Expert: Regan Shinski - 9/17/2010

Question
My daughter almost died earlier this year, she is 49 and I am 71. I was out so much expense over this and she had always helped me pay my bills, now she can't and I have gotten so far behind I cannot catch up. My question is should I try to file Bankruptcy or can the creditors not touch my home it has a mortgage on it and it is in a Trust.The largest bill I owe it nearly $8,000.00 on a pickup that was repossessed. The rest are smaller or at least they were until the companies added late charges and jacked interest up. I know they cannot touch my social security wages at all and I have not other income. What should I do?

Answer
Hi Shirley:

I'm not sure bankruptcy is a good choice for you, although you should always keep your options open.  The reason is your assets and lifestyle seem protected.

They cannot take social security and you have no other income.  However, you need to be sure that you put your social security income in an account that ONLY - and I mean ONLY - has social security income.  Tell the bank this account is only for SS income.  Make them put a note on the account.  If you have deposited ANY other funds into that account, close it and open a new one with ONLY SS funds.

Most importantly, you need to find out the status of you housing situation.  This varies by state.  Some homestead are protected/exempt from creditors with judgements placing liens on the property, others are not.  You also mentioned the home is in the name of a trust.  You may want to seek counsel to be 100% sure it is protected from your creditors if they seek judgements against you.

So assuming your only income and housing is protected - and assuming you have no other major assets - the other reason why I don't think bankruptcy makes sense for you is cost.  It can cost anywhere from $1000 - $4000 to file bankruptcy with an attorney.  I guessing these are funds you either don't comfortably have, or would rather not pend on a court or attorney when the benefit of the bankruptcy may only be on paper.

You can always file bankruptcy at a later date if your house or other assets become jeopardized, but I would not at this point.

If collection agencies start calling you, simply send them a certified letter that you want VALIDATION under the FDCPA and that you want all future communication from them to be in writing.  This should stop the annoying and harassing calls.

If your situation changes or you have more information or questions, please feel free to post another question.

Good luck, I hope this helps.

Regan