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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2897
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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I live in Minnesota and am struggling to keep my home and have

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I live in Minnesota and am struggling to keep my home and have been unable to pay $34,000 in credit card debt. I had to quit paying on them a year ago, but have kept all 4 of the creditors notified of my current income vs debt ratio. This is my current situation; I am employed fulltime and grossed approx. $49,000 last year. I net approx. $2600 per month of which $1350 is my house payment. My wife has been unable to find a job, but is looking. Our monthly bills which include basic bills,plus a student loan are approx. $3100 per month. We own two older vehicles which are paid off. Our credit card debt on 4 cards totals approx. $34,000 due to late charges and summons/court filing fees. My wife is due to inherit money when her dad's house is sold; it has been for sale for 3 yrs. now. We know because of this we do not qualify for chapter 7. How can we stop possible garnishment of my wages. Not all our cards are in both of our names. Does that make a difference? Thanks
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
Chapter 13 may be able to help, absent working with your creditors or credit counseling agency on a debt repayment plan or debt settlement.
It is where you make a monthly payment for the next 3-5 years. It will have to pay back enough debt to protect the inhereitance though, so you might not be able to handle it. It can go for as long as 60 months.
Customer: replied 7 years ago.
We knew that Chapter 13 would protect our home, the inheritance, and my wages, but we would be possibly obligated to pay $600 per month on our credit debts for up to 60 months. Of course, we don't have that $600 per month and have been living on borrowed money from relatives just to stay in our home right now. We can't sell the home unless we were allowed to do a short sale, which with our bad credit might mean we couldn't even get approved for a rental apt. Can my wages be garnished when we can prove that we have only that income to pay the majority of our bills? If some of the credit cards are in my name only, can my wife's possible inheritance be held liable for those debts? She could inherit from $45,000-$60,000 if the house ever sells. If we file chapter 13 and agree to work on a debt payment plan, do we have any room to negotiate with each creditor on a lower debt. These collections companies have paid cents for our debts, yet they want us to pay the entire debt plus the additional costs they have added to it. So far, we have two cards facing court action: one for $11,000 and one for $1700. Thank you.
Expert:  Terry L. replied 7 years ago.
Yes, wages can be garnished up to 15% under federal law.
If you do chapter 7, you can surrender your interest in the inheritance, so you can just get on with it, since it may take a long time to get it the way this real estate market is. With the chapter 13, you pay a certain percentage to unsecured creditors (same for each) to protect the inheritance. If you want to negotiate with them, you can, and the settlement amount may be less. If you explain that you have the inheritance coming, they may be willing to work with you/wait etc. Keep in mind, any amount forgiven by the creditor is taxable to you (unless you do the chapter 13)
Customer: replied 7 years ago.
One more question since I am not clear on the taxable part for amounts that may be forgiven. Please give me an example of that? If we owe $20,000 on one card, but negotiate it down to $10,000 and make payments on that, we still get taxed on the $10,000 we don't pay? I am confused. Thanks. Bob and Jill
Expert:  Terry L. replied 7 years ago.
IF you owe $10k and they agree to call it even for $7k, then you would be taxed on the $3k as income (1099)
Customer: replied 7 years ago.
Sorry, but I thought of one more question. If our two credit cards get judgments against us; one for $10,500 and one for $1700, they could garnish up to 15% of each of those amounts from Bob's wages? Would they then settle the debt or would additional amounts need to be paid?
Eg: 15% of the larger debt would be approx. $1550; would that end that debt? (and we would pay taxes as income on the rest of it?) Also, I wanted clarification on the fact that two of our cards are in Bob's name with Jill receiving a spousal card. Can the companies try to use Jill's inheritance on the cards that are in Bob's name only? PS Do you know how delinquent a person must be with their house payments before they might qualify for modification loan help? I appreciate all of your assistance.
Expert:  Terry L. replied 7 years ago.
They can garnish up to 15% of each check, until the full balance is paid. Each company offers different requirements on loan modifications. If they were joint cards, then the inheritance is at issue, if just authorized user, most likely not, assuming the inheritance was just for her.
Customer: replied 7 years ago.
When the court looks at garnishment of wages, do they care at all about our current outstanding debts or just use the formulary rule and take that required amount out; even if it means we miss a house/student loan payment, etc? The inheritance belongs to Jill only and yes two of the cards are spousal use only. Thanks again.
Expert:  Terry L. replied 7 years ago.
it is formula driven.
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