Assets and other Questions

[SinkingFast]

Long story short,...... CC's were used to supplement living expenses. Medical bills, car repairs, and such. We are not talking fur coats and expensive vacations. Refinanced house to pay off CC's but bigger house payment required use of CC's for medical bills, car repairs, and such. 18 months ago, hubby lost his job. Got severence. Decided to COBRA medical from the company, luckily as we had a couple rather unexpected medical events arise. Hubby found another job after 7 months that was out of state for less pay with more expensive benefits. He moved first and the family followed 6 months later. Last spring, we cashed out hubby's 401K to pay off the 2nd on the house since we knew we were going to sell. While getting the house ready to sell, we found out we had to replace some rotten windows in addition to a fresh paint job and desperately needed new carpet. The house out of state is still on the market and hasn't sold so we've been supporting 2 households for a year now.

Contacted Consumer Credit Counseling (Linked from the DOJ Approved website) last week for a professional opinion of our situation. 3 recommendations and DMP proposal. Contact the mortgage lender. Contact our auto loan lender. Seek legal counsel. The DMP payments were $100/mo more than our minimums now, for 5 years. We've about run thru the last of the "savings" keeping up the minimums and 2 house payments. Tried the "Hardship" department of our mortgage lender and discovered the phone number was really a collections company. Needless to say we did not enter our loan number into their automated system.

We don't have a lot of property, but we do have some assets that are specifically mentioned in the BK Law.

We "own" 4 vehicles. Really only 2 are ours. The other 2 belong to our children, but we hold the titles for the reduction in insurance rates for our kids. If the kids owned the cars themselves they could not afford the insurance to drive. Three vehicles are paid for and one has a loan on it. I read the under the new BK law, the Trustee will value the vehicles at Fair Market Value, and not "fire sale" pricing under the old law. I went to the Kelly Blue Book website and guestimated all of the older vehicles to be in "Good" condition. One of the kids' cars has a Kelly Blue Book of $2600 retail. The other has a KBB retail of about $4400. One of ours is older, and paid for. KBB retail for that one is about $5K. And we have an 'O4 worth about $24K with a $12K loan on it.

What will happen with the vehicles?? Will the Trustee really apply the KBB Fair Market assessment to them?? From looking at newspaper ads, even the '04 doesn't retail on Dealer's lots here for the KBB FMV. I haven't even seen ads for the 2 oldest ones the kids drive. A 1989 and a 1993. Regardless of the value assessed, we way exceed our old state's limit of $1000 each equity ($2K total joint filing). Because we recently moved and haven't lived here long enough we fall under the old state's exemptions. And, we don't have the funds to "buy them back" from the Court.

Also, the house for sale out of state. What are the possibilities with regards to that?? We originally listed the house for $10K less than the Real Estate Agents said we could ask hoping for a quick sale. But that has not been the case. We dropped the price a little bit after a couple of months and recently dropped the price $20K more hoping to sell. We don't have much buffer between our costs to sell (REA fee, taxes, documentation, etc.) and our loan at this point. Obviously we don't want to keep the house, but what do we do now?? Do we continue to try to sell the house or pull if from the market and let it go in the BK?? I ran the new Means Test and with our house payment we clearly qualify for Chap 7. Without the house payment, it might be a Chap 13.

Beyond the vehicles, we don't have much else in the way of assets. Our furniture is old. We left the refridgerator with the house to be included in the sale because we knew we wouldn't have room for it in a rental situation. The cooktop and oven were built-in so taking them was not really an option. We do have an old freezer that we kept and moved with us. I had a couple of nice pieces of jewelry, but I sold those a couple of months ago to keep us solvent until now. (I can prove that money went straight into the checking acct and straight back out to pay bills.) We do have a cheap stereo, an old TV, a not quite bottom of the line DVD player, and an older computer purchased with a computer purchase allowance from Hubby's former employer several years ago. We have musical instruments from when the kids played in band. Our old state's exemption for personal property is only $1K. I don't know if that doubles in a joint filing or not.

