The s*** is starting to hit the fan. A couple of the CC companies called my wife's boss yesterday and the missus is starting to freak out, understandably so.
We stopped making our mortgage and CC payments between 2 and 3 months ago. I have been unemployed for 6 months but have started a consulting project, which pays well and might put us in a position to have enough cash to settle with CC companies in 2 to 3 months.
Here is the dilemma. According to a BK attorney we qualify for Ch 7 based on the means test if we file in April. The "problem" is that I have finally found some work. It is a 2 1/2 month consulting project that will pay about $60K and there is also the possibility that it might get extended, which could mean another $20K. It could also lead to to other projects either with that company or with others. We currently have about $50K in checking/cash/stock. This means we would have over $100K in about 3 months, which could give us enough to settle plus have money to cover our living expenses for a few more months.
We owe $120K in CC debt. $40K of which is in my wife's name. Our home is underwater by about $200K, this includes a $120K HELOC. We also owe $7K in property taxes.
We have looked into a loan modification but I am not optimistic that we will be able to get a principle reduction, so I am turning my attention to getting rid of the CC debt first and then will focus on our home situation.
We have found a BK attorney that also does debt settlement. The cost of using them for debt settlement versus filing BK is about the same. I have considered doing the debt settlement on my own but don't have the stomach for it, although I may divvy up the task with the attorney to minimize costs.
My hesitation in filing BK is based on the following concerns:
1. As soon as the TT finds out we have $60K in income over the next few months plus $50K in cash-equivalent, he will either push us into a Ch 13 or demand that these funds go to the creditors. BTW, in CA, you can exempt $22K.
2. I will not sign up for a Ch 13. I am 52 years old and am not going to subject myself to having to answer to a TT for 5 years. If I continue to get consulting work, there is too strong of a possibility that we get placed in a 100% plan, which is worse financially than debt settlement.
3. I am trying to start a business that might potentially require outside investment and I am afraid that having a BK will increase likelihood that potential investor would back off.
4. For this consulting engagement the client did a credit check. I am afraid that most large companies will require credit checks even for contractors. It's competitive enough as it is.
I have checked with CPA and we would be insolvent at the time of debt settlement so would not have to pay taxes on forgiven debt.
I am leaning heavily to hiring the attorney today to start the debt settlement process, initially focused on settling my wife's debt. Since she has a FT job and I don't, she could get her wages garnished. Also, want to relieve her of the pressure at work.
Would really appreciate people's opinion, especially if you have considered or done debt settlement. I am also considering getting another attorney's opinion. I like the attorney we found but only spoke with one other and have found a couple of others that also do BK and DS.
If I didn't have the consulting project and prospect of others, then the answer would be very simple - file Ch 7. If I can hire an attorney to handle the DS, I can focus my energies on trying to make a living and start a business to climb out of this mess.
We stopped making our mortgage and CC payments between 2 and 3 months ago. I have been unemployed for 6 months but have started a consulting project, which pays well and might put us in a position to have enough cash to settle with CC companies in 2 to 3 months.
Here is the dilemma. According to a BK attorney we qualify for Ch 7 based on the means test if we file in April. The "problem" is that I have finally found some work. It is a 2 1/2 month consulting project that will pay about $60K and there is also the possibility that it might get extended, which could mean another $20K. It could also lead to to other projects either with that company or with others. We currently have about $50K in checking/cash/stock. This means we would have over $100K in about 3 months, which could give us enough to settle plus have money to cover our living expenses for a few more months.
We owe $120K in CC debt. $40K of which is in my wife's name. Our home is underwater by about $200K, this includes a $120K HELOC. We also owe $7K in property taxes.
We have looked into a loan modification but I am not optimistic that we will be able to get a principle reduction, so I am turning my attention to getting rid of the CC debt first and then will focus on our home situation.
We have found a BK attorney that also does debt settlement. The cost of using them for debt settlement versus filing BK is about the same. I have considered doing the debt settlement on my own but don't have the stomach for it, although I may divvy up the task with the attorney to minimize costs.
My hesitation in filing BK is based on the following concerns:
1. As soon as the TT finds out we have $60K in income over the next few months plus $50K in cash-equivalent, he will either push us into a Ch 13 or demand that these funds go to the creditors. BTW, in CA, you can exempt $22K.
2. I will not sign up for a Ch 13. I am 52 years old and am not going to subject myself to having to answer to a TT for 5 years. If I continue to get consulting work, there is too strong of a possibility that we get placed in a 100% plan, which is worse financially than debt settlement.
3. I am trying to start a business that might potentially require outside investment and I am afraid that having a BK will increase likelihood that potential investor would back off.
4. For this consulting engagement the client did a credit check. I am afraid that most large companies will require credit checks even for contractors. It's competitive enough as it is.
I have checked with CPA and we would be insolvent at the time of debt settlement so would not have to pay taxes on forgiven debt.
I am leaning heavily to hiring the attorney today to start the debt settlement process, initially focused on settling my wife's debt. Since she has a FT job and I don't, she could get her wages garnished. Also, want to relieve her of the pressure at work.
Would really appreciate people's opinion, especially if you have considered or done debt settlement. I am also considering getting another attorney's opinion. I like the attorney we found but only spoke with one other and have found a couple of others that also do BK and DS.
If I didn't have the consulting project and prospect of others, then the answer would be very simple - file Ch 7. If I can hire an attorney to handle the DS, I can focus my energies on trying to make a living and start a business to climb out of this mess.
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