May have to file BK but have a few Issues

[shotgun7]

We may, or may not have to file BK in the next 3-4 months My feeling is right now leaning toward we will... but we may have to postpone it, and suffer through so to speak.

Here is a little info about whats is going on... Between me and my wife, we have aprox 19-20k in CC debt between several different cards. She has not worked in the last couple of years and with 1 2 year old, and another kid due in july she has no plan to go back. The good thing is, since we are low income, we have state helth insurance that is going to pay all the medical bills. The min payments on our CC's are around $600 a month. I only make 600 a week before taxes (around 480 after) I can not do it any more I also have some business income, that ranges from 400-1000 a month, but most is written off at the end of the year though. However even with that, and not counting any write offs... and with my income in Arkansas, we still are well within the income to file chap 7.

Now, the issues:
We bought a house in feb, all is good on it, we are current and intend to keep it regardless. The issue is, we had bought a trailer house and 1.5 acre of land from my grandma before, and thats where we lived for around 5 years before we bought the house. Also, the house we bought from my grandma (we had a owner finace mortgage set up on it for 11k but, after paying around $1300 to $1500 she canceled it and just gave it to us) it adjoins my mom and dads land.... and my grandma lives in a trailer that pretty much sits in the middle (half on one and half on the other) but, that has since been put in my mom and dads name as far as I know.

But on to the point...After we bought this house that we live now, we did some trading with my mom/dad Basically we gave them the trailer house (80's model and in very poor condition) and 1.5 of land in exchange for a 2000 ford f150 pick up truck... I had been driving it anyway since my wife crashed our 2007 xterra and I just told them, won't you take the house for the truck as a even swap. we made everything final in march. however, I remember when I signed the title (in mine and my wifes name) at the title company it just said sold for $1. We do have a bill of sale we made up though, basically saying it was a trade. All this was done before I really started even considering bankruptcy (though I may should have been)

Since I have been doing research I have seen abounch of stuff about transfering assets before a bk and it causing a problem. I am just wondering If I do end up having to file (It wouldn't be before the 1st of sept if we did) is this really going to cause a problem if so what can i do about it?? I do not want them to lose the land since it adjoins them... I have no intention of taking it back, or anything such as that it was all done in good faith.

Are we going to have to tansfer it back to our name, and use our exemptions to cover it, can we even do that...or will it be ok? The Trailer, in its current state is very poor, I see little value in it, its not even really livable as is, the land is worth a few thousand, Im not sure what it would appraise for though, with the trailer on it.

Second issue is, My wife is not named on the mortgage... But arkansas allows Fed Exemptions. Even though she is not on the mortgage, since we bought the house well after we are married will she be able to claim the homestead exemption also? I don't think arkansas is a com property state, so I am thinking not, but courious none the less.


I should also add that we have very few assets... the house appr for 62k when we bought it loan has a balance of 58k

we have a 2000 ford f150 with 200k+ miles on it
a 1998 mustang gt convertible with 140k+ miles
a 2007 honda rancher 420 4 wheeler
a riding mower, garden tiller... a couple tvs but nothing of great value

Debts:
(Hers) Tractor Supply (citi bank) $2800 - Did not make payment due 5/21
(Hers) cap 1 aprox $400 - Will miss payment due 6/9
(hers) Cabelas Visa aprox $2200 will kiss payment due 6/16
(Her) Bill Me Later Aprox $1400
(Me) Lowes- GE Money Just over $3,300 - missed paymeny due 5/19 (may try to make 1 more on this one)
(Me) Natl Home - Ge Money $1200 will miss payment due next month.
(me) Wal Mart - Ge money - $2300 will likely miss payment next month
(Me) AMEX (in my name)- $1600 Missed payment due 5/21
(Me) Bill me Later - $1000
(Me) Visa- Chase - $1600
- I feel like I am forgetting a couple...

right now, we are close to current on all cards, but are going to have to stop paying them and try to save a little money

I don't know if we should go ahead and file around sept, if the above is not an issue. or If we should wait, and see who sues, and who just writes it off. If we could make it till tax time it would really help but, we usally get around 5k back, we could use that to pay the lawyer, and take care of a few things. Right now with my income, we can just barley get by to pay the house, the light bill... put food on the table... etc... and the business income is not a given, it could go away or it could grow (but most likely will stay the same through the end of the year)

I just hate the thought of all the collection calls... and I do have to use my home phone for work, not to mention the fact of will be having a new baby in the house. But, I am not sure I will have the time to fight all this, If we do end up getting sued.

