Expert: Terry Leeders - 10/24/2007

Question
We are currently getting behind in our mortgage and owe more than the house is worth.  We currently make $56k gross and owe 327K on the house, 27k on the ccards plus 3k on my car and approx $2500 on medical bills.  We may be able to liquidate his 401k but that will not even wipeout the ccard debt.  We are not in foreclosure but it's heading that direction.  Can we file bankruptcy either 7 or 13 and how will it help.  At this point I don't see a way out other than to file bankruptcy.

Answer
Chapter 13 will consolidate the debt, get you caught up and will pay back a portion of the consumer debt (discharging the rest).  Chapter 7 is available, but you are on your own if you  want to catch up on the home.  It would eliminate the consumer debt 100% (CC's and meds)  Both options protect the 401(k) as well.  It would come down to your monthly budget and value of your assets. So speak with a bankruptcy lawyer, most offer free consultations.