A rock in a hard place!!! Need advice!!!

[drestless]

Hi,

We've(myself and my wife) been struggling on my monthly payments for the past year and I've been in denial that we are really living paycheck to paycheck and even sometimes running under. Just when I thought we'll be able to get by like this two new credit card payment became due. This are the "no payment no interest for x months" type of credit cards which is another $15,000 debt. On top of that I have other credit cards that raised their interest due to the bad credit that I have now while in the process of a short sale. Here's my itemized financials to further explain my ordeal:

• Unsecured debt: $39,000 through credit cards and $20,000 that I personally owe through family members.
• Secured debt: $50,000 for two vehicles, $335K for new house, $425 house on short sale.
• Asset: $7,000 Honda Accord and $500 Supra (both payed off)
• Earnings: $120,000 combined annually.

Questions:

• 1. Is Bankruptcy for us or do we just setup an arrangement with creditors(which doesn't go well most of the time)?
• 2. If Bankruptcy if for us, can we stop our credit card payments now?
• 3. How much time do we have after we stop our credit cards payment before filing Bankruptcy(still looking for a goood atty)?
• 4. What do I do with my two paid off vehicles? Do I sell them before filing or I can keep them and they won't be garnished?

The short sale house is almost done and a different arrangement is being done there so I don't think this will be involved in the Bk filing if we file. We live in Riverside, CA if this helps the answer.

Anyway, I was going to keep on paying the credit cards minimum payments but checking their payment calendar shows me that it will take me 30 years to pay them. I don't want to be in the same financial situation for 30 years! Plus I had a wake-up call last month. I'm going to be a daddy so I'm very happy about it! BUT I have to look and be ready for our finances so we afford having a baby. This is what further pushed me to look on the bk option because we can't be like this when the baby arrives.

I'm in the process of looking for an attorney but an advice from folks that are in the same situation or were in the same situation would be a good starting point since it is inbiased. Thank you sooo much for your advices.

[Mi Bankruptcy]

You have come to the right place. My wife and I were in the same boat a year ago. I hadn't borrowed any money from family. We were living paycheck to paycheck and were not late with any of our bills. I had figured out that it would take over 30 years to pay off our credit cards which was similar to yours.

It was the best thing we ever did. We reaffirmed our house and two cars ( agreed we would continue to pay). I filed a chapter 7 no asset and just bought a new vehicle two ago after paying off two of my loans in January for the vehicles we reaffirmed.

This forum is great, continue to come back and ask questions. Meet with 3 attorneys and ask questions here.. Good Luck to you.

[drestless]

You have come to the right place. My wife and I were in the same boat a year ago. I hadn't borrowed any money from family. We were living paycheck to paycheck and were not late with any of our bills. I had figured out that it would take over 30 years to pay off our credit cards which was similar to yours.

It was the best thing we ever did. We reaffirmed our house and two cars ( agreed we would continue to pay). I filed a chapter 7 no asset and just bought a new vehicle two ago after paying off two of my loans in January for the vehicles we reaffirmed.

This forum is great, continue to come back and ask questions. Meet with 3 attorneys and ask questions here.. Good Luck to you.

Glad to know that you had success with your BK and hopefully we will be if we need to file BK. You mentioned that you are current on your bills, I assume credit cards as well. Did you stop paying these credit cards way before you filed BK or you stopped it after seeing an atty?

I'm surprised about the Chapter 7 approval because all I hear is they are now doing Chapter 13 because most of the applicants are not passing the "means test" for Chapter 7. What's the major determining factor that got your approved for Chapter 7? Did they garnish some of your assets? I have two oaid-off vehicles that I want to protect on top of the other two that I'm still paying. Thank you.

To the other BKforum folks, please help answer my itemized inquiry. Thank you soo much!

