We have had several BK questions that have been answered but have some new ones. We are letting our home in No CA go into foreclosure. We are still in the home and are in contract
on another home in No CA which will close on the 10th of June (next week). We withdrew about 75K from our IRA accounts and know we will have to pay the tax on that. We took all of our liquid assets and are buying the house for cash ($140K). Our realtor is giving us a private short term (9 mos) loan for $25K. We will own the home outright. We have about 110K in CC bills and loans (one $21,500 Second on the foreclosed home, a 26K Non Secured Sm Bus Loan for my Private Investigation business) We have several CC bills (20K Capitol One, 16K US Bank, and smaller amount with Direct Merchants Bank, Target Visa, Macy's Visa, Chase Freedom (our foreclosure and 2nd are through Chase also) We also have a Costco Am Exp with $8K that we want to continue paying to have access to Costco (and would consider re-affirming that debt?). We are planning to quit paying on all of the CC's and possibly the Sm Bus Loan (pay $200 per mo out of my business account at Bank of the West) as I would like to keep the business account open. We are current on all of the CC's and loans, except for the original Home 1st mortgage (750K). We met with a BK atty here in No CA and he advised us to buy the house, then Homestead it right away. He said that we could always file for BK later. He also said you need to wait at least 6 months after purchasing the home before BK and preferably longer, is that true? My wife is on SS and makes $700 per mo, I have a disability
income from the Oakland Police Dept (non taxable) of 4K per mo, My business brings in about 7K per month of which I pay about 4K to sub-contractors. After deductions I pay no inc tax and pay about $6K per year in Soc Sec Self Emp Tax. I have several specific questions regarding all of this:
If I homestead the house, how much would be protected from creditors (I have been told $150 K for BK), if I don't file BK? Should I homestead the house right away?
After filing BK, how long before it is discharged (it appears we would be eligible for Chap 7, I was told they take the prior 3 or 6 months of income to test the qualifying?) I know we have to be pre approved for BK and have to take two classes. After discharge do they monitor you financial situation?
If we quit paying the bills, how do we handle dealing with the creditors? What do we tell them, that we have lost our home to FC and cannot pay further (we will be making large payments to the realtor for 9 months), tell them we are considering BK and can't pay, ignore them, etc? I know they are going to come after us, are there any of the companies listed that are more aggressive than the others? Should we accept service of process or ignore that? We will be in a gated senior development. Should we tell them that we will try and resume payments as soon as we were able? We have quit using alll of the credit cards for about 2 months now and will not use any in the future except for Costco and our debit cards.
Will they come after our two cars which are paid for (one about $20K, one about $10K), how long before most companies let you get behind before they file suit? Can they come after my business and personal bank accounts, will they?
If they file law suits, do we answer the suits or ignore them and let them get judgments, or do we answer the suits, will there be additional loss for atty's fees, court costs, etc, or will the judgment be just for the amount we owed?
We pretty much have to make a decision to quit paying in the next few days, would appreciate any info you could give us. I know this is a pretty complicated set of questions. Thanks, XXXXX XXXXX