Question Have Questions, need advice

[Paulcalif]

I don't know much about Bankrupcy other than what I have read here over the last couple of hours.

I don't even know if we are candidates.

Here is our situation:

We live in Calif.
We owe $390K on a home that is worth about $650K
So far, so good.

I am a Realtor, but business is horrible - My income for the year will probably be around $20K

My wife is disabled, and is getting worse - Can't work and collects a small Social Security disability payment.

We have about $55K in credit card debt.

We also purchased a second home ($36,500) back in August when it looked like Real Estate might be making a come back. We closed in Jan this year and used funds from my IRA to pay for it (big mistake).

We have used ALL of my Wife's IRA, and mine is going very fast.

With taxes and penalties on this years withdrawls, we are upside down.

So here are the questions:
If we go BK - could we
1. Keep our primary home?
2. Keep the secondary home we brought with IRA funds (we pulled the funds OUT of the IRA).
3. Would our credit card debt be wiped out?
4. We paid our taxes this year with a credit card, over $10K. would that have an effect?

We could sell our home, and move to the secondary home, but it's in the desert, not were most people would want to live. Plus my adult daughter, 2 kids and fiance are living with us (don't get me started).

Thanks in advance for any opinions.

Paul

[momofthree]

I don't think there is any way to keep your home in this situation.

For starters, you cannot support a payment on a $390k loan on an annual income of $20k.

Even if you could somehow sustain the payment, you won't be able to exempt the amount of equity that you have. If your valuation is accurate, then you have $260k of equity. The max exemption you can take is $150k if you're over 65 or physically or mentally disabled, or $100k as a family unit if no other members have a homestead. In this circumstance, I think it's quite likely that the trustee may sell your home and distribute the profits to your unsecured creditors.

Given that situation, you may be better off selling the house on your own and paying off your debts. It's the same outcome but without a bk on your credit, so you'd be better off.....

Now, I could be completely wrong, but I can't see any other option given your situation....

[LadyInTheRed]

I agree with momofthree. Sell the house and pay off the debt. What is left can either be used as a significant down payment on a cheaper house or to live off of until your income improves.

I don't mean to get you started and I know there can many many reasons your daughter and her family are living with you and that you don't want to put your grandchildren on the street, but consider whether tough love is in order.

[Paulcalif]

Thank you

Not want I wanted to hear, but pretty much what I expected. Thank you very much for replying. It's information I really needed....

Paul