Can I file for Bankruptcy

[jbmex3]

Can I file for bankruptcy and still keep my house. I have been drawing unemployment for 2 years and pay over $600 a month in child support which will be reduced. I have about 90K in credit card debt, but my problem is that I have about 100K in equity in my house. My wife works and the w2's will probably say about $50K for this year.

If I can I would like to do it quickly and open up a business at the beginning of the year.

[Oceanic Flight 815]

Here is a link to a site that has the Alabama Means Test Calcluator that you can fill out.

[jbmex3]

based on the means test i qualify for chapter 7 if i did it right. i put 4 dependant, for myself, wife and 2 kids. i included my mortgage payment in there. do I need to leave that blank if i want to keep the house?

[Seadragon]

I would consult with a BK attorney. The amount of debt could be a little tricky. It is important to research the attorney carefully. Also the means testing is important but it is vital to protect your wifes wages moving forward from the BK. Many debts are not listed on credit reports as a hedge against someone filing BK. So I recommend letting an attorney handle it.

The process goes like this:

You consult with an attorney, or research the procedures for BK.
they/you conduct the means testing
attend credit counseling classes(mandatory)
make schedules for the action(If you are doing it for yourself this part you might consider letting an attorney prepare them)
the creditors have to validate the debt(more pronounced and huge authenticity issues)if they cannot prove the debt it goes away.
they check for SoL issues for debts
then you have to go to court on one day.
The creditors negotiate with the lawyer/you and the trustee will ask you questions about everything.
they will make a decision there.
Most of the time you walk out feeling much better.

most bk lawyers will let you make payments.

I did it years ago and it helped me to shed alot of debt from my spouse and me from before we got married.

I think sometimes we get ourselves into a vicious cycle and sometimes do things like use a credit card to pay off a credit card, use rent/mortgage money to pay bank late fees and overdraft fees and get into quite a jam.

That is what BK is there for to let you shed unpayable debt.

Some times it is better to fight another way ie BK than to let it get any worse.

So if you are thinking BK you are going to have to stop using credit in all forms immediately. there is a limit to what can be excused based on the use of the card from I believe it is 6 months before.

Hope that helps

[jbmex3]

i will look into a bk atty tomorrow. i have not used cc in quite some time. i was just paying on them and stopped in april. up until then i was never late or missed a payment. i had a business with a partner and learned the hard way why you don't do that. we are in litigation now, still waiting on court date, so without that income coming in i stopped paying the cc.

[Chriss]

Originally Posted by jbmex3

i will look into a bk atty tomorrow. i have not used cc in quite some time. i was just paying on them and stopped in april. up until then i was never late or missed a payment. i had a business with a partner and learned the hard way why you don't do that. we are in litigation now, still waiting on court date, so without that income coming in i stopped paying the cc.

yeah on a BK you definitely want a lawyer.

to answer though the question you seem most concerned about. I don't know the whole situation so I cant give you a 100% answer to your house question, but in most cases of bankruptcy your house is protected from them getting it. Once again though an attorney can answer all that =).

[jbmex3]

i plan on looking into this tomorrow. also i was looking at the rules of chapter 13. if i have to do a repayment plan would i be better off trying to settle? that way my credit doesn't reflect a bankruptcy.

is there that much of a difference in settlement vs. chap 13

[BV80]

Originally Posted by jbmex3

i plan on looking into this tomorrow. also i was looking at the rules of chapter 13. if i have to do a repayment plan would i be better off trying to settle? that way my credit doesn't reflect a bankruptcy.

is there that much of a difference in settlement vs. chap 13

Chapter 13 is also reflected on your credit report. If I'm not mistaken, Chapter 13 stays on your CR for 7 years, while Chapter 7 remains for 10 years.

There are some who have stated that after filing Chapter 7, they made timely payments on debts that were not discharged in BK, and their credit rating began to improve after just a few years.

In any case, BK is reflected on your CR no matter which type you file.

[jq26]

Two issues here, and I don't want them to be treated as one- they're two separate questions.

1) Can you file for a Chapter 7?

The answer lies in the means test. With $50k in income and a family of four, the answer is probably yes, though it is dependent on the applicable state median income (Alabama).

2) Can you file a Chapter 7 keep your home with $100k equity?

Not likely in Alabama. Some states allow the debtor to choose between the federal or state exemption schedule. Alabama does not all you to choose- they require you to follow the Alabama state exemption schedule. The homestead exemption is only $5000 under Alabama state law. Therefore, your net equity is fair game for the trustee to claim as part of the bankruptcy estate. Check this for updates- the exemption amountsa are updated from time to time.

ALA CODE § 6-10-2 : Alabama Code - Section 6-10-2: HOMESTEAD EXEMPTION - AMOUNT; AREA

A Chapter 13 filing would allow you to keep your home. Your payment plan would require you to make payments to secured creditors in full (mortgage, car payment, etc.), then make a payment to unsecured creditors that will net each unsecured creditor at least the amount they'd recover if you has sought a Chapter 7 filing. This will be tricky, because assuming $80k (roughly) in equity, unsecured creditors of $95k are entitled to >85% payout over 5 years. This puts your payment to unsecured creditors at >$1300/month ($80k/60 months).

So you are in a tough spot. Too much equity for a Chapter 7 but maybe not enough income for a Chapter 13...see an attorney. They may get creative and find a way out. But if you go it alone, the house is probably going to lost.

[jbmex3]

i was wondering how that would work. the means test showed i was eligible for chapter 7. my vehicles are paid off and my mortgage has never been behind, just a bunch of unsecured debt.

it sounds like to me if they are entitled to 85% im better off settling when i get some money

[jq26]

You may be right, if they'll settle. If I were an unsecured creditor, I'd sue and get a lien on your home or pop the vehicles to get paid. But I'm not sure big banks have the time or patience to really manage this on a case by case basis. Maybe a JDB does. Not sure who owns your debt at this point.

Also, beware that your vehicle equity is also an issue. The cars may also disappear in the bk, depending on Alabama state exemption amounts.

[jbmex3]

how long does the process normally take? and also thats why i was thinking about putting everything i can in my wife's name, it would buy me some more time

[BV80]

Originally Posted by jbmex3

how long does the process normally take? and also thats why i was thinking about putting everything i can in my wife's name, it would buy me some more time

Check your state laws. Transferring assets right before filing bk could be considered fraud. The laws will tell you how much time is allowed between transferring assets and filing bk.

[emmabail]

Yes you can keep your house by filing a bankruptcy because bankruptcy law has a provision called stop foreclosure which goes in to the immediate effect after you file the bankruptcy.you will get this advantage in both ways chapter 7 bankruptcy and chapter 13 bankruptcy

[1stStep]

Keep in mind that a mortgagee can file a petition to be relieved of the stay and foreclose.

This is why the OP needs to consult a lawyer.

[workingpoor]

Originally Posted by emmabail

Yes you can keep your house by filing a bankruptcy because bankruptcy law has a provision called stop foreclosure which goes in to the immediate effect after you file the bankruptcy.you will get this advantage in both ways chapter 7 bankruptcy and chapter 13 bankruptcy

The OP is not in foreclosure. And the stop foreclosure provision can't stop the trustee from taking the house if there's enough equity in it to settle up a percentage of the debt. I agree with everyone else, consult a lawyer. It's free...