New and totally lost

[fedinor]

I asked a couple questions but did not phrase it properly and only got a couple responses. I really need a little advice.
I am married. We live in Oregon. We own a home, but it is in my name only. Purchased for $270,000 in 2006. It is worth about $50K less now. We have two mortgages, both interest only. One is 7.375% and the other is 13.625%. Total payment $2,100 per month. We have two cars. One is paid off. The other, we owe $31,000. I have two credit cards in my name only: one has a balance of $5,300 and the other a balance of about $7,000. My husband has a couple of credit cards in his own name, with a total balance of only about $1,500.
I was laid off in May 2006. I receive unemployment benefits $611 per week with no taxes taken out. These benefits may run out at the end of July, but another extension is possible. My husband makes minimum wage, plus commission, but his company has taken a hit lately, so he has been making just a little over minimum wage for the past few months (about $1,200 to $1,300 per month after taxes). So, we cannot afford our bills and we are just getting into more debt trying to pay for this house. We think we have decided to just walk away. So, what I'd like to find out is this? Can I file for Ch 7? If I do, how will it affect my husband's credit? If I do not find a job, can I be a stay at home mom after filing for either Ch 7 or 13? Would we be able to keep one of our cars? Or would we "sell" it to a family member and then get it back after discharge? I don't know what to do. I don't want to stop paying my credit card bills and screw my credit if it turns out I can't file BK. Ideally, I'd like to file Ch 7 and start all over. Rent a very modest house and stay home with my child while my husband works. Is this realistic? Sorry, I am all over the place. I am flustered about all this. We don't want to do a short sale and then owe the bank the difference.
Also, how much can we expect to pay a BK lawyer for advice?
IF you got through all this, thank you very much!

[LadyInTheRed]

If you and your husband together make less than median income for your state (and it sounds like you do), you can file Chapter 7. A list of Median Income by state is at http://www.justice.gov/ust/eo/bapcpa...come_table.htm. If you make more than the median, you still may qualify for Chapter 7, but have to complete the means test to find out.

Whether you can keep your car depends on whether its value falls within the exemptions for your state. Exemptions for all states can be found at http://www.thebankruptcysite.org/bankruptcy-exemptions/ Whatever assets aren't covered by the exemptions must be surrendered to the Trustee. However, the trustee doesn't always want them. It depends on the asset and the trustee.

It looks like you can keep a car worth $2,150 in Oregon.

I've read many opinions on how bankruptcy will effect a non-filing spouse. Is your husband an authorized user on either of your credit cards? If so, the discharge of those debts will probably show up on his credit report. But, he may be able to have the account removed from his reort. [I called a credit card company last week to have my husband removed as an authorized user. They asked me why and I told them that was between my husband and me. It's best not to give any more info than needed.] Search this site and the internet and ask a lawyer for more info regarding the effect on your husband.

Make sure you filing alone will not leave your husband liable for the discharged debt. You may want to consider filing jointly. Discuss this with your attorney.

Only you can determine whether it is realistic to stay home to take care of your child and live off your husband's salary. $1,200 to $1,300 per month doesn't sound like much to pay for rent, utilities, food, transportation, medical expenses and everything else. But, I don't know what living expenses are like in Oregon. If you'll have to use credit cards as an emergency fund or to make ends meet, you should keep working or you'll find yourself right back where you are.

Most bankruptcy attorneys provide one free initial consultation. Go to at least 3 consultations before deciding on an attorney. The more prepared you are for the consultations, the more you will get out of them. Ask the attorney what to bring with you and bring everything they list. But, don't expect them to definitively answer every question. They need to have all of your financial details to give you complete and accurate answers and most won't spend the time to do that until you retain them. There was a very recent thread here where people posted what their attorneys fees were for a Chapter 7. I think you'll find it if you browse through thread titles. Start in the Chap. 7 forum.

This site is a wealth of information. Most of my answers are from what I've learned here. Read all of the stickies if you haven't already done so and try using the search engine to find answers to your specific questions. Then, post specific questions about what still confuses you. Also, try breaking up your posts into short paragraphs to make them easier to answer.

