Confused in Indianapolis! Should we file as we are going to let 2nd house "go back"

[basketsbears]

My husband and I married July 2008. I own a house that we live in in Indianapolis and he has a home in northern Indiana that he rents. We are still "in the hole" even with rent payments. His interest rate is approx 9% on that mortgage. It is with Bank of America and he has tried to renegotiate (as he is now receiving partial retirement from Civil Service), but since it is not our primary residence they will not consider anything. So he has decided to let it go back to bank.

His taxable income is less than $700 month. I work part-time as a nurse (just went part time end of year as I am going to graduate school - yes using student loans) and my annual income is just under $42000. We have had a lot of debt, own a Jeep 2009, payments about $500/month, have debts through credit counseling agency Green Path and the payments are $485 every other week, and another loan payment about $170 month. The mortgage payment on our principal residence is about $1100 (includes PITI) and we would want to stay in this house - interest rate is approx 6%.

My question is both my husband and I had filed BK in the past, mine was about 14 years ago and his was about 8-9 years ago. Both were chapter 7. (yea I know that's bad that we are back in this situation). We have both listened to Dave Ramsey, and that is why we went with trying to pay everything back, but with a foreclosure in the future is it best to file BK to protect ourselves?

Could we do Ch 7 again? I know laws have changed. Also, any advice on good attorneys in Indianapolis area?

[debee]

Is it best to file BK to protect ourselves? Could we do Ch 7 again?

Time-wise, you can file a chapter 7 again.

I believe Indiana is a recourse state so the lender would be able to pursue you for a deficiency balance. Bankruptcy would certainly put a stop to that.

I recommend that you do the online means test. It's the first hurdle you have to clear in order to be able to file a chapter 7. Several firgures will be automatically entered into the calculation for you based on your zip-code and household size.

Means test: http://www.legalconsumer.com/bankruptcy/nolo/

Once you get past the means test, the next hurdle will be your actual income/expense schedules. If you end up with around $180/month leftover after paying 'reasonable & necessary' expenses, you will be able to fund a chapter 13 and 7 won't be an option.

Another preliminary thing to do would be to check out your bankruptcy exemptions and compare those to your assets to see what you will lose, if anything, and how to protect the rest. For some people, this step is what motivates them to file a chapter 13 instead of a 7.

You can check your exemptions here, (although I don't know that these are the most recent figures): http://www.legalconsumer.com/bankrup...-law.php?ST=IN

Next, I would start contacting bankruptcy attorneys and go in for a few free consultations. Some couples find that they can get out of their predicament with only one spouse filing.

Good luck to you.