Question Wow, never thought I would be here

[Didit2myself]

thru my own stupidity.

Brand new, just joined a few hours ago and have been trying to figure some things out, but its hard.

My hubby and I came into our marriage nearly debt free. Our first purchase was our home (45yrs old, so not talking new here).
THEN... we got stupid.

We owe on a 2008 Car, 2005 Truck and a 2008 Travel Trailer.
Other then those debts (which are HUGE) we owe $8500 to Home Depot for the remainder of our roof and approx $7000 for a credit card.
The combined total though of all these debts is approx $70-80k now.

Im horrified that we have done this to ourselves. We make every single payment timely, but cant get ahead AT ALL. We have no savings to speak of and had to stop my 401k contributions last fall just to get by. We are considering stopping my husbands as well.

How did we do this to ourselves. I just want to cry that we could be so dumb. The 2008 car is a Dodge Caliber so were not talking fancy stuff here... but it all adds up!!

I guess this is my question:
Our house is over $100k in the negative for our area. So, no equity in there.
We have never, ever made a late payment as I sell stuff first rather then ever allow a single payment to be late.
We make good money you could say, but at the end of the month when bills are paid we have less then $400 to live and survive on for a family of 4. Gas alone costs us $100/wk for our cars just to get to work.

SO.... since we pay everything on time does that mean we may not have any opportunity to file for BK? DH is not happy w/the idea but I see no way out. He is 10yrs older then me and honestly he will be near retirement by time we could get these things paid.

We just looked into getting our home refinanced or a loan modification to help out but were told since we already have a fixed rate and have never been late on payments there is nothing at all they could do for us.

Sorry for the novel.... please be kind. We know this is OUR faults. I have honestly always looked down on others who I have known who have filed for bankruptcy but now I understand, it hit us before we knew what was happening.

On a side note, Im willing to give up all cars/trailer as long as i keep my home. I just dont want to lose my home.

Oh, and in regards to monthly bills... we have nothing out of the ordinary: We have basic cable/internet/phone, the only extras are $28/mos for home security and our cell phone bill which is $70/mos. All other monthly bills are water, electricity, gas... you get the point.

[klandsb]

Ditto ....

I dont know how I ended up here either...I dont know whether to laugh or cry sometimes when my paycheck comes because after everything is paid... Nothing is left... Just because you pay your bills on time doesnt mean u cant file but I am new at this also... Went to 3 lawyers , each one was completely different on there attitude and opinion on what I should do...
I must tell you that the majority of my debt is credit cards...Divorced in 2000 and lived on a so-so income and when things happaned and I didnt have money the credit card companies were very happy to have me as a customer. I tried calling the credit counseling service but my pmts were way high... I did the debt settlement route..DON'T DO IT !!!! Great idea but it doesnt really work... They come after you when u quit paying as they advised me to do and took alot of money along the way...
SO my advice , go to a few lawyers, 1st consultations are free everywhere I looked... Give them the rough figures and see what they advise you to do....ALso, you will get a lot of information on this site...I have spent many of hours on here and got some really good info on things I had no clue about. I am still a newbie and getting my feet wet real quick ... Good Luck

[Keebler]

First, you'll need to figure out if bankruptcy is available to you based on your income and debts and all, and there's tons to read here to help you decide. There's another point I'd like to make...

One mistake many people make (and you seem well prepared to avoid) is postponing the inevitable. For example, people cash out 401k's unnecessarily or take on second mortgages that don't ultimately solve anything. There's no good reason to make things worse by throwing good money after bad!

The first step is realizing that you're on an unsustainable path and begin making the changes you need to set your life straight. Ideally you'll realize that credit isn't your friend and you'll accept that bankruptcy will limit your access to credit and that's not all so bad.

We started living on our post bankruptcy budget and did it for months. It was a difficult change and we learned lots about ourselves. We generally learned that our financial situation was much worse than we let ourselves originally believe.

