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I am a 71 years old woman with 35000.00 debt on credit cards. I am on a disabled social security . I cannot make these payments

Marion, IL |

I am spending out more than I get a month. I own my home with value of $90.000 but owe $41.000 I was told I could not file chapter 7 that i would loose my home. I have stopped paying the credit cards so I can pay my utilities and insurance and house payments. What should I do now I can get a home equity line of credit but if I use it it will increase my house payment fro $278 a month to over 600.00 I could possibly loose my home if I would not be able to pay the over 600 dollars payment What should I do? Can I just quit paying the cards I do have a 730 credit rating now but that wont stay theat way long please help as noone seems to have an answer. I called on credit company and tryed to just settle with them but they will not do that until I am way behind in monthly payments thanks

Attorney Answers 3


If you stop paying on your credit cards, your creditors can sue you. While your creditors cannot take your social security check, they can put a lien on your home.

In many states, the homestead laws will prevent the creditors from forcibly selling your house but the lien will have to be paid when you try to sell or finance your home. Because your equity in your house exceeds the homestead allowance in Illinois, I don't know whether the creditors would be able to force a sale of your house or not.

You may wish to consider whether a reverse mortgage could give you an income that would allow you to settle your debts (for less than 100%) and would protect your equity in your home. Contact a local nonprofit credit counseling service for more information about a reverse mortgage and/or settling your credit card debts.

Hope this perspective helps!

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There is another option you should explore - Chapter 13 which is a bankruptcy filing that has a pay plan for certain debts. The plan would seek to make the payments affordable and should protect your house. Get legal advice.

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When you file Bankruptcy you create a financial estate. That estate is “administered” by a Trustee. There are very different paths to the same outcome if you file a Chapter “7” or a Chapter “13” Bankruptcy, but the result is the same: you get rid of “unsecured” and maybe other kinds of debt.
Bankruptcy is filed by creating and filing a Petition. In the Petition you list all of your assets and income for the household; and all of the debts and obligations for that property or person who is filing.
After everything is listed your attorney applies “exemptions” to the property. Exemptions are creatures of State law in New York. Quite simply, they are the “things you get to keep” as defined by specific statues and laws.
There are many exemptions. It does not matter if a person files a Chapter 7 or a Chapter 13 Bankruptcy. These exemptions apply to all cases:
Homestead exemption: This is where the homeowner who is on the Deed and living in the property gets to protect $50,000.00 (in New York…other States Vary!!!)each (up to two) of equity in the property. So, if one person is on the Deed and they live in the house and the home is worth $50,000.00 and is paid off, they get to keep the home and no one can try and take it if they file Bankruptcy. If two people are on the Deed and reside in the home the house can be paid off and worth $100,000.00 and nothing will happen to it if they file a Bankruptcy.
Personal property: The vast majority of people do not have to worry about losing property when they file Bankruptcy. However, it is your obligation to report all property. Most people’s furniture, bedroom sets, dining room sets, clothes, etc. are normal consumer items that we list, but since the PERSONAL PROPERTY EXEMPTION IN NEW YORK IS $10,000.00 DOLLARS (In New York…check your State) we have found that it is not worth the trouble by the Trustee appointed to oversee your Bankruptcy to take and sell the property.
Take out a second mortgage to pay credit cards;
Transfer property to family members or friends to “protect it”;
Take money out of your retirement account to pay credit cards.
Good Luck!
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Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.

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