New here - coming to terms

[Forthebirds]

Hi everyone,

I am glad to have found this forum. Last year, I found out that my husband was putting living expenses on credit cards. I thought all of our cards were paid off until I got a call from Chase, saying my card was over the limit and my minimum payment of $500 was late. Not a good day. I had been staying home w/ the kids and was able to find a job. A year later, I have a decent job as does my husband, but we have $35k in CC debt. It's been a huge headache trying to pay and juggle everything. Child care alone eats up half of my salary. BK never crossed my mind, I thought people who filed had hundreds of thousands of dollars in debt, but through my research I know that is not true. After going over the numbers for weeks and losing sleep, I am going to meet with some attorneys to discuss our options. The nail in the coffin was our roommate moving out (we rent but had a family member staying with us and paying some of the rent). Now our rent alone will be 45% of our income. We have a lease and can't move. Live and learn. I will never allow myself to be uninformed about my finances. I trusted my husband with the money, and this was a big mistake. We both have a lot of work to do on money management and communication. Thanks for reading.

[DaisysMom]

You're taking the right steps. I had cc debt also, but I was the one who dug the hole. My husband would go out and spend like we had it and I would be buying the groceries and gas on the cc's. We learned a powerful lesson. Now I tell him what's left in the checking account and if he spends it...then he won't have cable to watch his sports. LOL It's working.

I'm glad you found this site, it helped me tremendously and possibly helped to save my sanity!! Welcome to the family.

DM

[bcohen]

If your rent alone is 45% of your income, you might want to consider moving ASAP (without telling the current landlord that you're looking, of course)! Once you find an acceptable lower-cost apartment, and are approved and ready to move in, then pull all your stuff out of the old apartment, quit paying the rent on it, and file for bankruptcy. You can discharge the resulting debt by "rejecting" the lease in bankruptcy. The automatic stay, and eventual permanent discharge injunction will prevent the old landlord from filing a lawsuit, or reporting negative information on your credit.

Otherwise, if you don't move somewhere cheaper, where the rent and utilities are no more than 33% of your incomes, bankruptcy will not solve your financial problems. You will likely find yourselves in debt once again, and without the bankruptcy "escape hatch" available to use.

[Forthebirds]

Thanks for the replies. Bcohen, reading your post gave me a knot in my stomach. We are going to try to find someone else to rent a room. We haven't been in this house very long and personally know the LL, so I would hate for that to happen. Hopefully we can get someone else we know to rent that room. With a renter we are at 34%. Just curious, does how much one pays in rent affect BK filings? Like is the court going to say sorry, your rent is too high, you have to move?

[bcohen]

I'd still recommend moving somewhere cheaper. Bankruptcy is a business decision, and it is not your concern if your current landlord loses money and/or fails to re-rent the house once you leave.

Also, in answer to your question, the bankruptcy court cannot force you to move however high your rent is, but if your income is over the median for your state, they can refuse to recognize your actual rent as the housing cost allowance. This would have the effect of showing that you have more "disposable income" and you could be forced into a Chapter 13.

[Forthebirds]

Thanks for the info. More to think about!!

[Forthebirds]

Also, I wouldn't be concerned w/ the LL not finding a renter. Houses here do not come up for rent often so I know he wouldn't have trouble. I am more hoping to work this out(rent) because our kids just started school at our local school, and there are no apartments or condos nearby. We have also put some TLC into the house (not on our dollar) because we hoped to stay a few years. So, a lot to consider and i see your point. Thanks again.

[Forthebirds]

We are meeting with a BK attorney later this week. However, I looked at my husband's credit card info online, and he transferred $400 from his WF card to our WF acct in mid-August. I've read about the 90-day rule for not using credit, but I also read somewhere that cash advances need to be an even longer time from filing. I'll ask the attorney of course but wondering if anyone here knows. Payments on the card are current. Thanks.

[Drazil65]

Hi and welcome. Sorry you are having all these issues with BUT it is an eye opener and now that eyes are open and you are seeing the reality of the situation you are in a position to make some sound decisions for your family. First, filing bankruptcy is nothing but a business decision to create options for a business (your family finances) gone bad. Everyone here has been there or going there, we have all tried to rob peter to pay paul, borrow until we can borrow (credit cards) no more just to try to stay afloat. We were all so afraid of the creditors that we went deeper and deeper into debt just to make sure "they" were taken care of at the total expense of our families. When was the last time you read of a business (think Trump) that went so long in the hole and kept getting deeper before they realized that it was not working???

We have all done it, lesson learned. Read everything you can on this forum, become obsessed with knowing the ins and outs of filing bankruptcy. Keep setting up and going to the free consults until you find someone that you are comfortable with and has your best interest. You have options and you make the decisions for your families future. Yes, you will probably need to get another room mate or maybe you and your husband agree to some sweat equity around the house for a few months of reduced rent (painting, fixing up, landscaping etc), it does not hurt to ask.

You can put your goals on paper, create your timeline for filing, research and setup Google Voice ahead of time (life saver and will give much peace in your house), stop paying all unsecured debt and start saving that money to pay attorney fees and just start saving. You will start to feel back in control of your life and finances once you start to see you have options. Good Luck!