[SMinGA]

At $120k per year gross, you're probably looking at ch. 13 unless you are part of a large family. Most people do NOT lose assets in a ch. 13. The main way to determine ch. 7 vs. ch. 13 is if you have disposable monthly income. That is, income remaining after paying necessary expenses/bills.

A good place to start is to assess your income/expenses:

What is your household net monthly income? Do you normally owe or receive a refund at tax time? (If either is significant, you may need to adjust withholding to aim for even.)

What is your 1st mortgage payment? 2nd mortgage/Heloc? What is your home worth?
What are car payments, and about how long remaining on the loans?
What do you pay in utilities, insurance (not already deducted from pay)?
What do you spend on groceries, personal care, household maintenance/needs, transportation, medical out of pocket?
Any other expenses not covered?

What is the bottom line, as in what remains when you subtract all expenses from income? How many in your household?

And since you mentioned balance owed to family - how much have you paid family/friends in the past ~1 year?

[Mi Bankruptcy]

Sorry drestless. I meant we were in the same boat as far as credit card debt. However, you make significantly more than I do so my case would not be comparable. Sorry, didn't want to get your hopes up.

Keep asking around the board. Several people have the same income and debts you do and should be able to help answer some of your questions..Good Luck..

Glad to know that you had success with your BK and hopefully we will be if we need to file BK. You mentioned that you are current on your bills, I assume credit cards as well. Did you stop paying these credit cards way before you filed BK or you stopped it after seeing an atty?

I'm surprised about the Chapter 7 approval because all I hear is they are now doing Chapter 13 because most of the applicants are not passing the "means test" for Chapter 7. What's the major determining factor that got your approved for Chapter 7? Did they garnish some of your assets? I have two oaid-off vehicles that I want to protect on top of the other two that I'm still paying. Thank you.

To the other BKforum folks, please help answer my itemized inquiry. Thank you soo much!

[drestless]

Sorry drestless. I meant we were in the same boat as far as credit card debt. However, you make significantly more than I do so my case would not be comparable. Sorry, didn't want to get your hopes up.

Keep asking around the board. Several people have the same income and debts you do and should be able to help answer some of your questions..Good Luck..

Thank you for the feedback. Yeah, I think our's is not as easy as yours but it's not rare at the same time.

I know there's well knowledgeable folks here in BKforum so I'll just research further with their inputs.

[drestless]

At $120k per year gross, you're probably looking at ch. 13 unless you are part of a large family. Most people do NOT lose assets in a ch. 13. The main way to determine ch. 7 vs. ch. 13 is if you have disposable monthly income. That is, income remaining after paying necessary expenses/bills.

A good place to start is to assess your income/expenses:

What is your household net monthly income? Do you normally owe or receive a refund at tax time? (If either is significant, you may need to adjust withholding to aim for even.)

What is your 1st mortgage payment? 2nd mortgage/Heloc? What is your home worth?
What are car payments, and about how long remaining on the loans?
What do you pay in utilities, insurance (not already deducted from pay)?
What do you spend on groceries, personal care, household maintenance/needs, transportation, medical out of pocket?
Any other expenses not covered?

What is the bottom line, as in what remains when you subtract all expenses from income? How many in your household?

And since you mentioned balance owed to family - how much have you paid family/friends in the past ~1 year?

I assume you don't need to know the information on other questions but more of giving me questions to myself on determining the bottom line or what's left after all utility WITHOUT paying my credit cards. What will remain is around $1,000 for us if we DON'T pay our unsecured debts(credit cards) and just pay our mortgage(not including short sale house) and two vehicles. If we pay all our credit cards minimum payment requirement then we will be under around $500 a month with no extra $$ left in our bank account.

There's 3 people in our household in which 1 is my mom who doesn't share for the house payment nor bills. Will her income count eventhough she is not helping financially?

I've paid around $2,000 the past year for money I owed to family.

I hope this will help you answer my case. Also, please(if your able) answer the itemized inquiries that I have. Ulitimately, I would like to know first is if I should stop paying my credit card now before seeing an atty since I know I'm gonna file BK.