This exercise served two important purposes. First, it made us live without credit and live on exactly what we earned. (No more and no less!) Second, it made us budget and track expenses and save receipts so that filling out the bankruptcy schedules was a breeze. Remember, Chapter 7 is available when you can show that your expenses consume 100% of your income and leaves no disposable income left to repay your financial obligations.

This "training period" was actually the way our life would be after bankruptcy and it gave us a chance to work things out before we filed. We lived off our income, spent money in reasonable ways and stopped paying unsecured debt and eventually car payments. By the time we filed, we KNEW we were going to be okay and we used bankruptcy to clean up the mess it made.

The end result was being broke and debt-free but we already had many months worth of experience to make out new life work.

The point is that bankruptcy seems like it's the solution to your problem but it's more like the beginning of your new life. All of the changes need to come first and then bankruptcy can give you a new start. Without the changes, the bankruptcy really doesn't solve much of anything.

I'm hoping you find the forum as comforting and helpful as I did when I first came here. There's TONS to learn and you can expect to spend MONTHS in the process. It'll be difficult and frustrating at times but the quality of the outcome is proportional to the effort you put in to it.

[Iwantmyname]

Simply the fact that you are here and considering it is the first step. Now is a chance to become educated and make a good choice. I'd suggest down loading and reading the free BK books in the stickies-- you can do that tonight-- also see a lawyer. Lots of people making "good money" go BK. It's a one time only type thing, and it is not pleasant, but it will help you out if you are qualified.

[Didit2myself]

Thanks for the responses. I have lots of reading to do on the subject.

I see how lots of ppl mention that they stop paying on their loans, etc while filing. That is something that scares me to pieces! Although the money going out is killing us I guess its against my every being to think of NOT paying on a debt I owe. (silly, I know).

Im going to spend some time reading up more on here in the stickys.

[Keebler]

Thanks for the responses. I have lots of reading to do on the subject.

I see how lots of ppl mention that they stop paying on their loans, etc while filing. That is something that scares me to pieces! Although the money going out is killing us I guess its against my every being to think of NOT paying on a debt I owe. (silly, I know).

Im going to spend some time reading up more on here in the stickys.

Your feelings are completely justified and I felt exactly the same way. It's a big deal and not something you should consider lightly. Right now you realize there's a problem and it's time to learn and formulate a plan. Don't change anything until you have a plan!

Maybe for me it was way easier because we had a ton of medical expenses. I HAD to decide what to do and it was easy to decide that my Wife's healthcare was way more important than Visa or MasterCard.

Remember that bankruptcy is going to screw up your credit and the payments you stop making aren't really going to make it too much worse.

For Chapter 7 you'll need to show that you have reasonable living expenses and no disposable income left to pay your debts. If you keep paying Visa $250 a month right up until the time you file, that's $250 a month that you're not spending on living expenses and $250 a month that you're proving you have available to repay some of your debts. If it turns out like that, you'll be Chapter 13 material and you'll spend the next five years under the courts care while you pay back some of what you owe.

[klandsb]

I continue to make my mortgage & car pmt because I am planning on keeping those..I know I make too much for a chapter 7 ... Did you do the means test ??? If not go to legalconsumer.com and take it..
I am a chapter 13 if I decide this is right and will be paying for 5 yrs but I would be paying for 5 yrs if I dont just won't have creditors hounding me and the interest w/be gone... I have to get out of under this or I will loose my mind !!!!!!!

[jadams]

My first concern would be the debt owed to Home Depot for the roof. How is it classified in the finance agreements? Have they attached any contractor's liens to your house? Or was this merely purchases you made on your Home Depot charge to do the work?

I know when I was looking over the paperwork to have my parent's roof replaced they were granted a security interest in the property until the financing was paid off. If this was in your paperwork, it could complicate things if you intend to keep the house. Either way you should still have options, considering your house being underwater so much.

You should explore the options with the house so you can be confident whatever decision you make is the best one for you. Stay in your house because you've made the informed decision it's what you want, not because of the emotional response to not wanting to let it go.

It is $100K underwater. Do you expect the market to change enough in say 2-2.5 years to negate that?