Good luck to you.

[BobMango]

It sounds like you are a good candidate for filing a Chapter 7, but as the previous poster indicated, a free consult with an attorney or two would be advisable.

If your husband is not on the house loans and doesn't have much credit card debt, then filing separately might be an option and his credit should not be impacted much. However, if he is on the car financed at $31K and you don't want to keep it, he may have a problem. If you let it go back and he is on the loan and doesn't file, he will most likely face action for the deficiency balance.

I applaud your desire to be a stay at home mom. My DW and I made the same choice when we had kids and didn't really miss having a new car every three years, or living in a McMansion. If you can swing it I think the rewards for your family far outweigh the material things that you could acquire by working and subbing out raising your kids.

If you have HOA on your home you may want to see about letting the house go to foreclosure before you file, since you will be liable for HOA fees and insurance post filing and until the title is actually out of your name. Some folks have walked away from their homes and the loans, only to find they are still on the hook for the HOA fees, with the bank in no hot hurry to foreclose.

In terms of how much an attorney will cost you, we filed in SW Washington and our attorney cost $999 for the bankruptcy filing. The filing fee of $295 was above and beyond and we had to pay $125 for a reaffirmation. Our attorney came highly recommended by friends and did a good job. No hitches and our discharge just came through this week. I've seen quotes ranging anywhere from $900 to $2,500 for a Chapter 7. I'd recommend checking the court calendar for your district to find the names of attorneys that are filing. I probably wouldn't go with the name you see most frequently, but you definitely want an attorney that is there regularly.

Good luck!

[momofthree]

"Or would we "sell" it to a family member and then get it back after discharge? "

Just wanted to say that the above ^^^ is fraudulent and the sale of your vehicle will be scrutinized. You have $1700 motor vehicle exemption (can be doubled for filing jointly) according to this website: http://www.legalconsumer.com/bankruptcy/laws/#Oregon

Can you use the federal exemptions? They are here: http://www.bankruptcyinformation.com/exemp-fed.htm
Motor vehicle exemption is $2950, BUT you can use up to $8725 of the unused homestead exemption towards ANY property, so if the car is worth less than $11675 (2950 + 8725), then you should be able to keep it. Some states only allow you to use their state exemptions though...

[BKDefender]

You CAN sell a vehicle to a family member and buy it back after your bankruptcy, BUT you need to get a legitimate appraisal of it's fair market value and sell it to them for that fair market value then protect your cash with an exemption. Get a kbb.com and nada.com value for it as accurately as possible in FAIR condition for a private sale. Sell, it to your family member for that amount, take the money and put it in a Roth IRA then file bankruptcy. After you verify that all the documents for your filing were done and you're issued a case number, you're free to withdraw all of the money out of your Roth IRA (losing 10% penalty for withdrawal within 5 years) and buy the truck back if you want. Your trustee might not like it but you're allowed to convert non-exempt property to exempt property prior to filing BK. It's called proper planning.

One problem though - if you sell it to a family member for fair-market-value but you keep the vehicle then it could be construed as fraudulent. The same goes if you sell it to a family member for less than fair market value then you could have a problem with fraudulent transfer claims as well.

--William

[LadyInTheRed]

.... You have $1700 motor vehicle exemption (can be doubled for filing jointly) according to this website: http://www.legalconsumer.com/bankruptcy/laws/#Oregon

That website is outdated. The Oregon Vehicle exemption is now $2,150.

This one was updated in December 2009: http://www.thebankruptcysite.org/exemptions/oregon.html

And here's the statute itself: http://www.leg.state.or.us/ors/018.html Scroll down to 18.345

[momofthree]

That website is outdated. The Oregon Vehicle exemption is now $2,150.

This one was updated in December 2009: http://www.thebankruptcysite.org/exemptions/oregon.html

And here's the statute itself: http://www.leg.state.or.us/ors/018.html Scroll down to 18.345

Thank you for that correction.