Would personal bankruptcy be the answer?

[bluefx]

What is the name of your state? Florida
This is like a bad soap opera...
Long story short; woman with excellent credit fell for guy with debt and bad credit in 2005(other issues) Girl and guy open company together last year in hopes of making $. Economy is bad, guy brings no money in for many months, business isn't off the ground...housing slump makes sale of home impossible...and mortgages currently more than home is valued. (That changed in the last year) Girl used her credit resources including personal loan from bank for $45K to keep afloat. Three hopeful business contracts fell through, no outside money coming in at the moment. Tried to sell house BEFORE things got bad, no buyers. Home is valued at approx. $395K due to slumped values in South Florida area. Girl's main job is secure, but obviously not enough to carry debt.

Facts are:
Girl's annual income: $65K before taxes.
Girls 401K valued at $33K (not including loans out for $11K)
Girl is 48 years old.
Mortgage (first) $291K
Mortgage (second) $126K
Home's current market value approx. $389K (figure includes 15% decrease in value since appraisal one year ago)
Credit Card Debt ($40K)
Personal Bank Loan ($45K)
Second Vehicle Loan ($26k) roughly equals what vehicle is worth (guy's vehicle)
Main vehicle paid off. Value approx. $14K

Other factors: I have one teenage dependant and jointly we have several animals.

If one payment is late, doesn't the domino effect begin and all cards default to highest rate allowable by law? By next month, there will not be enough funds to pay my bills...

I was told that I must have no assets and no money in the bank to file bankruptcy. I am losing sleep worrying about what to do. Any advise would be welcome and appreciated.What is the name of your state?

[bankruptcyAtty]

there are a lot of factors to consider. Certainly credit card companies usually put in the terms and conditions that your rate may change depending on your payment status on OTHER cards.

My advice would be to amputate as many non-essential assets as possible. For example, sell your cars and buy two old honda civics for $5,000. Buy only one if you can get away with it.

Everyone loves their pets, but you should think of your family first. Consider adopting out your pets to relieve some additional cash constraints.

Find a good real estate agent, and figure out what your house will sell for NOW and find a way to sell it at that price... in todays climate banks would probably rather give you a loan to cover the difference between amount owed and amount sold rather than have another foreclosure on their hands.

Find income... if the business is not working find something that is and start making money. then start delivering pizzas on nights and weekends.

Eat beans and rice... at home... eating out is expensive.

THEN if everything is still falling apart, you may want to speak with an experienced bankruptcy attorney. If you need help locating one in your area you can visit [url]http://bankruptcy.legalrow.com[/url]

[bluefx]

I appreciate your input...will take recommendations accordingly...

[Ladynred]

I was told that I must have no assets and no money in the bank to file bankruptcy

Yeah.. that's incorrect.
The 401K is 100% exempt, so no worries there.

In FL, for a Ch 7, if you claim the homestead exemption, then you only get $1000 in personal property exemptions, which is pretty stingy and won't save your paid-for vehicle. Now, if you let the house GO in the bankruptcy, obviously NOT claiming the homestead exemption, then you can claim the $5,000 exemption for personal property that's become available. I do believe that 5K includes a vehicle, so the paid off vehicle would still be a target to the Trustee, although you could redeem it (pay the Trustee the value to keep it).

If your income is above the median and you have disposable income to fund a Ch 13 plan, then you could keep the house - but only as long as you can afford to make the payments. You could also let it go, and still walk away from the house. Your vehicle would be safe, and you'd pay back at least some portion of your other debts over a 5 year plan.

Trimming back as suggested is a good start, but you still might want to speak to a bankruptcy attorney now. Get a good handle on what you'd be facing, then make a decision. Far too many people wait waaaaaaay too long to file bankruptcy.

[bluefx]

Thank you for the information; I am interested in paying other debts, but getting the two mortgages off my plate, and doing that in the smartest way possible. Real estate is not moving AT ALL in So. Florida, at least not in my neighborhood, but I plan to speak with at least one broker regarding Short Sale.

I think if I were to let go of the motorcycle loan, and the two mortgages, I would definitely be okay. Anyway, I need to make an appt with an attorney, the sooner, the better. Thanks.