I picked 2-2.5 years because 2 years from BK discharge is when you could qualify again for a FHA mortgage. (It may be 2 years from when the property actually transfers, depends on who you speak to how they read the rules.)

Is it possible your future (retirement, etc.) would be more secure if you were to let the underwater house go, rent for 2 years, and then buy a new property at a lower price and not underwater?

How do rental payments in your area compare to your mortgage? Have a look at the MLS in your area -- how much would a comparable house cost you now? Do a amortization calculator to estimate payments. Is the difference monthly enough to justify the time, expense, and possible risk (risk that values would recover before you qualify for FHA) of letting the house go and buying another?

Or, do you require your mortgage payment as a secured debt expense on the means test in order to qualify for a CH-7?

And, of course, the house could just be perfect for you and you aren't concerned the debt to value because it's worth it for something the property offers you and your family.

I would just be cautious that you're going to come out the other side of a BK filing owing so much on your house that you'll never be building equity for your retirement.


I don't think any of us ever thought we would be here. It's a bit humbling. I prefer to look at is as a chance to rearrange and recover in a better position for my future than before. Try to focus on the positive impact it can have on your life.

Good luck! The people and posts here have been very helpful to me, hopefully they'll make things easier for you too.

[Didit2myself]

My first concern would be the debt owed to Home Depot for the roof. How is it classified in the finance agreements? Have they attached any contractor's liens to your house? Or was this merely purchases you made on your Home Depot charge to do the work?

I know when I was looking over the paperwork to have my parent's roof replaced they were granted a security interest in the property until the financing was paid off. If this was in your paperwork, it could complicate things if you intend to keep the house. Either way you should still have options, considering your house being underwater so much.

You should explore the options with the house so you can be confident whatever decision you make is the best one for you. Stay in your house because you've made the informed decision it's what you want, not because of the emotional response to not wanting to let it go.

It is $100K underwater. Do you expect the market to change enough in say 2-2.5 years to negate that?

I picked 2-2.5 years because 2 years from BK discharge is when you could qualify again for a FHA mortgage. (It may be 2 years from when the property actually transfers, depends on who you speak to how they read the rules.)

Is it possible your future (retirement, etc.) would be more secure if you were to let the underwater house go, rent for 2 years, and then buy a new property at a lower price and not underwater?

How do rental payments in your area compare to your mortgage? Have a look at the MLS in your area -- how much would a comparable house cost you now? Do a amortization calculator to estimate payments. Is the difference monthly enough to justify the time, expense, and possible risk (risk that values would recover before you qualify for FHA) of letting the house go and buying another?

Or, do you require your mortgage payment as a secured debt expense on the means test in order to qualify for a CH-7?

And, of course, the house could just be perfect for you and you aren't concerned the debt to value because it's worth it for something the property offers you and your family.

I would just be cautious that you're going to come out the other side of a BK filing owing so much on your house that you'll never be building equity for your retirement.


I don't think any of us ever thought we would be here. It's a bit humbling. I prefer to look at is as a chance to rearrange and recover in a better position for my future than before. Try to focus on the positive impact it can have on your life.

Good luck! The people and posts here have been very helpful to me, hopefully they'll make things easier for you too.

Interesting info on the roof, I will definately look more into it. I honestly have so much reading/research to do Im not sure what is best at this point.

I plan on taking time out tomorrow to start going thru and writing down EVERY single account/debt/bill we have. I figure that will get me started in a good direction... seeing it all on paper scares me but I know it will help lead us in the right direction.

[lrprn]

I honestly have so much reading/research to do Im not sure what is best at this point.

The forums here have great information, but it doesn't always come in the most logical order to understand Ch 7 and Ch 13 bankruptcy.

Start by looking through these websites designed to help you understand both bankruptcy chapters:

Chapter 7

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter7.html

http://www.moranlaw.net/chapter7.htm

http://www.bankruptcyvisuals.com/viewcharts.html (a timeline that shows how Ch 7 progresses)

Chapter 13

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter13.html

http://moranlaw.net/13workings.htm#Chapter%2013%20practice

http://www.abanet.org/publiced/practical/bankruptcy13_whatis.html

Also NOLO (a legal website focused on helping consumers) has excellent how-to-file books available for purchase on Ch 7 at http://www.nolo.com/product.cfm/obje...D0792C01A/213/ and Ch 13 at http://www.nolo.com/product.cfm/Obje...1/213/161/129/

These two books explain bankruptcy in a very understandable, logical way and are well worth the purchase!

