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I am a homeowner with close to $35,000 in credit card debt.

Good morning, I am a...
Good morning, I am a homeowner with close to $35,000 in credit card debt. I find myself in a deficit of about $250/mo paying mortgage, household expenses, and credit card payments. Would I be eligible for bankruptcy? Thank you,.
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Answered in 7 minutes by:
1/4/2017
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2,960
Experience: Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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hi and thanks for your question. You may be eligible for chapter 7. It would depend on your monthly income and your assets.

if the assets you have are covered by the exemptions, and you are below the median income level for your family size and state(or pass the means test if above median) then chapter 7 is an option for you, yes.

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do you have any questions?

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Customer reply replied 1 year ago
Hi Terry,My gross annual income is about $75,000, (net about $4400/mo), plus I receive $1250/mo VA benefits (from my deceased husband). I have one adult son living with me attending college.My only asset is the home, purchased last year for $515,000 and with current refinance, has a $3200/mo payment. Can you share the specific guidelines for California? thank you!

what is the balance on the mortgage?

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median income level for California 2 people is $69,370. So you would have to pass the means test to get into chapter 7. If not, then you can pay back a percentage of the debt, based on the chapter 13 means test, which will help calculate the minimum percentage needed.

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Customer reply replied 1 year ago
the balance on the mortgage is about $530,000 (with recent refinance). Plus I do have a loan through the HERO program for home improvements made (HVAC and windows) which is paid through property taxes. That $700/mo property tax impound is included in the $3200/mo payment I mentioned above. I've read of Chapter 13 which is a repayment plan of the debts in a 3-5 year timeframe, correct? how is the payment determined and that is for a percentage of the credit card debt, correct? Would the discharged/forgiven balances of the credit cards be treated as taxable income? thank you so much!!

you would pay a percentage of the unsecured debts (usually 10-100%) based on the means test calculation of the last 6 months income. You would pay any mortgage arrears 100%, any outstanding Taxes (usually 100%) and any secured debt such as car notes 100%(but can cram down in some instances) You would pay the mortgage directly most of the time. The forgiven debt is not taxable, since it is discharged thru federal law. (the creditor gets the tax break).

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Customer reply replied 1 year ago
I am not in arrears in any of the payments but am nearing the point where something's gotta give. the meager savings I had is dwindling to near zero. I did inquire about a 2nd mortgage to pay off the debt but am not able to secure that - seems the 2nd mortgages are for home improvements. I have no car loan - just the unsecured debt. Would I be better off contacting my credit card holders and closing the accounts hoping no more interest would be charged? I'm just unsure of what to do.

you can always try that, it will ding your credit, but if you can get those paid off, and otherwise handle the rest, then you can avoid bankruptcy. if they won't work with you, you have the ch13 fallback.

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Customer reply replied 1 year ago
Besides the huge ding to my credit, is my home safe in Chapter 7 or 13? That's truly my only concern.

if there is no equity, and you remain current, then it is 'safe' in the bankruptcy, yes

Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2,960
Experience: Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
Verified
Terry L. and 87 other Bankruptcy Law Specialists are ready to help you
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Customer reply replied 1 year ago
thank you so much! I guess I need to schedule a consultation with a lawyer here to see my next steps.

always a great choice! best of luck to you!

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