At this time, we are current on all our payments. But I've read on here in a couple of places each month's payment extends the time limit on the debt. We might be able to make January's payments on everything and the last of the money is gone. Major payments are:
$3200 rent and mortgage
$250 car payment
$2900 CC minimums on about $115K of debt
plus there's utilities on 2 households because the water and electric are still on at the house, phone, food, etc. Or, do we just contact an attorney and call our CC companies about our situation??

We are looking for all points of view. All pros and cons so we can weigh our options to make some decisions. Feel free to suggest other bases we may need to cover or issues we may need to consider. This is a very difficult decision and we are by no means making it lightly.

[HopeinHorizon]

If the house out of state does not have a lot of equity that you would lose consider a Deed in Lieu, so that you can get past the supporting of two houses. A Deed in Lieu is where you give the rights of the property to your lender in exchange for repayment of the mortgage...

One requirement for a deed in lieu is it has to have been listed on the market for at least 90 days with a realtor. It had to be your primary residence never an investment property. You will need to draft a hardship letter, which is basically what you just posted here. Make sure you do make it clear you were forced to find work out of state, and have relocated. A lot of investors will approve a Deed in lieu based on those qualifications....

Who is your lender, I can get you a number for their loss mitigation department, and perhaps even a name of contact...

Good Luck!

[JimH]

lol Wow, I'm glad you made a long story short.

Seriously though it sounds like you should just decide what you are keeping and conserve your resources. I know you want to keep juggling all of this debt - I did something very similar for three years now and in the end I wish I would of come to my senses earlier. If you are keeping the new house, then keep current on the payments with that. Don't pay another dime on the other. It sounds like there is very little equity there and even if you do have some, you'll ultimately lose it in a bk. You could try the deed in lieu but definitely don't keep putting money into it.

The vehicles are a problem. You'll only get to keep two, but even those are only exempt to $1,000 each. You can't give the kids theirs because of fraudulent transfer rules - unless you plan on dragging this out forever. They are as good as gone because they are easy money for the trustee. Under the new law, atty's can't advise you to take on more debt as part of your bk planning so the advice you get on these sites will be more helpful in this area. So.....If you still have credit, you probably should buy two vehicles with only $1,000 down each. That way you would have two exempt vehicles. Maybe trade in the one that has a loan to at least get rid of that - use it as your down payment money. Let the trustee have the rest of them - he'll like that because he gets a cut of anything he sells.

I saw something about no appliances. Better buy those because they are exempt. Most of the stuff people fill their houses with the trustee doesn't want so don't worry about your furniture, etc.

I base all of the previous advice on a ch 7. If you can work it out to where you are a ch 7, you will be much better off. If it's a ch 13, you won't lose anything but the debt and assets that you want to give up. The bad part is the 5 years of the trustee in your life and obviously the payments,

Hope that helps.

[JimH]

Yeah we both did .. I just read yours

[JimH]

I missed a couple things. Stop paying the cc debt too. If you are truly going down, don't bother. Any money you have, the trustee will split up between them all. So you are renting - I misread that. Doesn't really change anything.

[SinkingFast]

Thanks for the tips. I kinda felt we shouldn't even bother making the payments this month as it all seems pretty hopeless anyway.

About the cars,........ The kids do work. Our oldest lives at home and commutes to college. They both pay for gas, repairs, etc. We simply own the cars in name only for insurance purposes. It saves the kids money. Oddly enough, they didn't pay any where near what those vehicles are worth when they bought them years ago.

We got the '04 because we knew we would have lots of 2000 mile round trip runs going back and forth between states. The car we traded was paid for but not mechanically sound. I wondered, if it's possible, that the Trustee would let us use the proceeds from the sale of the newer vehicle to "buy back" the other vehicles.

Yes we rent where we currently live. I brought up appliances because of ads in the phone book. A couple of attorneys itemized things to bring to the consultation meeting and appliances and household goods were specifically mentioned.

