Sickofdebt Posted December 18, 2009 Report Share Posted December 18, 2009 (edited) I feel like I'm in a pickle right now. I live in PA. We were wanting to file Chapter 7 bankruptcy. Our lawyer told us that we could as long as we didn't have more than either $40 or $50K equity in our home. We didn't think we did. We had the appraisal done and sure enough, the equity is $50K. I'm not interested in filing Chapter 13 because we can't afford to pay anything. This is why we are where we are! I am assuming that we can't get the house refinanced because of our bad credit. Unfortunately, our mortgage company is not accepting loan applications. We can't afford a home equity loan even if we could get one. We are planning on selling the house in the future. We will have land to put a modular home on. We were told by the attorney that PA law does not allow creditors to garnish our wages as long as we have joint accounts. One thing for me not to worry about. Things would be SO simple if we could simply sell the house and use that $$ to pay off these idiots. Problem is our credit is so bad I don't think a mortgage company would touch us. Even though our mortgage has never been late because it is automatically taken out of my pay. I've been at my job for almost 23 years. Sorry this is so long...I seriously need advice. Thanks everybody. Any mortgage people out there that could help me? Edited December 18, 2009 by Sickofdebt Link to comment Share on other sites More sharing options...
jq26 Posted December 19, 2009 Report Share Posted December 19, 2009 Not a mortgage broker here, but I know a thing or two about BK. In essence, Chapter 7 BK means everything you own that is non-exempt is distributed to the benefit of your creditors. Some of the equity in your home is exempt. Most of that $50k is not. The problem with filing a Chapter 7 with significant equity above the exempt amount is that the bankruptcy estate has a right to that money and will force a sale and distribution. If you want to keep the house, then Chapter 7 probably doesn't work here. Why do you want to file Chapter 7 in the first place? Whose name is on the home (title)? Whose name is on the mortgage? And whose debts are they- joint or individual? All of these matter. PA does not allow for garnishment of wages aside from child support and tax delinquencies. Addiitonally, PA is a strong tenancy-by-the-entirety state, which means that joint spousal property is untouchable by creditors to either of you individually. It could be possible that the best thing to do is nothing at the moment- depending on the circumstances. Link to comment Share on other sites More sharing options...
Sickofdebt Posted December 21, 2009 Author Report Share Posted December 21, 2009 We wanted to file Chapter 7 because we can't afford the monthly payments required by Chapter 13. Our attorney said we would have to pay $10K of the debt. I'm assuming this is over several months. Our mortgage and deed are in both of our names. The credit cards are individual. My concern is that if we simply do nothing, then we will not qualify for a mortgage for years to come. Doesn't credit card debt stay on record for like 7 years??? We are interested in selling and moving in about 2 years. We have a 3 year old and would like to have him settled in one school. Thanks for your input. Link to comment Share on other sites More sharing options...
Denita Posted December 21, 2009 Report Share Posted December 21, 2009 (edited) Really you have not posted enough information for us to help you. How much is your total debt? What is your income? I am assuming the unsecured debt is larger than the $10k you mentioned in your post. If you post your income and expenses, maybe we can help you formulate a plan. Don't put the unsecured debt onto your house. It is much better to keep as much equity as you can in your home so when you sell, you have the funds to purchase something else.Note, qualifying for a home depends upon many factors. The payment of your mortgage on time every month is one of the factors that weighs heavily in your favor. Having a large downpayment is another factor that really helps you. Getting rid of the unsecured debt will actually help you in the long run - so if you are able to work through this now, by the time you are ready to sell, you will be in good shape. Remember the last two years is what the banks look at the most - older credit issues they just require an explanation (as long as the issue has since been resolved). Edited December 21, 2009 by Denita Link to comment Share on other sites More sharing options...
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