Thanks In Advance!

[Drazil65]

Hi and welcome. You have a good start to your questions here on this forum. Read everything here you can and gather as much info as possible. Start making your "attorney questions" list for the interviews/consults you will be scheduling. Schedule as many "free" consults as you can to really get a feel for the right attorney for your situation. Choosing the right attorney for your situation is crucial and should not be taken lightly. Also, before you stop paying your creditors go into your customer profiles on line with each creditor and "change/update" your contact information to a Google Voice number (search Google Voice and set it up with a GV number that is connected to your home phone and will run to your computer for documenting calls). GV is free and will save your sanity during the process. Make sure you clearly identify yourself on the outgoing voice message so that the creditors will know exactly who they called, leave your address in the outgoing message as well.

Create a goal/time line for filing, then if you are pretty sure this is the direction you want to go in and the best decision for your family then that is when you will want to stop paying all your unsecured debt and start saving that money each month to put towards the attorney fees. Alot of attorneys let you pay in installments until you are paid in full then they will start working on the paperwork and get ready to file. You should have about $600 more a month according to your story and should use all or at least some of it each month to pay towards fees.

You will feel so much better once you get everything in order and start the timeline process, you will feel like you actually have options and are taking control of your life again. Its a a very empowering feeling and you can actually see a decent future with a fresh start. Make sure to learn the lessons of bankruptcy along the way and how you got to that point so that you can make better decisions for your future. We have all been there or are going through it right now so we know exactly how you are feeling. Please ask as many questions as you want here as there is a wealth of knowledge and experience on this board and great people. Good Luck and keep us updated!

[despritfreya]

You purchased 1.5 acres and a trailer and financed the purchase for $11,000.00 through the “bank of grandma” about 5 years ago. You made a few payments. The “bank of grandma” forgave the loan and released the mortgage so that you now own the 1.5 acres and trailer “free and clear” of any liens or encumbrances. In February, 2012 you purchased a house and moved out of the 1.5 acres and trailer. In March, 2012 you transferred ownership of the 1.5 acres and trailer to your parents. In exchange for the transfer, your parents gave you a truck. You have a good paper trail of the transfer (at least I hope you do).

Are we going to have to transfer it back to our name, and use our exemptions to cover it?

Not necessarily if you can prove: 1) that the transfer of the title to the truck took place at the same time as the transfer of the title to the land and trailer and 2) each item (truck and land/trailer) were of substantially equal values. If the land/trailer were worth more than the truck, you have a fraudulent conveyance for the difference. If they were about the same then I see no problem so long as you can document, document, document. If there was inadequate consideration (land/trailer worth more than truck) you might consider undoing the transaction, but, BEFORE you do anything, consult with several local attorneys.

I cannot comment on the federal or Arkansas exemptions but I am sure someone will chime in.

Des.

[shotgun7]

Thank you both very much for the reply... I do feel much better, now that I have come to terms with everything, and realize there is a way out. But I want to go about it right. and this is the only real thing that has me worried. I can not stand the thought of my parents losing the land, especially since it ajons where they live. And I am sure they would not like any new neighbors. I just worry cause the title company drew it up as "Sold for $1" I do have a BOS for the truck, but it is just made up between me and the folks... It hasn't been Notorized or anything. But on the title, the sale date is listed mid march, just shortly after we signed the papers at the title company.

It would be Sept before we could file anyway, I want to get well past the 90 day mark on purchases. We just had to use one account to buy a set of tires, and that was just under $600 I plan to keep making payments on that account though its only $35 a month so shouldnt be an issue.

Since we are going to have to wait till atleast sept anyway (not for sure we will have the money to file by then as stuff has a habbit of coming up) I have it in mind to try to wait till after we file our taxes next year, we usally file end of jan and have them back some time in feb. but with the EITC, Child Deductions, and so forth, we normally get a large return 5k or so, maybe more this year with another dependant. and we REALLY need some household Items..... New Washer and Dryer... Couch etc. And both cars will need some work done by then, Also I guess we could use it to pay the lawyers. From what I understand, it would be ok to use on household items, and they wouldnt ask for any of it back (would need to document it all I am sure). But then, It would be counted as income in the previous 6 months, is that correct?

Thanks for all the help, I am glad I have found this wonderful site, I have been doing much research lately and joined a few other forums but this seems to be the best by far!

[despritfreya]

Tax refunds do not count as "income" for means testing purposes.

Des.

