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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 12216
Experience:  JD, MBA
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Hi, Husband and I live in NY, have approx. 50k in debt with

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Hi, Husband and I live in NY, have approx. 50k in debt with credit cards and 14k loans. July 2008 we got a new 2008 ford focus, with a 435 month loan. Since hubbys job up and moved to mexico dec. 2006, took him 1 year to find another job. our income is too small for our outpay in bills, we just cant do it anymore. I am retired disability with $700 month income, he takes home $1300 month. we live in a paid for house, no rent or mortgage in our names. no land/property only our vehicles. do we have to be way behind in our bills to file chapter 8? december is our 1st month we will miss some of the credit cards due. Thanks so much. we are both in our 40's., 3 yrs. married. we have no savings and little in the checking, no 401k. we want to keep the new car and pay it off as per our loan agreement and our worried of losing the car. should we file chapter 7/8? dont know chapter laws. this economy has crushed us.

Hello and thank you for allowing me the opportunity to assist you.

Question: “do we have to be way behind in our bills to file chapter 8?”

Answer: There are two possible Chapters under which you’d file for bankruptcy protection: Chapter 7 or Chapter 13. In a Chapter 7 your assets would be liquidated (i.e. sold) and the proceeds would be used to repay your unsecured creditors. In a Chapter 13, you can keep your assets, but you must make monthly payments into a “plan” for 3 to 5 years, and the bankruptcy trustee will disburse those funds to the unsecured creditors.

The botXXXXX XXXXXne is that if you filed under Chapter 7, your house would be sold and the proceeds would go to the credit card companies. If you filed under Chapter 13, then you may be able to keep the house if you can afford to make the monthly payments to the plan. The amount you’d have to pay per month partially depends on the value of your assets because after the plan is completed, each creditor must at least have gotten the same amount it would have gotten had your assets (such as your house) been immediately sold. Therefore, if your house is worth quite a bit you may not be able to afford the monthly payments required to keep it. My suggestion is that you consult with a local bankruptcy attorney who can review your financial picture in its entirety and then advise you as to the best route to take.

In answer to your specific question quoted above, you do not have to be behind in your bills to file for bankruptcy, and therefore, you can file immediately if that makes the most sense for you.

Have I satisfactorily addressed your concerns? If not, then please feel free to ask for clarification.

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DISCLAIMER: Please understand that the complexities of most legal problems cannot be adequately addressed in this setting, and that I am only licensed to practice law in the state of Maryland. Accordingly, you acknowledge (1) that we have not formed an attorney-client relationship, and (2) that my post is general information only and not specific legal advice.

I just realized that I did not mention your car.

It is possible to keep the car if you "reaffirm" the debt. Basically, you would sign a document agreeing that the car loan will not be included in the bankruptcy. You will then continue to owe the debt just as before the bankruptcy. To be honest, however, I doubt doing so will be in your best interest since the monthly payments will reduce your ability to pay the amount necessary to fund the plan. In layman's terms, it doesn't sound like you can really afford the new car. If that is the case, now is the time to get rid of it since the last thing you'd want is a situation where the car has caused you to be in financial distress again. It's generally best to take care of all debts at once.

Hope I helped!
TJ, Esq. and other Bankruptcy Law Specialists are ready to help you
Customer: replied 8 years ago.
hi, ok i think i didnt make myself too clear on this, we do not own a home or any property. we live in a house that is not ours. thanks for your help.
Ohhhhhhhh, that changes everything. I thought you owned the house. Now your initial post makes more sense (I did see where you wrote that you had no land, but thought you meant that you had no additional land).

Since you don't need to protect a house, then you may be best off filing for Chapter 7 and get the debts discharged right away without paying into a plan. You can then reaffirm your car loan and continue paying as usual despite the bankruptcy. Chapter 7 bankruptcies are much less complicated than Chapter 13s, but I still suggest you speak to a local attorney to help you prepare your documents to file.

Good luck!
Customer: replied 8 years ago.
Yes, wow, that makes me feel better. I was so upset that the one good car we have for husband to get back/forth to work, would be lost. Thanks for your help. I shall talk to a local bankruptcy lawyer in the coming week. As ever, Sandra
Glad I was of help! I really wish you luck!
Customer: replied 8 years ago.
thank you very much, and Happy Holidays to you and yours. I left you positive feedback as i hope you shall do for me. Thanks again.
Happy Holidays to you and your family as well. I will certainly leave you positive feedback. Thanks for using Just Answer. :)