It does all seem hopeless but we've been holding onto "IF" the house sold, we could work through the rest. Obviously, the house has not sold. I am even worried now about filing income tax. We are going to have the 10% penalty for early withdrawal of the 401K money. I'm afraid that instead of a small return, we probably will owe taxes. Just great! Another bill.

Edited to add:
One other thing we did learn from the Credit Counselor is our FICO score. Obviously we were decent back in the spring when we bought the newer vehicle, but what about now with the huge debt load. Amazingly enough, our FICO scores run right around 690. Definitely not in the toilet yet.

[HopeinHorizon]

If you think you could pull through without supporting the two houses, contact your lender and try for a deed in lieu...

You seem to qualify from the experience I have had with lenders.

We look to see if the home has been listed at fair market value for 90 days. That the home was purchased as a primary residence not a 2nd home or an investment. We look for proof that you can't afford the home any longer. One of the cause of delinquencies that usually pushes a deed in lieu through is the relocation to another city because of a job.

You have all of these, get with your lender, and fill out a workout package ASAP! You said the number didn't work for the loss mitigation department of your lender.. Some lenders outsource to a 3rd party for all loss mitigation/hardship requests, so the number could in fact be ligit, but if you tell me your lender's name, I can try to drum you up a number!

[SinkingFast]

I'd rather not post the Lender's company name on the Forum. I wouldn't mind contacting you privately, though.

A DIL worries me because,....... Years ago I worked as a Real Estate Agent's assistant. I saw Lenders work much more readily with people who filed BK than with people who went the DIL route. I wondered why so I asked. The main reason was the legal protections BK provided. A borrower a couple years post BK can't file again for a long time. A DIL did not provide that protection for the Lender.

Not that we are currently planning on buying a house any time in the near future. But, I do want to protect the possible right to do so reasonably "easy" down the road.

You sound like you're in the Mortgage business of have that type experience. Maybe I'm all wrong about DIL. That might have been the case a while back but has changed now??!!

[HopeinHorizon]

DIL-
DIL will appear on your credit report for 7 years....
You could answer no to foreclosure in the last 7 years and bankruptcy in the last 7 years on a home loan application...

Bankruptcy-
However, with a bankruptcy, you could buy a home 2 years after the discharge date, as long as everything AFTER your discharge was paid current.

I am a compliance auditor for a top 10 mortgage lender, and have seen many loans pass through with 600 credit scores in certain programs as long as there was some line in the sand drawn. Past credit behavior, bankruptcy, then GREAT credit behavior...

It looked like you would benefit the most with a Chapter 13, with all the cars, so if you did a 3-5 year 13, your discharge would be 2009 *assuming the three year* +2 years after the completion that the lender requires = 2011 for home purchase. If you get a 5 year plan you are looking at 2013 which is the same as 7 years for the deed in lieu to fall of the credit report....

I guess it all depends on the ifs of your bankruptcy case. Attorney's consultations are free, go see 2 or 3, see if they think you can keep your assets in a 7, because then you could be eligible for a house by 2008... if he thinks a 13, then ask him what kind of repayment period... if he tells you 3 years, you'd be home eligible faster than the deed in lieu... 5 years, you are looking at the same timeframe, BUT the rest of your debt would be gone too...

Your credit is not a matter of public record, bankruptcy is, so you have to decide if you want to keep it private, and do the deed in lieu or get a fresh start completely with some drawbacks...

[SinkingFast]

I registered at the PACER website and looked up cases for attorneys listed in the yellow pages. That was a great tip. I at least learned how many cases different ones have been involved in. 2 of 3 had lots of BK experience where 1 has only been involved in a couple hundred in 15 years. At least now we have a feel for who we should be chatting with. Let them take a look at our situation and get their input. See where we go from there.

[sunshine08]

Remember to look over the cases that you have checked and see if any look similiar to your situtation and have a list of questions prepared.