Thank you soooo much.

[Mi Bankruptcy]

If you absolutely sure you are going to file.. Stop paying your credit cards. However, if you think there will be a delay you may want to pay on them. Do not use them after you have met with an attorney.

I stopped paying in July and didn't end up filing until Nov. So, you will have time. The benefit of being current is you are sneaking up on those creditors and you can answer the phone and give them your attorney information after he\she is retained. Thus, you avoid an onslaught of calls. They will start calling as soon as you are late on a payment

[SMinGA]

Correct - you do not need to post that info here. Some people will post a preliminary budget, to get feedback, before submitting it to their attorney - but this of course is not required.

If you are certain that you will file bankruptcy, then it does make sense to stop paying to the credit cards. At that point, many people start saving to pay an attorney. Your initial equation, $1000/mo without credit cards or -$500 a month when paying the minimums, makes it seem at a glance that bankruptcy will probably be a benefit to you.

My understanding of 'extra' people in the household: You count their income so much as they contribute to household expenses. So if she pays to help with the house payment, groceries, etc. you would count that income. What she uses for her own reasons - you do not count.

I don't think the $2,000 to family in the past year will be a major obstacle. Maybe not even a minor one. Worst case scenario is that you must propose a plan that pays at least $2000 to unsecured creditors, and based on the disposable income you stated - that will likely happen anyhow. You may end up in a plan where you pay back most or all of your unsecured - but at frozen balances, no more interest. I say this purely based on the premise of $1,000 disposable per month and $59,000 unsecured debt. Ultimately the payback may be less - when you go thru your budget in detail you may discover things you had overlooked. Its a bit of an adjustment, when one is no longer paying credit cards, to handle all that we need monthly and not just the things we can not put off any longer!

[drestless]

If you absolutely sure you are going to file.. Stop paying your credit cards. However, if you think there will be a delay you may want to pay on them. Do not use them after you have met with an attorney.

I stopped paying in July and didn't end up filing until Nov. So, you will have time. The benefit of being current is you are sneaking up on those creditors and you can answer the phone and give them your attorney information after he\she is retained. Thus, you avoid an onslaught of calls. They will start calling as soon as you are late on a payment

What delayed your filing?

If I continue paying my credit cards minimum payment it will be around $1,500 a month. I don't think this is worth just to be able to sneak up on them and give them an attorney number once I have one retained. Also, this amount is even worth paying to just prevent call from the creditors. I agree with the perspective but is it worth throwing $1,500 a month just to have these strategy to the creditors and prevent calls? Thank you for your advice.

[SMinGA]

I agree that it is a waste to keep paying...

For some, the phone calls are hard to handle. Especially if they call at work. I found that asking them to not call at work any longer was usually effective. Some update their contact phone # to go to something other than the main phone#, or leave their ringer off.

[drestless]

Correct - you do not need to post that info here. Some people will post a preliminary budget, to get feedback, before submitting it to their attorney - but this of course is not required.

If you are certain that you will file bankruptcy, then it does make sense to stop paying to the credit cards. At that point, many people start saving to pay an attorney. Your initial equation, $1000/mo without credit cards or -$500 a month when paying the minimums, makes it seem at a glance that bankruptcy will probably be a benefit to you.

My understanding of 'extra' people in the household: You count their income so much as they contribute to household expenses. So if she pays to help with the house payment, groceries, etc. you would count that income. What she uses for her own reasons - you do not count.

I don't think the $2,000 to family in the past year will be a major obstacle. Maybe not even a minor one. Worst case scenario is that you must propose a plan that pays at least $2000 to unsecured creditors, and based on the disposable income you stated - that will likely happen anyhow. You may end up in a plan where you pay back most or all of your unsecured - but at frozen balances, no more interest. I say this purely based on the premise of $1,000 disposable per month and $59,000 unsecured debt. Ultimately the payback may be less - when you go thru your budget in detail you may discover things you had overlooked. Its a bit of an adjustment, when one is no longer paying credit cards, to handle all that we need monthly and not just the things we can not put off any longer!

