Seeking for advice about bankruptcy?

Question

divorced, one son, no childsupport, ex. husband re-married and left a huge debts: two house mortgages, $70,000,00 credit card balances, having a good job, but can not carry all, had tried debts consolidate, did not work as it said, one house in short-sale now, thinking about file bankruptcy, any suggestion would be greatly appreciated

Answer 1

First of all, calm down.

When it comes to paying off debts, nobody gets a dime until the essentials are paid.

A great fico score doesn't do you much good if the money you were going to spend on dinner went to visa instead.

We're going to get back to basics here.

There isn't money for luxury items or vacations right now, so you're going to have to "live like no one else" in order to get through this mess your ex left you.

Take out a sheet of paper, and we're going to work thorugh a budget.

The top line is "INCOME".  

You say you have a good job, so write down how much you're going to make next month.

Next, we're going to list life's essentials, in order of importance.

Give you a hint, the number 1 top essential is FOOD.

Write down how much you spend.

Now, since we have an emergency, and you're broke, we're going to go back to beans & rice, mac & cheese, and ramen noodles, until we get this mess cleaned up.  

When I was unemployed, I managed to stretch $11/week to feed myself.  Since you're feeding two, and since sons tend to eat a lot more than daughters (especially if they're teenagers), let's pad this a bit.  $250/month.

Number 2 essential is SHELTER.

Under shelter is MORTGAGE. That's the first house only.

Also under shelter is UTILITIES.  The electric bill, the water bill, etc.  Again, the first house.

If your second house (that you are trying to short-sell) gets foreclosed, you still have a roof over your head.  

So the second house is not part of the essentials.

Number 3 essential is CLOTHES.

But we're not talking about taking a trip to the mall, that's recreation.

Number 4 essential is TRANSPORTATION (one car)

CAR PAYMENT

GASOLINE

CAR INSURANCE.

Now that the essentials are listed, do you have enough income to cover that?

If so, that's good.  We have the ammo with which to attack the debts.

If not, then we need to cut back our lifestyle until you can afford the essentials.

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Next step, attack the debts.

"know your enemy" - list out every single debt you have, from smallest to largest, and list out the minimum payments.

If we have enough income to cover the essentials and the minimums, then you are NOT filing bankruptcy.

If the income doesn't stretch, then, before we take the drastic step of filing bankruptcy, we're going to do some other things first.  

I'd rather sell the sofa than get it repoed during the bankruptcy proceedings.

Short-selling the second house is a great first step.

Just make sure that you negotiate a "short-sale without recourse", which means the lender agrees to eat the difference without coming after you for it.

Next, it's time to have "the mother of all garage sales"

Put so much stuff on sale that your son will ask you if he's next.

If you have to sell the first house and move into a cheap apartment in order to afford the payments, do it.

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A bankruptcy will stay on your credit report for 7 years, and a lot of job applications and credit applications as "have you ever filed bankruptcy".

Which means that it's permanent.

Even if it takes you 3-4 years to clean up this financial mess, you're much better off not filing.

Answer 2

Betty..you need to contact a qualified bankruptcy attorney in your area, most will see you on a first free consult or first free hour consult. With the new laws you would need to pass a means test for a chapter 7...they go by the median income per state. You would need to bring to the attorneys office, copies of your last 6 months paystubs, assets, list of ALL your debts, last 4 years of taxes. Once the attorney looks this over, they will be able to tell you what you qualify for. You can check this website out...www.bcsalliance.com    It's a great site for debts, credit and bankruptcy info. Without knowing how much you make annually, or where you are located...I can't give you any idea what you would possible qualify for, but, seek out a few bk attorney's, doing so will give you a rough idea on what they charge to retain and give you the opportunity to pick the best one that you feel comfortable with. Check the website out as it will explain the difference between the chapter 7 and 13 and give you an idea what it all pertains to.  If you'd like to email....I'll see if I can help some more....Good Luck!

Answer 3

You need to meet with an attorney ASAP.  Most offer a free initial consultation.  He/She will be able to help.

Answer 4

Whose name is on the mortgages?  Yours alone, both, just his?  If your name is on them, sell both houses (if shortselling, make sure mortgage company signs off, without recourse).  Rent a house/apartment you can afford and pay off credit card debts that are in your name.  No matter what, pay the credit cards last.  Your first priority should be food, then utilities, housing, transportation.

Listen to and/or call into the Dave Ramsey show.