highlight=USAA

I found the below in some of the posts on this Forum:

The details of Obama's Loan ModificationHASP can be found here:

http://www.treas.gov/press/releases/...guidelines.pdf

The Department of Treasury is here:

http://www.treas.gov/initiatives/eesa/

and here the financialstability.gov site that was temporarily up is now replaced with:

http://www.makinghomeaffordable.gov/

This borrower FAQ is pretty informative:

http://www.makinghomeaffordable.gov/...orrower_qa.pdf

Also, go to 'Google' and type in USAA Heloc. Lots of information concerning USAA Heloc. You might be able to do a Loan Modification.

https://www.loansafe.org

We quit paying our credit cards in late Sept. Phone calls started in Oct. By that time, I had paid partial payments to our Attorney & he told me I could give the Creditors his name, phone number & address.

We thought we would be filing in Dec. 2008; however, after searching this forum I found out a 10 yr. payout I had on a QDRO (similar to a 401K plan)
was taxable. Received last payment in Feb. 2009. So we will be filing in Sept. 2009 using Income from Mar - Aug. 2009.

If you have an IRA or 401K Plan, please do not borrow or take money out of them, as it will be considered Income if you file bankruptcy. Plus there are significant taxes and penalties you will incur on your 2009 Federal and State Income Tax Returns.

Also, here is a Means Test written by a Member on this forum to determine if you are eligible for a Chapter 7 or 13.

http://www.johnfire.com/meanstest/wizard.php

Look in the phone book for Bankruptcy Attorney. Call some of them and see if they give a Free Consultation. Set up your Free Consultations with Several Attorneys & take with you the completion of the Means Test. Ask what their total fees will be.

It's early in the morning; however, I'm sure some of the Moderators or Gurus will be able to answer some of your questions in detail.

As several of the members have told me. Filing Bankruptcy is a "Business Decision".

Good Luck

Luci

[keepmine]

The HELOC is a secured debt and if you don't pay post bk, the lender can start foreclosure.
You need to look at your account paperwork and see if there is a cross-collateralization clause in there.

[Naomi]

Thanks so much for the reply. I know most people are not up in the middle of the night. I work 10 pm-7 am so I usually am up thinking about these things.

I did the means test - am not sure I did it exactly right, but looks like Ch 7 would be possible.
The median income for our family size is about $62,000. We will be making about $30,000/yr by the end of the year. Our cc debt is about $30,000 (includes medical/dental bills that we charged because we have no insurance) - I don't have all the exact amounts yet (still not really facing reality, but getting there).
I knew this day was coming and I know it's our fault. I just don't see a way to significantly increase our income and get out from under this. For the last 2.5 years we were "making" an extra $2000-$2500 by going to school. Both my husband and I are prior military and receive GI Bill benefits. We have about 6 months left of benefits and that money will be gone. That is where the panic starts to set in. It hasn't even happened yet and I'm stressing.

[Naomi]

The HELOC is a secured debt and if you don't pay post bk, the lender can start foreclosure.
You need to look at your account paperwork and see if there is a cross-collateralization clause in there.

I will try to find the paperwork and see what it says. I don't know what cross collateralization means, though.

I think if we didn't have the credit card payments, paying the mortgage and heloc wouldn't be a problem.

[LuciluS]

I will try to find the paperwork and see what it says. I don't know what cross collateralization means, though.

I think if we didn't have the credit card payments, paying the mortgage and heloc wouldn't be a problem.

From:

http://en.wikipedia.org/wiki/Cross-collateralization

"Cross-collateralization is a term used when the collateral for one loan is also used as collateral for another loan. If a person has borrowed from the same bank a home loan secured by the house, a car loan secured by the car, and so on, these assets can be used as cross-collaterals for all the loans. If the person pays off the car loan and wants to sell the car, the bank may veto the deal because the car is still used to secure the home loan and other loans. Technically, cross-collateralization expires when the borrower has no outstanding loans with the bank. A cross-collateral provision is widely used by the banks to decrease risk."

[catleg]

All of your USAA loans are secured debts except the credit card.
It is unlikely that the credit card has any cross-collateralization with the real estate or the vehicle. I have been reading up on contract law and the example they use for an Unconscionable contract is one where a rent-to-own furniture store extended cross-collateralization across each new piece of furniture bought, combined with predatory lending. You would probably only be at risk for any deposit accounts you might have with them.
As far as insurance I guess you'd have to ask them. I would think that if you have a vehicle loan with them and you do a "drive-thru" (i.e. keep paying without explicit reaffirmation) then it would be stupid for them to drop the insurance, as it's typically a requirement for the loan. Likewise with homeowners and the mortgage/heloc.
I am assuming here that you want to keep the house and the truck and can afford them post-bk.
Do you have any student loans? They are usually the biggest problem for people, they are normally non-dischargeable.
You are doing very well already by doing research, a lot of lawyers don't give you the complete picture, if you ask questions here there are some good people who will steer you in the right direction and provide moral support (we are all pretty screwed up financially here, I think).

[Naomi]

Yes, we would like to stay in the house and continue to pay mortgage and the heloc also if we have to. The truck is my husband's and there's still 3 yrs left on the loan. It's something we're going to have to talk about more. I think we could afford it because my car is paid for. But it also depends on the exemption for autos which I read as $3500 for GA. Is that total or each person? My car is a 2003 Xterra and the KBB lists between $4000/$5000. So, I don't know if we could even keep both? That's another concern of mine.

No, we don't have any student loans.

I'm so glad I found this forum and will continue to read as much as I can. I don't want to even go into a lawyer's office until I feel that I understand some of how this could work out.