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Hi,

I am writing to gain a better understanding of bankruptcy and if it might be a good option for me (by "good" i mean "least bad"!) I live in NC and bought my townhome in 2006 and looking back, I shouldnt have bought my place bc it was clear I couldnt afford it. And I think it was clear to Wells Fargo and my mortgage broker too. The terms of mortage are terrible.

In 2010, I was laid off from a really good job and it took 2 years of part-time and temp work before I found another FT job...one that pays about 20k less than the one I lost. I have applied for a loan modifcation w my new mort company (Wells Fargo sold it after signing the deal; then the next company sold it 6 weeks later). My mort company told me my mortgage is not HAMP eligible (although it was when it was w Wells Fargo...) and that they only modify to a 7% interest rate.

I have an underwater house, about 40k in student loans, a few small credit cards I stopped paying when unemployed and a car loan. I don't see a way out of this.

I dont understand bankruptcy. Can I file if I have a job? Do I lose everything if i file- house, car etc? Is it better to file bankruptcy or to lose my house in foreclosure? I've heard that you cant get any credit for 7 years after bankruptcy- does that mean when it's time for a new car, I'd have to pay everything out of pocket?

Thanks so much for your help!!
Kristen

Answer
I would suggest you get a free consultation with a local bankruptc attorney and you can find one on the national association of consumer bankruptcy attorneys website (nacba.org) as members of that organization are debtor attorneys only.

Now you only lose the condo if you want to;  it has no equity it sounds like so you can pay or you can go, at your option, if you file a chapter 7.

If you have a car you're paying on, you can keep it and pay, or surrender, your choice.  Odds are everything you own is exempt (furniture, clothing, jewelry etc) but this is a local issue dependent on your state law;  assume everything is exempt or mortgaged so there's no equity.

You could file a 7,  not a problem and the only possible loss would be a tax refund if you get one and can't exempt it -- but you MAY be able to exempt it under your local laws.  

Now not getting credit for 7 or 10 yrs -- not true at all.  After you file your bankruptcy and get a discharge, I recommend getting a secured visa and the best place to get that is
USAA federal savings bank in San Antonio.  They're part of USAA insurance that just deals with military, but ANYONE can bank with them and they're used to dealing with people that aren't local.

Free checking, free bill paying service with them, "snap it/deposit it" camera deposits, but their secured visa card is the best I've seen;  you give them between $300 and $5,000 and that's collateral for the credit card.  It's not a debit card;  it's a credit card and they report your pay history to the credit agencies.  Annual fee is $35 or so and they also pay interest on the Cd AND you can add to it any time to increase your credit limt.

Also, you can get car financing and house financing after a chapter 7 bankruptcy.

If you do a 7 and decide to walk from the condo, you have no financial responsibility. Do NOT however reaffirm that mortgage debt; you don't need to and it totally revives your personal liability as if there was no chapter 7.

I hope this helps.  Get local legal advice; don't try this on your own; but if you were in AZ, I'd file your case unless your income forces you to do a chapter 13 payback;  doesn't sound like it.

Good luck!

Lee Horner

Bankruptcy Law

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LEE HORNER, ESQ.

Expertise

Consumer bankruptcy questions invited. I've been filing Chapter 7, 11 and 13 cases since 1985 in Calif and Arizona. I do NOT do homework questions. Let me know what state you're located in when you write. My bankruptcy practice is limited to California and Arizona but inquiries from other states are welcome. Your local jurisdiction determines exemptions. Find more background information at our website, www.freshStartAz.info. Individual Chapter 11 and small business chapter 11 questions invited. We can also advise on the creditor's side if for example you have a fraud case, money judgment etc against someone who has filed (or is threatening) bankruptcy. We have filed and defended numerous adversary complaints in bankruptcy court and opposed trustees' demands for turnover of assets from time to time.

Experience

My partners and I have filed over 5000 consumer and small business cases to date in California and Arizona.

Organizations
I've been a member of the California bar since 1984 and Arizona since 2004; also a member of the National Association of Consumer Bankruptcy Attorneys, Bankruptcy section of the Arizona State Bar, Tucson Association of Consumer Bankruptcy Attorneys, Arizona Consumer Bankruptcy Counsel and American Hellenic Educational and Progressive Association (AHEPA).

Publications
I've written a booklet on land trusts for real estate owners, players and dealers, and co-authored a special edition of "Stop Sitting on Your Assets". I was a writer of a monthly law review article relating to California real estate issues and pending and recently enacted legislation.

Education/Credentials
Attorney at law, experienced in trial procedures, adversary complaints filed and defended and numerous claims objection proceedings as well as filing cases for consumer and small business debtors.

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