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Question: I have two condo rentals I own outright, one mortgaged and my primary condo on a mortgage--4 in all. I have two outstanding debts: 1 to Visa and 1 to GE Money for cabinet refacing. Both are 6 mos delinquent, both have late fees also -- about 15,000 without late fees--about 20,000 with. I cannot pay these payments. My credit has dropped from 750 to around 550. Could I be sued?
Response 1: Yes, and it is very likely since you have two properties with no mortgages.
Should I file?
Response 2: No. Not a very good idea. You are only entitled to claim one Homestead Exemption of $150.000.00 or less of equity in a homesteaded property. So, you have to turn over the two condos without mortgages to the bankruptcy trustee. Depending on the equity on the other properties, you may be asked to pay the trustee the difference if you are not able to completely exempt the equity on your primary condo. Also, it would be considered abuse of bankruptcy code to be filing for bankruptcy on two credit cards when you own four condos, two of them outright.
There is NO equity on the mortgaged properties. I am underwater for sure. The two I bought are foreclosures that could be sold for no more than $50,000 -- if I could get that! We're not talking about a lot of money here. I am on Social Security Disability and this money was my inheritance from my dad. Perhaps a good faith payment of $25 a month faithfully untill the market improves. Want to pay my creditors AFTER the market improves - not now. Perhaps I should just communicate directly with them. I think I would have better luck. Do not want this "over my head anymore." Hope you understand my point.
Response: Yes, I do understand your point. However, you cannot file for bankruptcy protection at this time without jeopardizing the two properties that you bought at foreclosure. You can only claim Homestead exemption on your primary home and not your second or investment property. You can try to negotiate with your creditors. However, there is no point in that if you cannot afford the payment. You can simply tell them to cease and desist from calling you at this time because you do not have any money. Then follow up the request in writing. They may then file a lawsuit. However, before any judgment can be obtained, you would be in a position to settle the accounts. The Courts fortunately, do not work very fast. For instance, a lawsuit filed this month, may not be resolved until sometime next year depending on the Court docket assuming that you respond to the lawsuit if or when it is filed.
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