thoughts, input, advice needed

[october99]

So like most here I feel backed into a corner. I was never late on a payment until Aug. We were running out of funds every month and the CCs would not even talk to me about lowering payments since I was never late. In addition over the course of about 3 months in the spring all four increased interest rates. I am guessing it all started with boa lowering my available credit and it all snowballed from there.

Now after 2 months of no payments I'm starting to get letters offering payment programs with lower interest, blah blah blah. I'm glad to see that this is happening and opens a door if things were to change.

Let me say that at this point I do not care to save my credit rating and have full intent to survive on a cash basis. I am married, but all the debt is in my name alone. My DH will not file bk with me when/if the time comes.

My CC are with some of the biggies (BofA=9k, Chase, 2accts 4k & 7k) and one other less known but nasty (1st Financial Bank 15k). There is also another 4k in medical bills.

I own a house (haha) that is worth about 7k less than what I owe. We want out of the house as the neighborhood has gone downhill and it will never regain any equity. I have not paid the mortgage this month.

I live in a state where wages cannot be garnished. There is no equity in my house. The only savings I have is in an IRA and 401k. I have a joint checking with DH where only paychecks are deposited.

DH is out of work as of this month. He has interviews and possible opportunity, but they could be deadends as well. Our plan is to move from the house I own and into a rental in a better area no matter what in the next 6 months. We doubt we can sell the house (realtors won't even return my calls), but maybe a short sale would be an option down the road.

I have talked to attorneys and I am a borderline Ch7 if I file soon. With DH out of work the longer we wait the easier the Ch7 will be for me.

On the other hand if he goes back to work a Ch7 may be more difficult, but I might have the money to make payments in some of these CC payment programs and probably even settle some of it for a % owed.

I just can't decide if I should let it ride and see what happens or go ahead and get the CH7 over and done in the next few months. Part of me wants to put an end to it all, but another part of me feels like I may be pulling the trigger too soon.

WDYT?

[tyson24]

Hi October99,

We decided to let it ride a few years ago and now we are in an emergency garnishment situation. The good thing is you do not live in a garnishment state so that fares well for you. If you think that you might be in a better position to wait to better qualify for Ch 7 I would wait. If you think that this is your window and you have to jump now, I would do it. Have you charged on your cards in the last 90 days?

We had a great window when my husband was laid off and we declined and now...well, lets just say I would not wish this feeling on anyone. Go with your gut and take a hard look at your finances. Hope this helps!

[october99]

Thanks for the reply. I do agree that living in a state that does not allow wage garnishment creates a different perspective. My brother has quite a few defaults and never a judgement. SOL is 3 years here and he has waited all of them out though that was years ago before the economy tanked.

I forgot to mention that we have student loans coming due though we just put the federal loans back in forbearance until April (again). The compounding interest on DH SLs are killing us though. We'll be paying for those forever.

Last time the cards were used was July for an unexpected home repair. It was the final straw as we realized we'd never have funds to pay for those emergencies if we kept pace with the monthly min payments. So I would not be planning to file until Nov at the earliest.

[ryan]

..... I have a joint checking with DH where only paychecks are deposited.

Just want to point out something: Even tho you say your state does not allow wage garnishments, creditors can still levy your bank acct containing funds that are not exempt. If the acct contains wages not previously garnished, they could still become fair game for a creditor who has a judgment.

(The state law probably only prevents an employer from garnishing, not stopping a creditor from getting those same wages once deposited in a bank acct.)

[tyson24]

I need to move to SC! I wouldn't even be worried right now.

I know that we will be better off in the long run filing but I think the stigma thing has stuck with us throughout this whole thing.

I wish you luck and hope you get the relief you need. The process can be gruesome at times, but the outcome is definitely for the best.

[october99]

Just want to point out something: Even tho you say your state does not allow wage garnishments, creditors can still levy your bank acct containing funds that are not exempt. If the acct contains wages not previously garnished, they could still become fair game for a creditor who has a judgment.

(The state law probably only prevents an employer from garnishing, not stopping a creditor from getting those same wages once deposited in a bank acct.)

Correct, so from what I can reason, if they did get a judgement against me this would be the only thing I would need to change and remove my name from the account. My father has also offered to provide an account that I can use as well if it were to come to that. I'm also wondering if it would be possible to exempt these funds as they would be less that state exemption for cash. I am not really clear on those details yet.

[keepmine]

Correct, so from what I can reason, if they did get a judgement against me this would be the only thing I would need to change and remove my name from the account. My father has also offered to provide an account that I can use as well if it were to come to that. I'm also wondering if it would be possible to exempt these funds as they would be less that state exemption for cash. I am not really clear on those details yet.

Don't involve you father or other family and friends in your financial problems/bankruptcy.
A creditor decides to play hardball and you get sued and called in for a debtors exam they'll ask if you are using anothers bank account.
Since, you are still working and can support yourself post bk-I think I'd file before your husband finds another job.
I'd stay in that house until evicted and use the money you were paying the mortgage lender to pay hh expenses as well as save for deposits and moving expenses.

[october99]

Don't involve you father or other family and friends in your financial problems/bankruptcy.
A creditor decides to play hardball and you get sued and called in for a debtors exam they'll ask if you are using anothers bank account.

I am trying not to, but it can be a convoluted mess bc I need my family's emotional support and of course they want to offer more. So what about an account that is just in my husband's name? I'm guessing if it got to this point it would be best to get a paper check.

Since, you are still working and can support yourself post bk-I think I'd file before your husband finds another job.
I'd stay in that house until evicted and use the money you were paying the mortgage lender to pay hh expenses as well as save for deposits and moving expenses.

Thank you. This is the kind of thing I need to hear. I have no idea what happens if a judgement is filed against me. I guess I'm figuring that if it comes to that I will slam the bk through, but it is probably smarter to just plan to file in Nov. Maybe Dec if job prospects don't look good.

So how does that work if there is a window of time where income drops, but then goes back up? What if he's accepted a new position when I'm filing? I think I would have to disclose that and my schedules would be forward looking with that new income in mind. Is that right? It looks like if I file in Nov I will be above median, but pass the means test (DMI -249).

How might it work if I surrender the house? I would like to be able to use a rent amount (which will be more than my mortgage) for my housing expense. Will that be possible? I hate this house. I just needed to get that out. It is the biggest mistake. Blech.

[drowning123]

I used my mortgage and car payment even though I had stopped paying them 4 months before I filed. Include everything and I mean EVERYTHING. All expenses should be included. If your attorney tells you otherwise, tell him you want to include everything. He may check "Re-affirm" on the form, but don't worry about that. The trustee didn't even ask if I wanted to re-affirm the house or the car. I had my 341 this week and I flew through even though I told the Trustee that nothing is current, but that's just my experience. Remember, your husband was working up until this month, so most of his income for the past 6 months will be counted anyway. You have to take the median test first and see if it makes a difference whether you file now or in November, if you're planning to file Chapter 7. I wish you good luck.