[ValleYum]

The federal homestead exemption wildcard is used by people living in apartments so it doesn't matter for BK purposes about her name being on the mortgage or deed (for just this one purpose). If you choose the federal exemption set and don't have any (or only have very little) equity in your home to exempt, you can use this wildcard.

If you both file, you can each use the $10,825 homestead wildcard exemption for a total of $21,650. You can use this to cover all or part of equity on items where the regular exemption isn't enough, doesn't exist or has already been used up. You can also cover cash in your bank account or an expected tax refund with this!

There is also another $1,150 wildcard in the federal set of bankruptcy exemptions. You and your wife (if you file together) each can use this for a total of $2,300 more that you can use to exempt personal property, cash, etc.

[shotgun7]

The federal homestead exemption wildcard is used by people living in apartments so it doesn't matter for BK purposes about her name being on the mortgage or deed (for just this one purpose). If you choose the federal exemption set and don't have any (or only have very little) equity in your home to exempt, you can use this wildcard.

If you both file, you can each use the $10,825 homestead wildcard exemption for a total of $21,650. You can use this to cover all or part of equity on items where the regular exemption isn't enough, doesn't exist or has already been used up. You can also cover cash in your bank account or an expected tax refund with this!

There is also another $1,150 wildcard in the federal set of bankruptcy exemptions. You and your wife (if you file together) each can use this for a total of $2,300 more that you can use to exempt personal property, cash, etc.

Wow, that is great to know that she can use her homestead exemption (or atleast the unused portion) even if her name is not on the loan. We really don't have many assets. So I guess worst cause, We could transfer the land and trailer bank into our name and exempt it, and then transfer it back after all is done. That really puts my mind at ease. Ofcourse, I won't do anything more before we consult with a few attorrneys be it Sept. or, If we can hold off till after next years tax refund.

I was really worried when I started researching, and found all the stuff about fraud transfers (even if it was in good faith)

Thanks for all the info!

[shotgun7]

Ok, I have one more question...

Right now, the titles on the cars are as follows...
Truck: Mine & Wifes Name
Car: My Name Only.
FWIW, The car is hers, the truck is mine. Should I got ahead and change the titles accordingly? (If/When We file BK it will likely be a joint file)

[ValleYum]

No. Change nothing, even if it seems to be innocuous and easily explicable - why draw unwarranted attention by the trustee?

[shotgun7]

I am sorry to keep posting questions... But another one has come to mind.

The business I spoke of in my first post. How is this going to be treated. Let me give a few details.

Single member LLC. Service business No assets (phone computer printer, all of which I use for personal use too) that has its own EID#, but is taxed as a sole p.

the AVG GROSS income for the last few years has been 10-12k however, at take time, due to quite a bit of travle mainly to try to find new customers and set up new accounts. I end up 3-5k in the red. alot of the funds are used for personal stuff, but alot of my personal income has been used to cover travle cost as well (gas etc) I haven't been able to keep the 2 seperate, due to being so strapped for cash the last few years, and having to juggle things. I have not done nearly as much travle this year, but should barley break even, or show only a slight loss..
I don't keep alot of tickets, but I do have a mileage log and what not. The losses will also be reflected in my tax returns from previous years.

Now, even with that income and not accounting for any expensses we still pass the income means test just FWIW.

I just want to know how it is going to be valued, Will I be forced to close it down, can i exempt it? If so how do I value a business that really does not make any money? I do not want to lose it, Cause once I ever get out from all this other debt, I can refocus on it, and maybe grow it even (several years down the road).

I acuatlly get all my income from 1 source, (I contract through them) but I have to build my own accounts, and do my own work, and get a %. If I had to, I think I could close the LLC and still work through them as a Sole P though, I really don't want to go through making those changes, If I don't have to as business has really slowed down, to only 1 main account for me... so I don't want to give them a reason to end our contract.


Nothing is ever easy for me I don't guess.

[ValleYum]

Hey Shotgun?

Cut and paste the LLC question into a new thread. Title it something like "LLC value question" - that way maybe some of the attorneys/folks with LLCs will see it and help you out. Tough questions need their own thread with an accurate title to garner answers/advice. Good luck!

[shotgun7]

Will do, Thanks!

[LadyInTheRed]

Ofcourse, I won't do anything more before we consult with a few attorrneys be it Sept. or, If we can hold off till after next years tax refund.

I suggest you consult with attorneys now. Don't wait until September. The sooner you get an attorney's advice on your entire situation, the better you can prepare for your eventual filing, which may have to be a year from the transfer of the property to your parents. Be sure to bring all the documentation on that transaction to your consultations so you can get good advice based on all the facts.