I think I'm certain due to my financial situation. Is there any reason you know of that I shouldn't or will hold me from filing?

Yeah, they will see that $2,000 payed in total because I used bank checks. Your answer here makes sense. One thing I'm worried about is they won't calculate my personal loans with my family as a burden as well. Is this possible? If they don't then they might end up obligating me to pay X amount and not consider that I still need to pay my personal loans to my family. These personal loans I borrowed through my family is my obligation and some of them are loans they openned under their name to lend to me. Either through signing a credit card so I can buy some appliances under their name and loan some 401k under their name so I can have a down payment for a house. Mixture of these. Will this be considered calculated to my burdent calculation eventhough it's not under my name?

Yeah she doesn't contribute anything financially in the house. I hope she wouldn't be counted.

Thank you for your detailed response.

[drestless]

I agree that it is a waste to keep paying...

For some, the phone calls are hard to handle. Especially if they call at work. I found that asking them to not call at work any longer was usually effective. Some update their contact phone # to go to something other than the main phone#, or leave their ringer off.

I think I can handle the phone calls to my mobile because I don't really pick up calls that I don't know the caller's number. BUT calling my work! How do I prevent these from happening eventhough they haven't tried yet? This is something that will be embarassing.

[SMinGA]

My experience was that they did not automatically call work first, they called my home #. When they did call work (I ignored most calls to home) I asked them not to call me at work again, I told them it was a disturbance and could cost me my job and therefore my ability to repay them anything. Once I asked them to not call me at work, they did not. Thinking back - it may have been helpful to answer the first round of calls to the house, explain that things were rough at the moment and ask them at that point to not contact me anywhere but home.

I did not initially tell them I planned to file. I don't know if my logic mattered, but I figured if they thought I was trying to work things out that they would not want me getting in trouble at work.

As to the family loans you mentioned in another post - you should be able to list these, and your family should be able to file claims. I don't know for sure, but you may be asked to show documentation since you're stating a rather large amount total to family. Ultimately these should be treated like other unsecured debt. If you end up in a plan paying less than 100%, you may want to work our arrangements to pay the rest to family later - but during the plan they would probably need to just accept what they were allowed in the plan.

I think I can handle the phone calls to my mobile because I don't really pick up calls that I don't know the caller's number. BUT calling my work! How do I prevent these from happening eventhough they haven't tried yet? This is something that will be embarassing.

[momofthree]

Couple things. I tend to "think" out loud so my thoughts may be jumbled.

First of all, I don't think there is any way you will qualify for a ch.7 bankruptcy. Like SMinGA said, you will probably end up being a ch.13 paying back 100% of your debt over 5 years.

If you choose to file ch.13 bankruptcy, it would be wise to wait until you have your baby because you will then be allowed higher expenses in your budget (an extra person in the household, higher medical expenses, daycare fees, etc), which will serve to reduce your monthly plan payment.

You can stop the credit card payments now, however, if you end up in 100% payback plan, you will still be responsible for the accruing interest & fees from now until you file, which could increase your payback during your plan. However, once you file, all fees & interest stop accruing. Whether you wish to stop paying now is your choice. Most people filing bk are NOT in a 100% payback plan, so it makes perfect sense for those people to stop paying towards the debt immediately, but in your case, it may or may not be a good idea. It's up to you to decide.

Since you are in CA, you have a good set of exemptions. Both of your cars can be fully exempted and are safe. No need to sell them. You can also save up some cash on hand as an emergency fund. There is a $21k wildcard exemption in CA that you can use to exempt any property including cash.

As is always suggested, meet with 3-4 attorneys to go over your options.

GL in your journey and keep us posted on your progress.