I plan on taking time out tomorrow to start going thru and writing down EVERY single account/debt/bill we have. I figure that will get me started in a good direction... seeing it all on paper scares me but I know it will help lead us in the right direction.

This is the very best first step you can take to start being in control of your debt instead of allowing it to control you! Yes, it's very scary, but it's important to document all your debt before starting to set up your free initial interviews with area bk lawyers.

Hang in there - this journey is surviveable and you've taken the important first step of recognizing you are swirling the drain financially. Good for you! Keep asking questions here - we'll help you sort things out as much as we can.

[Crozier]

Read the Tactical BK Manual II, it is really good. Go see some attorneys. I have been on the attorney tour all week. Three have been pretty good. One was terrible. I see that you are in California. If you are in So Cal, I have two references for you that I got from other BKForum members. Like one of the other responders said. DO NOT WAIT. Once you do some pretty simple math and figure out you can't make it, GO FOR IT. My ego got in the way for the last 6 months. I could kick myself for wasting 6 months of interest payments, being late, and still ending up with a bad credit score and a bunch of phone calls. You will be ok. You are so right Keebler.

[Flowers]

Didit2:

I would get your stuff together and go see a lawyer.
It sounds like you are really beating yourself up over this.

Just go for a meeting, no need to have someone talk you into filing BK or not filing.
Go for information. Sounds like you are in that stage.

Please stop beating on yourself. It happened. Go forward.

In my case, filing BK was the responsible thing to do. While I did not pay the debts, I gave the creditors the opportunity to get the tax benefits of bad debt and I released the need for the collectors tactics.

best to you . . . .

[JRScott]

Do you want to know what led you here? Its the same thing that ultimately leads almost everyone to bankruptcy, the fact that we do not have high school courses mandated in financial management. Then you get that big rush of credit offers and soon your sunk.

It's hard to know what's the best option for you.

It would be easier if you told us your household yearly income, the mortgage payment and the payments on each of the vehicles.

As for the lack of equity, it depends what you plan to do if you worry about that. You have little unsecured debt so obviously something has to go (my first thing would be the travel trailer). Do you see yourselves living there for the next 20 years? If so then the lack of equity now is relatively minor. However how much the mortgage is in relation to your income could well be a major concern. Ideally should be 25% or less than your gross.

Vehicles combined should be less than 15% of gross income.

400 dollars is left to go to what, you say after the bills....but honestly food should be one of the first purchases....Still there are ways to feed a family of four. You need to look for coupons. You need to look and plan for a menu and look for deals.

Some cheap meal options: Beans and Rice, Vegetable Soup (I mean homemade...2 packages of frozen mixed vegetables, 2 cans crushed tomatoes, 4-5 medium potatoes cut up. You could even cut up a pound of chicken in it to add some protein), Chili (again homemade, buy 5 cans of different beans, 2 cans crushed tomatoes, some mushrooms, green peppers, onions, perhaps a few jalopenos.), Spaghetti (with homemade Sauce...similar to Chili but no beans). If you have a farmer's market nearby you might can cheaply make several casseroles. The number one thing is to not eat out it is to expensive for such a large family.

Southern California is very expensive so you'll have to budget every penny. Make sure you know where it is going before you get it.

[frogger]

We've all ended up here for one reason or another. Start reading, listen to the advice, and start learning.

Most of all, don't kick yourself. They are plenty of others that want to do that for you, so don't do it to yourself.

Good luck.

[2manybills]

I think we all have that OMG How did I get here? when we realize how much debt we have. The cost of living in So. Cal. can be very expensive, if that's where you are.

Interview several attorneys and examine all of your options. Instead of beating yourself up, use that energy to find a solution. You will find your way.