I was terminated in Feb. 09 by my employer after almost 8 years. I'm now collecting unemployment. My wife makes approx. $25K / year.
I've been unsuccessful at finding a new job and I'm not optimistic I'll get anything anytime soon. Soon unemployment will run out and I will not be able to pay all of my bills - mainly credit card debt.
If credit card creditors are unwilling to work with me and I can no longer make payments to them, what are the possible legal implications beyond affecting my credit record? The debt is unsecured. I'm not sure if I should pursue bankruptcy or simply just stop paying the credit card companies (need to pay mortgage and other living expenses first).
Estate Planning Attorney
This is a complicated question and you should speak to a bankruptcy attorney.
If a Chapter 7 bankruptcy is filed, and if both you and your wife are on title to the house, then $15,000 of equity in the house is exempt (you can keep it) for each of you.
The Chapter 7 would discharge or eliminate your credit card debt. I am assuming that the credit card debt is all yours and not joint with your wife.
However, the bankruptcy would be on your credit report for 10 years and it would be difficult to obtain credit for quite some time.
Good luck to you.
The title of your question has to do with keeping your house in bankruptcy, but the question itself has to do with the ramifications of no longer paying credit card bills in favor of living expenses. Both of your aims can be met in a Chapter 13 reorganization. This form of bankruptcy involves calculating "disposable income" and proposing a plan to repay creditors with whatever is left over. As long as the plan is observed, you are allowed to keep your property (including your home).
I hope this information was helpful. Feel free to contact us if we can be of further assistance. Whatever your choice, we wish you the best of luck.
General Practice Lawyer
Generally, if the equity in your home, assuming it is jointly owned with your wife, is less than $30,000.00, you will be able to keep the home in a Chapter 7 bankruptcy. Each of you is entitled to a $15,000.00 homestead exemption. If the equity is only slightly higher, it is likely that you will be able to keep the home even though it is not fully exempt. An attorney should advise you carefully.
If there is too much equity, then you would want to explore Chapter 13. Whether that is feasible will depend on a thorough review of your income, expenses, assets, etc.
The scope of this space does not afford an opportunity to assess the situation and advise you. I recommend you assemble for legal consultation: (1) your income information for November through May, including wages and unemployment during that period; (2) all your bills (several months' copies neatly assembled); (3) last four years' tax returns; (4) a credit report; and (5) other information that may apply, such as copies of lawsuits. Set up an appointment at your earliest convenience to afford the most opportunity in which to be advised about your best course.
The bankruptcy laws are designed to allow a fresh start. A fresh start would be impossible if you would lose all your property. The fact is that most people don't lose anything in their bankruptcy. The bankruptcy law allows the State government to decide what property is protected for bankruptcy cases filed in its state. In Illinois, you are allowed to keep most personal and household property, equity in your home up to $15,000 per person, some equity in a car, most retirement plans, and many tools of the trade.