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Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2878
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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Hello. I am a home owner in Pennsylvania and my house is worth

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Hello. I am a home owner in Pennsylvania and my house is worth about $350,000, which is less than what I paid for it and invested in it. I don't want to sell my house now when the prices have dropped so much. I have a mortgage balance of about 270,000. I have a credit card debt for about about $40,000 and a car that is worth less than I owe on it. I'm struggling with my bills right now because my income got slashed in half. Should I consider bankruptcy or any of those solicitors that offer to reduce my Credit card debt in half? Someone told me to just stop paying on credit cards and wait until they are in collection and then pay off the reduced amount. I don't want to ruin my credit though. Please advise.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

In Penn, you would need to use the federal bankruptcy exemptions to protect equity in a house if you wanted to file chapter 7.

Terry L. :

$21,625 is what can be protected, after subtracting the mortgage balance, liquidation costs from the value of the home.

Terry L. :

It might not be enough, so you may have to consider chapter 13 repayment plan.

Terry L. :

You would pay back enough debt to protect the equity.

Terry L. :

Since you have some decent equity here, you might have to pay quite a bit, if not all of the credit cards back.

Terry L. :

Therefore, a settlement offer might be wise.

Terry L. :

Bear in mind there are tax issues here for settlements, you are taxed as if it was income for any discount given.

Terry L. :

You would be best served to talk to a bankruptcy attorney before doing anything, most offer free consultations.

Terry L. :

Talk to your tax advisor as well.

Terry L. :

Let me know if you have any questions.

Terry L. :

Thanks

Terry L. :

Good luck

Terry L. and 3 other Bankruptcy Law Specialists are ready to help you