[alo]

Also, in answer to your question, the bankruptcy court cannot force you to move however high your rent is, but if your income is over the median for your state, they can refuse to recognize your actual rent as the housing cost allowance. This would have the effect of showing that you have more "disposable income" and you could be forced into a Chapter 13.

Do you know if this holds true if it is your mortgage and you plan to stay in the house?

Also, Drazil65, I like what you wrote. I needed to be told again that this is ok. We just stopped paying our CCs and the calls are starting. I haven't hardened to the fact that this is a business decision completely so I am still unnerved by the thought of the calls! Not sure how to respond. One CC company called my work number because I am 12 days late. I thought this was super aggressive. I've never been late.

[keepsmiling]

Generally speaking your mortgage is what it is and will fly.
Once in blue someone reports that the tt is not happy with an outsize mortgage.
Alo, how far over the allowance for your county are you?
Be sure to tell these guys NOT to call you at work. Start looking at "cease and desist" letters and send them one asap.

[alo]

Thanks, keepsmiling. The housing allowance is about 1600 and I am at 2400 (which includes mortgage, taxes and insurance). I will look for a letter to send and will set up google voice.

[TheBajan]

Also, I wouldn't be concerned w/ the LL not finding a renter. Houses here do not come up for rent often so I know he wouldn't have trouble. I am more hoping to work this out(rent) because our kids just started school at our local school, and there are no apartments or condos nearby. We have also put some TLC into the house (not on our dollar) because we hoped to stay a few years. So, a lot to consider and i see your point. Thanks again.

Hello and welcome!

I wanted to address this issue b/c I agree with bcohen. Unless you reduce your rent, you will still end up in trouble and BK won't be an option again for quite some time. Relying on a room-mate is a shakey strategy at best and could be dangerous and costly at worst. I understand that you have a personal relationship with your landlord but perhaps you can solve this in a mutually beneficial way.

We have a house that we rent out that is right next door to where we live. In such close proximity, it's hard not to develop some sort of relationship with our tenants. We leased the house last Nov to a young family... very nice people, always paid on time, good tenants. They came into a situation that made it beneficial to move before the end of the lease. We talked about it and they agreed to pay rent until I found a new tenant. I ran the ad and had a tenant within three days. If your landlord is in a position to find a new tenant quickly, and you are willing to pay rent until the new tenant moves in, there is no loss to him and he would probably be willing to release you from your obligation. It's a win-win situation that only requires some preparation and communication.

At any rate, it's worth trying. I would prepare to have somewhere to move to very quickly but not somewhere you are committed to until you've been able to talk to him/her about it. If you're reasons for staying there are more to do with the location, you may want to look really hard at how realistic that is. I know that we tend to cut everywhere but what we conceive as our kids "needs" is the Holy Grail and we won't compromise. However, there is almost always more than one good answer to a situation.

Best wishes,
The Bajan

[Forthebirds]

Thanks everyone for the responses. I met with an attorney last week. After looking at our documents, she said we can file a Ch 7 and it would be no asset, clear-cut, very simple. She is only charging me $1k because she is a friend of a friend. I am still going to meet with one or two more attorneys just to see what they say. I have read a lot on the forum, and am learning about the process. One thing the atty said was wait to file until after the election. Apparently, if Obama stays in office, there's a chance the laws will change to allow student loans to be discharged in BK (we have $75k). This would be great, but now I don't have a time frame and that makes me anxious. I would like to file and move on with my life. This is the first month we have not paid any of our CC. One is already threatning collections. How long until things like being sued occur? I plan to tell the CC we are filing.

I called Sallie Mae to put my private loan in forbearance (federal loan already is). It's a $50 fee. Is this a good idea? I read that once you file, your private student loans go into default. I am assuming I'll have to repay my student loans, so I don't want to mess things up more than will already occur due to BK on that end.

I got an offer at work to increase my hours after the holidays, which will make our living expenses manageable (still wouldn't have let us pay more than we were on CC!). BUT I don't want to mess up our income for the Ch 7. Another reason I'd just like to file. Thanks.

[tobee43]

if you counted your student loans on the means tests then i wouldn't attempt to defer them now. you can do that really at anytime for a hardship.

i'm still not quite understanding you living situation at $2400 monthly, in total for the rent, even with a roommate. i'm with bcohen all the way... this is rent and not a mortgage, although if i understand what you're saying here. that rent would most likely not withstand the scrutiny of florida's middle district courts. and, in all honestly, and believe me i understand the costs of living in calif., rent and child card costs alone are enough to pull many under.

i know my daughter had to relocate to another sate for a job, she's able to rent a mc mansion for less than $1500 monthly where she is...but her child care runs over the 2k mark monthly. insane, and it's killing them (or should i say me). but a reality even for the bk courts to consider.

it would be nice if the government would indeed, give some relief to those carrying those inflated student loans. i really hope congress, (i know but it's a dream) will finally do something for all those carrying all those loans and can't even get jobs.

if you qualify for a 7 now, i would just see what those figures would do to change you means tests and your position for a non asset 7. i would hold off adding or subtracting anything...if they do make a difference, although, just a matter of opinion, i'd rather no-asset chapter 7 as opposed to a 13 for us (because of changing incomes chapter 13's work very well for many). although, since your CC debt is not that high it may be another option. on this site we have seen those that have CC debt in excess of 150k or more.