[bkfiler]

regarding number of cases: ummm, well.. not exactly how that plays out. the more the better but watch out for too many. you will not get personal service. i would take an attorney thats been in the area for 20 years and only done 100 cases a year rather then one thats been there 5 years and has done 500 cases a year. the longer they live there the more tthey know the local process. the less cases they do the more time they can give to you. this of course is how i view it.

you wanna be careful on picking a bankruptcy mill. one that turns out cases by the boatload. know what you are getting. i myswelf wouldnt go by that.

i personally would do it like a hunt for a girlfriend...

first you need to see if you like their looks, so you go to where they gather.

then you see who her friends are and if they interact well. see if they respect her. (if they dont seem to then maybe she is a better kisser then them and that makes them mad but that has nothing to do with picking an attorney.)

after that stalk her at her work and home to see how she does stuff. in this case office and court.

then you are ready to make a date. keep it cheap. in fact, make her pay. the appt should be free and you should try to make as many as possible.

make sure she can handle your problems and deal with you in the fashion you need. remerber that bk is mostly about you geting info down on paper and them trying to get all of your assets protected. thats about it.

so they need to be able to handle you adn what you need plus have experience to know how to help you but they also need to be well respected by the others like the trustee, judges, etc. that way they get along good. believe it or not im telling you something here i hit upon when doing my research. its deeper then you may think.

ask point blank how well your prospective attorney knows the trustee, us trustee. you have to weed through their comments and see what comes out of it.

bottom line is you will never know until its over if you made the right choice. thank god it usually works. but you have to stay on top of your own case like we all do here. attorneys, just like some girlfriends, dont always have your best interest at heart after they get what they want.

[edwards2]

Sinkingfast...isnt this forum great? No matter what your situation is it seems someone has had it happened to them or knows someone who has. I have several friends who got caught up in the 2 house note situation. How they met their expenses is beyond me. We can barely make one house note but then we have private school, 3 vehicles, etc. Anyway, I agree with the advice to consult an attorney asap and dont go through the BK mills. I would however, make sure you find one who specializes in BKs...at least that's what I was told to do. You have a lot to deal with but we are all here to help if we can. Keep us posted.

[SinkingFast]

I didn't look at more than a couple of cases and didn't find one similar to ours. PACER can run up the pages real quick. One attorney's cases filed, links to individual cases listed on ONE website page, accounted for 49 pages billed at PACER.

That particular attorney, 49 pages billed at PACER, is probably a BK Mill. He's been in practice here for about 15 years with over 4000 cases filed. I did scroll down to see if he's filed anything new since the 10/17 cutoff and he hasn't. Probably because during the couple weeks before the 10/17 date, he had about a hundred filings. I've read several places that some BK attnys may not do BK anymore with the new level of liability. I was looking to see if any were filing new cases for new clients. All of the others were, but not that particular one.

I have since found out that the one that's only done a couple hundred in 15 years doesn't really specialize in BK. He's a family law attny and probably picks and chooses the BK's he wants to file. Possibly for those people who are already divorce/other issues clients??!!

At least, by looking at the lists of cases, I found out who the major players in the new town are. We plan to visit with several in person for the free consultations. And, I'm going to call the court house to find out when 341 Hearings are held so we can go see them live and in person, in action. Look for the little things that might tell us more. Like,.... do the the clients look prepared. Or, do the clients look like deer caught in headlights. If there are some sorts of objections, issues that arise, does the attny cover his client's butts or does he/she leave them to flap in the breeze.

All of this is something more than blindly picking a name out of the phone book and hoping for the best!!

[bkfiler]

you wont see much at a 341 that will help you pick an attorney. but you should go to them to see if you spot anything. teh problem is not much happens. and thats the reason you should go to them. you will see that you have nothing to worry about. we were all very very very scared. very scared. i went to 3 days of them. i answered each question as everyone was asked them to practice. soon got bored and was helping others waiting not be so scared lol.

teh very best thing is the free consults. cuz you will learn so much you wont believe it. and you will be able to pick one out that you like.