Expert: Terry Leeders - 8/23/2007

Question
My husband and I are considering filing bankruptcy.  We have several credit cards with approx 25,000 on them, plus around 5,000 in medical.  I am also upside down on my car loan and cannot afford to keep it and cannot trade it and would want to include this.  Our home has approx. 30,000 in equity.  Would this hurt us in filing for bankruptcy, or how would it affect us filing.  The other reason for filing is we will also be getting divorced in the near future and neither can afford to pay these debts.  Also, is it true that you need to pay up 3 months in advance on anything you want to keep?

Answer
you need to speak with a local attorney to see if the $30k in equity would be protected.  Each state has exemptions.  after costs of sale and paying the mortgage and deducting any exemption, if there is still equity...then you would consider chapter 13 to protect that equity.  IF your monthly budget is a wash, a chapter 7 sounds like a better option to eliminate all the other debt incl. the car balance (give up the car and get something else later).  You do not want or need to pay up 3 months in advance for the items you are keeping.