$125K in debt filing Chapt 7-Questions????

[lessismore2014]

I have a shopping addiction and I've had it since I was in my 20's. I get credit and I go crazy. Well this time I went further then I did before. Got myself in $125K in debt I have no job at the moment and my son has been paying all my bills. I can't have my son keep doing that and I love him for doing so but I can't have him take the money he's been earning to pay my debts. Though he owns his own business I don't want him to keep doing it. The reason I'm not working at the moment is because I have some medical issues that I'm dealing with and my next appt is not until July to see my specialist to see what the next step will be. I was missing alot of work & when I was working I had asked for some personal time off and it was denied so I quit and figured I'd take care of my issues without any hassels. I had to take care of me. I have about 19 CC's and 1 unsecured loan I will be asking to dismiss. I just can't do it anymore, it's too stressful and it's taking it's toll on me.

These are my questions:

1. My home is jointly owned with my son and there's no mortgage so it's free and clear, will I be able to keep it?

2. My car is free and clear will I be able to keep it?

3. Is it a good idea to remove my son from being an authorized user beforehand so he isn't effected? I have him down on 3 cards as authorized user.

4. Is there anything that I should be concerned about?

5.Is it best to have a bankruptcy lawyer or not?

Any suggestions would be helpful.

Thanks

[StartingOver10]

For your situation definately get a BK attorney. Do NOT attempt to file BK on your own.

Whether you can keep any of your assets depends upon your state's exemptions. Since you have assets filing BK will not be easy in your situation. Some exemptions are extremely low in some states. I am sure your son is well aware what is at stake if you file bk, the loss of both your house and your car. It is prudent for you to discuss this with him first.

There are other avenues to get out from under your debt. You could sell your home and pay off your debt and still retain the balance of proceeds plus your vehicle.

Because you have assets you are unlikely to be able to keep them in bk. There are exceptions to this though so do your homework first before you interview multiple BK attorney's.

You did not say where you are located so this link gives you the exemptions for all 50 states so start your research here: http://www.legalconsumer.com/bankruptcy/laws/

[lessismore2014]

Selling my home isn't an option. My son just bought it. It's in both our names. It's free & clear. My car is free & clear. I want to keep both. I will be calling on Tuesday to make an appt. with an attorney for a free consult to see what my options are.

[EW800]

I am so sorry for all that you are going through.  Very glad that you are seeing an attorney.  

I fear the home, being bought and paid for, could be a real issue.  I am sure that the BK attorney will be able to advise you about how that would come into play.  

[StartingOver10]

Do remember to interview several bk attorneys.When you go to the attorney for an interview you will need all of your financials in order to get accurate info. This includes the puchase information for the house and car and any other asset you have such as furniture, jewlery, art, etc.

Don't transfer any assets whatsoever at this point as it can be considered bk fraud. There is a long look back period prior to filing bk.

Talk to your son since the house is owned by both of you and filing bk will impact the property and all of your assets including the car. This is especially true since he just purchased the property. You have a more complex bk than what you think at the moment.

Do interview knowledgeable bk attorneys. Small shops are better than the large firms when you are talking bk because you have more experienced attorneys actually looking at and reviewing your file. Plus they actually show up to the 341.

IMO stay away from large bk 'mills'. They are the large bk firms that you see advertised on tv and through other media. You usually end up not working with an attorney but a jr type attorney without experience so there can be issues with your filing when you have assets. Attorneys are naturally in these types of firms, they just don't work much with the actual files.

[lessismore2014]

Thank u for that info. OMG I hope they don't take my home I won't do it. My son would freak out. We have discussed the bankruptcy but I didn't know that there'd be a chance I could loose my home & car. I thought the meeting was in front of a judge and I told him I was scared to do that and he told me if that's all I had to do then to do it but like I said I didn't know there was a possibility of loosing my home & car. This is my primary residence. They won't make me sell my home just to satisfy a $125k debt, would they? My home is worth about $350k and I reside in PA. My equity I guess would be $350k. It was built 2012. I'm so confused right now. I'm not understanding my PA exception regarding homestead. I guess that's why it's best for me to seek out an attorney. 

