Much Needed Help Please

[Ann]

Well, I never in a million years thought I would even contemplate filing for bankruptcy. After my husband pulled our credit report (585) he said we had no choice but to file. We are so blind about what to do. We want to keep our home and 2 cars (only 11 payments left on both cars) but are unsure as to how (7 or 13) or when we should file. Honestly, I look around my home to find out where it all went and I can say that for the most part I actually paid our living expenses with credit cards. I know it is sad but it is very true. If I really want a chance at starting fresh I need to be honest and upfront with my situation. My husband never did our finances so he never truly understood how much we owed. Funny thing about how it all began is that when his paychecks were really good I never used credit to pay for anything. He never used credit much at all but when he switched jobs (taking less and less money with every new job) there was less money to work with and I used our lines of credit to pay for utilities and food. I also took advantage many times of the 0 % balance transfers that would com our way. To make a very long story short I began to pay late on my 2 lines of credit to be able to pay on my cars and my house payments and other credit cards. Only the cards were paid on time because I knew the credit card companies would raise my rate if I was even 1 minute late so in order to be able to pay for our expenses with those cards I made sure not to be late. I stumbled on this website and so far am very glad I did. I really need to know if I should quit paying on my cards now and only pay on my house and 2 cars? How long should I wait to file or to even see an attorney? Also, I want to know if I have over $175,000 of unsecured debt and have a yearly income of less than $80,000 should I just file chapter 7 or will they make me go the chapter 13 route? How can I keep my cars if they are worth at least $5000.00 each? I am really concerned and I really need your (anyone who is willing) to please reply with some much needed answers. I just want to breathe again. I want to wake up and not worry about how I will make ends meet. Basically I want to LIVE! Please help!

[Crozier]

I am right there with you. I just spoke with an attorney regarding my situation, which is similar to yours. Like everyone on this site has told me, you will be ok. And I agree you will! I would download and read the Tactical Bankruptcy Manual II, read it two or three times, seek a free consultation with three or four attorneys, and sit down with your husband and talk honestly with him about the situation and your fears / concerns. I have started the process, and knowing there is a solution, is a huge stress reliever. This is a great site, use it. Good luck to you. Also, check out the stickys, there is a lot of useful info. You will see, there are a ton people like us, who have succeeded and are living again.

[hamburgervol]

Well, I never in a million years thought I would even contemplate filing for bankruptcy. After my husband pulled our credit report (585) he said we had no choice but to file. We are so blind about what to do. We want to keep our home and 2 cars (only 11 payments left on both cars) but are unsure as to how (7 or 13) or when we should file. Honestly, I look around my home to find out where it all went and I can say that for the most part I actually paid our living expenses with credit cards. I know it is sad but it is very true. If I really want a chance at starting fresh I need to be honest and upfront with my situation. My husband never did our finances so he never truly understood how much we owed. Funny thing about how it all began is that when his paychecks were really good I never used credit to pay for anything. He never used credit much at all but when he switched jobs (taking less and less money with every new job) there was less money to work with and I used our lines of credit to pay for utilities and food. I also took advantage many times of the 0 % balance transfers that would com our way. To make a very long story short I began to pay late on my 2 lines of credit to be able to pay on my cars and my house payments and other credit cards. Only the cards were paid on time because I knew the credit card companies would raise my rate if I was even 1 minute late so in order to be able to pay for our expenses with those cards I made sure not to be late. I stumbled on this website and so far am very glad I did. I really need to know if I should quit paying on my cards now and only pay on my house and 2 cars? How long should I wait to file or to even see an attorney? Also, I want to know if I have over $175,000 of unsecured debt and have a yearly income of less than $80,000 should I just file chapter 7 or will they make me go the chapter 13 route? How can I keep my cars if they are worth at least $5000.00 each? I am really concerned and I really need your (anyone who is willing) to please reply with some much needed answers. I just want to breathe again. I want to wake up and not worry about how I will make ends meet. Basically I want to LIVE! Please help!

You don't tell us what state you live in. I believe you will need to take the means test in order to determine if you can file Chapter 7. A lot, including myself, are above the median income and are still able to file CH7. FWIW, you're in the right place. The folks here at bkforum really know their stuff and will be able to answer most any question. This forum is a God sent.

http://www.legalconsumer.com/bankruptcy/nolo/

[justplaintired]

You are not alone. We were pretty much where you are when we started this process. I have probably felt everything you are feeling. It will get better. Try doing a means test online, find your median income for your state. All this info is available online.

http://www.usdoj.gov/ust/eo/bapcpa/20090315/meanstesting.htm

This will give you median income for your state along with federal allowable expenses (helpful when completing the means test if your income is above median income)

http://www.legalconsumer.com/bankruptcy/nolo/

This is the means test. Start here, find out where you stand. This helps before you go to see an attorney, atleast you will understand a little more when they are talking about median income and means test.

[Ann]

Hi.. I live in Michigan... Really need to know if I should stop paying on my credit cards now if I know I want to file??? Please reply. I need to makeup a missed car payment or pay on my credit cards. This is scary. I have never intentionally missed a credit card payment. Also, after reading about the whole process can I have my home equity loan payment "stripped" and use it as a unsecured debt in a chapter 13 or is this no more??? I'm confused. Thanks

[lrprn]

[Ann, I deleted the duplicate post you made asking the same questions in this thread. My reply to your original response is here. -lrprn]

Really need to know if I should stop paying on my credit cards now if I know I want to file??? Please reply.

