Question Considering Bankruptcy

[cinderella19]

We are contemplating filing bankruptcy. My husband's income was recently reduced and I have recently lost my job. To date we are not late on any of our our bills. Here is our situation:

Yearly income: 64K apx
Mortgage Principal Balance: 358K
Home appraised: 410K
Credit Card Dept: 35K
Checking/Savings Account: 15K

We are both in our 50's and were able to have a small savings in case of emergency. What happens to our the money we have saved in the bank? If we do choose the bankruptcy route, how do we protect the money we have in the bank?

What is our best option? A dept management program or bankruptcy.

Thank You

[keepinitreal]

Get free consults with bankruptcy attorneys. They should be able to tell you what would make the most sense for you. With your current income and your mortgage payment, your savings will slowly dwindle away. Better to talk to a bankruptcy lawyer today than wait until your savings are depleted.

[cinderella19]

Get free consults with bankruptcy attorneys. They should be able to tell you what would make the most sense for you. With your current income and your mortgage payment, your savings will slowly dwindle away. Better to talk to a bankruptcy lawyer today than wait until your savings are depleted.

Thank you. I have spoken to 2 BK attorneys and to be on the safe side, tomorrow I am having a full appraisal done on the house. As far as our savings, would it be wise to use some of it for home improvements prior to filing? Or perhaps send a few grand towards our mortgage? How much savings is allowed when filing bankruptcy?

[keepmine]

Thank you. I have spoken to 2 BK attorneys and to be on the safe side, tomorrow I am having a full appraisal done on the house. As far as our savings, would it be wise to use some of it for home improvements prior to filing? Or perhaps send a few grand towards our mortgage? How much savings is allowed when filing bankruptcy?

Ask your attorney this question. The answer will be how much cash your state allows you to exempt.

[cinderella19]

Ask your attorney this question. The answer will be how much cash your state allows you to exempt.

I live in California. Can I transfer some of my savings into a Roth IRA before filing BK?

[blessed]

I've seen advice given that you can in fact put $5000 per spouse into an IRA. Ask your attorney for details before you do it.

[momofthree]

Given your current income, I don't know that you can sustain the payment on a $358k mortgage, even after all your other debt is discharged in bk. You may need to consider selling your home and finding something less expensive...

[LadyInTheRed]

California has two exemption systems you can chose from to protect your assets in bankruptcy. If you keep your house, you will probably use system 1 which has a $75,000 homestead exemption. Since system 1 doesn't have a cash exemption or wildcard, and your home equity is less than the $75k, you might be able to use your savings to pay down your mortgage before BK. A contribution to an IRA may also be an option. Talk to an attorney before you make any significant payment or transfer.

You can look at CA's exemptions at http://www.thebankruptcysite.org/exe...alifornia.html. Updates to many of the exemptions are at http://www.courtinfo.ca.gov/forms/do...exemptions.pdf

I don't hear a lot of good things about debt management. I have a friend who did it and is now debt free, so it is a good option for some. But, I've also read of a lot of bad experiences. If you decide to go that route, do a lot of research about the process, research any company you work with and make sure you understand whatever solution they offer. Remember, a debt management plan will also mess up your credit, some say as badly as bankruptcy will.

And, to repeat Momofthree's advice, seriously consider whether you can afford to keep your house even if you get rid of your debt. My salary and mortgage balance is similar enough to yours to know that it isn't impossible to maintain that mortgage, but it is very difficult. If I couldn't strip my $88k mortgage, I'd be gone.