Expert: Apex Credit Services, LLC - 10/31/2008

Question
First, thanks for your informative web site.  It has
answered lots of my questions.

I am no longer to make the $750 monthly payments (plus
storage, insurance, maintenance) on my 2006 motorhome.  The
original list was $136,000 and I purchased it for $100,000
round figures, no down payment.  My intention was to use it
one year and sell, hoping to keep the deprecation loss to
minimum (I have done this before).  The rising cost of gas
has almost completely halted new and used motorhome sales.
For the past eight months I have had mine on sale on
several web sites for $65,000 and have not received a
single call.  

My loss of income due to my IRA being recently demolished
makes it imperative that I cut back on spending in order to
make the IRA last through my expected lifetime.

The motorhome is in my name only, the house is in the joint
name of my wife and I.  Credit card debts and all bills are
paid off fully each month and my credit rating is in the
order of 740.  Our combined IRAs total approximately
$250,000, down $150,000 from last year.  In the past, we
have withdrawn a total of $4,000 each month to supplement
our retirement and SS income.  This will have to be reduced
immediately by $1,000 immediately in order to stretch the
IRA income several years.

In considering Chapter 7 bankruptcy, I haven't determined
yet if I am even eligible, or if the wife's portion of IRA
and home ownership becomes part of the equation.

I read this morning on RV.net, a blog site for motorhome
owners, that one person, in a situation similar to mine,
went to his bank holding the lien and told them he could no
longer afford it, nor will anyone buy it on the depressed
market.  The bank agreed to take possession of the
motorhome for the amount ($20,000) the owner had put in
equity and write off the remaining debt which was about
$80,000.  Before I contact my bank, I want to know if an
arrangement such as this will put a worse hit on my credit
rating than if I file for Chapter 7.

Thanks, I would appreciate you input.

(Please, do not post my name)  

Answer
Dear Sir:

Absolutely not.  A voluntary repossession with a zero balance will not come close to seeking bankruptcy protection.  The reason is that every debt must be disclosed and that has the potential to become listed on your reports.  In addition, you will have the public record.  By virtue of this, you will see some creditors close current accounts.

However, you should not suffer such a hit via one repossession.  Your scores will fall about 50 to 60 points but, over the course of two to three years they should rise back to the 700's.

Jason Barnette
Barnette Law Offices, LLC
http://www.barnettelawoffices.com
615-585-3885