Ann, you need to meet with 3-4 experienced bk lawyers in your area first. Almost all have FREE initial consultations. Go to the meetings with a list of all your debts and how much you owe on each along with a list of your income from every source over the last six months or so. You should leave the initial consultations with a good idea of which chapter you can file - Chapter 7 or Chapter 13, when you can file, and whether you should stop paying on your unsecured debts now or not.

For now, given a choice between making up your car payment and paying your credit cards, for sure pay your car payment! If it turns out you can file Ch 7, you can't file Ch 7 and keep your car if you are behind on your car payments on filing day. The unsecured creditors will squawk - do a search here in the forums on how to deal with that effectively until you can get your lawyer meetings started.

Also, after reading about the whole process can I have my home equity loan payment "stripped" and use it as a unsecured debt in a chapter 13 or is this no more???

To "strip" secondary and other home loans if you file bankruptcy, you must file Ch 13. To find out if you are eligible to file Ch 13, you need to have those lawyer initial meetings I suggested above.

If it turns out you can file Ch 13, whether you can strip your HEL or not depends on the CURRENT market value of your home and how it relates to the amount you owe your lenders.

To figure out the current market value of your home, look for similar homes in your area that have sold in the last few months. Don't look more than six months back because the home prices are continuing to fall in many areas of the country. Also don't look at home valuation websites like zillow.com - the figures they provide are inaccurately high in most areas of the country. Do not use your last property tax appraisal either - they are typically inflated as well.

So (1) if you qualify to file Ch 13 and (2) your home's current market value is LESS than what you owe now on your primary home loan, then yes, you can strip your HEL when you file Ch 13.

[eddiep]

Whether or not you can keep your cars will depend on your states exemptions. But please keep it in perspective, if you have to hand over a $5000 car to erase $175k in debt it is a no brainer. to put your mind at ease check kbb.com for the value subtract what you owe on it. That is how much equity you will need to protect and then check on legalconsumer.com to find your states exemptions. You can also check the median income level for your state which is the first step in determining whether you are eligible to file ch7 or if you will have to take the means test. Just so you know you taking that first step is typically the worst part of filing for bk protection. Once you make the decision and hire an attorney to represent you relief is in sight!! good luck and keep asking questions!

[Ann]

Wow... Thank you so much for all of your input! Today when I woke up (after reading this forum until 3:00 a.m.) I really felt for the very first time I have someone who will listen to my fears and help me! You people here have no idea what you have done for my peace of mind. I have decided that my house and cars are most important and I will make sure they will get paid first! I have canceled all of my automatic payments on my credit cards and personal loans. After reading here from some of your valuable input I think a chapter 13 is my route to go. I would love to ax that second mortgage. My current balance on my home is 198,000 and my current home equity loan balance is 68,000... Most homes in my immediate area are selling below 200,000 so I think I would qualify for a "strip" of my second mortgage. My only concern here is how much of a payment plan will they put us on when all is said and done? I mean will I still struggle to pay my mortgage and cars let alone my utilities and food? I also have a son in college that will need my assistance. Please advise me on what I may expect on a repayment on 175,000 over 5 years. Thank you so much! Ann

[DSIG]

Ann, play around with the online means test to see what your disposable income may come out to be. Income - Expenses = disposable income. Sounds like a simple calculation but of course the bankruptcy code has to complicated by calculating trustee fee and all this other garbage.

You have to consider your husband's income if he is not filing jointly.

The disposable income x 60 months (or less, depending on your amt of debt) is your payment plan.

Dont cheat yourself on your expenses and make sure you consider increases (ie daycare will increase from what you currently pay).

The trustee will focus on expenses. That is my understanding. I havent filed yet but my attorney already pointed out that my 401k contribution is too much. My response to the trustee would be 'okay, I'll change it'.

[eddiep]

Ann
I was up until 4:30! I cant wait for this to be over!

your mortgage, medical expenses, food, utilities and other expenses are going to come first. What ever is left over is what you would pay in to the plan. this is why you are hiring an attorney to protect your interests.

you should contact a local realtor and have a market analysis done to determine the value of your home. I called and told them I was considering selling my house and wanted to know how much it was worth. If you hope to strip they may require an official appraisal, but the market analysis will give you a ballpark figure before you hire an appraiser.

There is a good sticky around here on amount of payback. I know it sounds strange but the amount paid back has nothing to do with how much you owe unless you were able to pay back 100% of the debt. so if you owed 50k or 250k your payment would be the same, whatever is left over.

[Ann]

Well, because of the wonderful advice I have received I looked up the means test and after doing some calculations I won't pass for filing chapter 7. However, after being really honest with all my expenses they came up with a payment of 482.00 monthly over 5 years which is a far cry from what I pay now and I will be debt free! Thank you so much again...I will keep reading as much as I possibly can here to make sure I stay informed.

[brokeasajoke]

The first few times I went through the Nolo Means Test Calculator, I was coming up 400.00 - 500.00 (positive) over. I filed Ch. 7 Friday, with a disposable income of -845.00 (negative.) The numbers you have to use you tweak and tweak, then the lawyer will tweak even more. I worked with a lawyer for 2 weeks on the means test. I ended up using Nolo the last time and was within 50 cents of what the lawyer came up with. I am about 14,000.00 over median income for the state of NC...

Talk to a few lawyers as suggested here and go over the numbers again and again. Then go over them again.

I came to the realization that filing was our only option in the middle of June and filed about 6 weeks later. I didn't pay a single unsecured in that time. I did get my car payments and mortgage 100% current prior to filing.

I am sleeping pretty good at night these days. Everyday gets a bit better.