[StartingOver10]

Yes, they can make you sell your home to satisfy creditors if your home equity is larger than the allowed exemption in your state. When you file bk it is not just not paying the creditors, it is liquidating your assets to pay the creditors. That is a very simplistic explaination.

Most of the time you don't meet with the judge at all. Your attorney files the petition and you have a "Meeting of the Creditors" also called the 341 meeting, that is headed by a trustee that represents the creditors. The trustee is looking for assets, of which you have plenty. Everything you own is considered an asset, not just the house and car. 

 The trustee has complete control over what happens to your assets in a Bk. The trustee is not your friend.** That is one of the reasons why you need an attorney to represent you if you decide to go this way. You want a bk attorney that is a debtors attorney and not a former trustee because you want as much protection as the bk law will allow. If I were you, I would be extremely careful at this point. You may want to consider other options other than bk. But speaking to a good attorney is a start so you get accurate and timely information.

** Note of clarification:  The trustee gets a commission on each and every dollar that s/he is able to recover for the creditors. For example: If your house is actually worth $350k and there is an exemption allowed of $155k (example only ...don't use it for your situation) and the trustee decides to sell your house for less to get rid of it quickly, you get the exemption. Your son gets his portion that can be proven according to the bk rules and the trustee gets x% (in my area 10%) and the balance goes to the creditors.

[StartingOver10]

I don't know your entire situation, but if it were me I wouldn't risk the loss of all my assets for a debt of $125k when you have assets that are probably $500k + remember everything is included except retirement accounts and allowed exemptions.

One other option you may not like, but is a possibility is to get a mortgage and pay off the debt over time. I usually am not a fan of moving unsecured debt (cc debt) to secured debt (mortgage) but it is one solution. Another is to pick up a job or two and pay down the debt.  Work out something with each creditor. You will need to come up with a plan.

[EW800]

I think what StartOver10 and others mentioned is spot on!  I do not think you should get a house worth over $500K involved in a debt of $125K, and it likely (in my opinion) would not be possible to do a BK without getting it involved.  Look at it from the side of the creditors.  They are being asked/forced to walk away with little or nothing, but you would have half-interest in a house worth over $350K.  That would never fly with them, the trustee or any judge.  I am sure that the attorney(s) that you meet with have dealt with this type of issue before and can explain what other options might be.  Perhaps some sort of debt settlements?

I also agree what it is usually is not good to take out a secured debt to settle a non-secured debt, however in this case in might be the cleanest way out.  You just have to make darn sure that you and/or your son keep the payments up on that note.  

You mentioned that you had a very bad spending pattern.  If you do not mind me asking, do you feel that is under control now?  That is basically step one in my opinion.  It was different circumstances completely, however my wife and I ended up in an ugly financial position.  We made the decision that we would basically go two years of eating rice and beans (so to speak) and paying every dollar we saved to get rid of debt.  It was a hard couple of years overall, however as of about a month ago we eliminated 100% of the debt.  Painful yes.  Worth it now?  Very much so.  

Best wishes.  Please keep us in the loop!

[joelotto]

I have no idea on what is wrong and right in this case but I will share what I think about the house possibilities. You are a joint owner on the house...did you and your son pay 50/50 towards the house or was it a different percentage. Not sure if it really matters but maybe your son paid 80 or 90% of the house. I'm not sure if it's possible but maybe he could buy you out on the house and only have his name on the deed. Not sure if or how this can be done but anything is possible if you find a good BK lawyer. Even if it pushes the BK out 6 months and he finds a way to buy you out on the house....you use that money to pay for your own problem that you caused and not your son.  In the long run it's probably better that he gets you off the deed now before he looses what he worked for. I may sound harsh and I'm not trying to be but if you have a shopping problem don't take your son down with you. Separate your finances and be responsible for your own debt.