Thinking about Bankruptcy and scared to death

[dolphindan1]

Wife and I are thinking about Bankruptcy....Not sure which one 7 or 13....We own a home that we bought a 95000 and owe 76000...2nd mortgage of 15000 and a secured credit card of 7500 against the home....we also have another 10000 in CC debt....2000 in loans....16000 loan on truck and 2000 on car.....we are falling a little futhur behind each month....we own nothing of real value except an acre lot with a run down single wide trailer valued total at maybe 5000....We dont want to lose that lot, our home or cars....Also my father is cosigner on the truck and I dont want to hurt is perfect credit rating.....any comforting advice on these issues???....anything to give us a little peace of mind....I am in the progress of making appointments to meet with a couple lawyyers....

[Methuss]

I'm afraid you are putting too many restrictions on this for me to offer any encouragement.

Chapter 13 "repayment" is the only way you will keep your property, but you need to be aware that nearly all of your non-living expenses are gonna go to your creditors. You can forget about going to the movies every week and eating out if you go that route. You will have little in the way of disposable cash for several years.

Chapter 7 is liquidation. That means your assets (land, vehicles, etc) are sold by the court to pay your debts. You are allowed to keep some things up to a State mandated dollar limit. A $16,000 truck is not going to be exempt. They will take it. You can generally keep your primary residence, but land you own not part of that is gonna be taken.

As for your co-signer, if you file any BK he is gonna feel it on his credit report. That's why they have a disclosure for cosigners that explains that they will suffer the consequences if the primary defaults. It was fully explained what he was getting into when he co-signed.

BK is not meant to be comfortable. Like erasing a blackboard, it is a destructive process you have to go through before the slate is clean.

[LadynRed]

If you have little or no equity in the vehicles, then you MAY be able to exempt them. Without knowing what state you're in, we can't say how much equity you can exempt.

Ch 13 is the ONLY way you'll keep that 2nd lot, it will be forfeit in a Ch 7. You can only use the homestead exemption for your actual residence.

The co-signer would only wind up being held solely responsible for the debt, but with a Ch 13 the impact on him would be less than a Ch 7. IF your bankruptcy shows up on HIS credit reports, he can easily dispute it off - he didn't file - you did.