08-26-2013 04:48 PM
Contact another BK attorney. In fact, contact several. Interview all of them. Not all BK attorney's are good. In fact, if you ended up calling one of the mill type attorney's they are notorius for trying to put you in a Ch 13 first and then converting to a Ch 7 because then they get paid twice, once for filing the 13 and once for filing the 7.
There is no way that you don't qualify for a 7 with an income of $27k/yr! Do your research on BK attorney's so you know what to ask them when you interview them, but one thing: stay away from the mill type firms. You can recognize them as large firms that do a ton of advertising on park benches, tv, radio and other media. Go with a BK attorney that has a small, independent shop with a couple of paralegals. Generally they only specialize in BK and nothing else. Come back here and ask whatever questions you have so we can guide you on some basic info.
08-26-2013 05:00 PM
So, I stopped all of the payments in order to get together enough money to pay my property taxes- and I made it with a little help from friends. I made my first call to an attorney this afternoon only to hear him say that I can't file for chapter 7 because I don't have a mortgage on my condo. He said that I would have to file for a 13 and my payments would likely be around $500/mo- which I can't afford on $1200- 1300/mo. The condos in my building are probably only worth 40 to 45K- mine would be less because I have had no upgrades at all the windows are bad and the heat and A/C doesn't work. I thought people didn't lose their homes in bankruptcy unless it involved a foreclosure. Here I am, 62, working low pay jobs 7 days a week, no money at all, debts around 30K, sole support of another adult, no health insurance and I can't even file for bankruptcy. But rich people can file for bankruptcy... Any suggestions?
This may or may not be the most ridiculous thing I've ever heard.
Q: What state?
Q2: What's the current market value of your Condo?
Q3: Does it have a HELOC on it? Or any other debt attached?
The answers to those Q's may actually disqualify you from a 7, because of the asset... but I'd like to double check to be sure.
Need to check that assets value/state to find out if you're judgement proof, too... which may give you an even better option.
08-26-2013 08:25 PM
I'm in Illinois. Condos on my street are for sale from between $40 and $60K. A foreclosure in my building sold last month for $42K- renovated. No heloc or debt attached. It is in a land trust if that helps. I forgot to mentioned that this attorney suggested that I get a reverse mortgage.
08-26-2013 09:26 PM
Well, I don't have very good news for you. The IL homestead exemption is only $15K (I honestly can't believe it's that low), this means that you'd lose the house if you did a BK7 or a BK13 that wasn't a full-repay plan. This is probably why the attorney suggested a full-pay BK13 and not a 7.
Putting a reverse mortgage on it (if you can qualify) is definitely an option, it would cash-out enough to pay your other debts... but, I wouldn't pay them in-full. I'd settle them. On $30K, you'll pay around $10K to make them go away (once they're all really late). If you hire a law firm to handle it for you (don't hire a company, hire a LAW firm) you'd probably wind up around $15K out of pocket.
Well, at least we know that the lawyer you talked to wasn't a complete idiot... but now you have to figure out what you're going to do. You're in a rough spot, that's for sure. The more I think about it, the more I'm thinking that at least talking to a bank about a reverse mortgage might not be such a bad idea. The other option is to sell the condo, pocket the cash and settle your debts that way... but it's really hard to find a place to live for free, which is what your essentially doing now.
Being 62, you might also want to talk to an estate planner attorney about this mess. Normally, I'm not an advocate of taking Social Security early (62 is early) but in this case it might be an option... I don't have any expertise in that though, so definitely find a good attorney to talk to on that front. Calling the creditors and trying to get them to knock the interest down to 0% is another thing to look at.
Good luck to you,
P.S. I don't know anything about IL land trust rules, so I'm staying away from that. Here in Nevada, I understand they're practically worthless because the veil is really easy to pierce. The right estate planning attorney would be able to help with that, too.
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