Filing Bankruptcy, Chap-7 in TX?

[golding]

I have 2 credit cards, the total credit cards debt is $17000, i am current on my car payment and for the house i am in the process of the Loan Modification plan. i can't afford to pay these credit cards, i am already 12 months behind on these cards and i am thinking to file bankruptcy. i have talked on the phone with some law firm and after listening to my situation most of them are saying Chap-7 works well for me. But i want to keep my home and car, i only want to get rid of these credit cards debt, as i can't afford to pay them. last month only i settled with bank my one of the credit card and paid them half of the balance and the rest they settled but today i have heard that for the settled balance of the credit card i will get form 1099 for IRS and i have to pay tax on that. now i dont understand what should i do for my other 2 credit cards, one of the lawyer told me that for chap-7 there is income limit of $57000 yearly in TX my husbands annualy income is 60000 so which means i can't file for chap-7 and for chap-13 he said that i have to pay some % to the credit card company but i dont have any money to pay them. i am so confused. I just want to get rid of my credit cards!!!! and on top of that all lawyers charges so much of the fees avg $2200 for chap-7 and $3000 for chap-13, a person is filing for bankruptcy ofcourse he don;t have money and still they ask so much money.

[sonny]

You cannot pick and choose which debts to include in bankruptcy. ALL debts and ALL assets must be listed when you file bankruptcy.

You can keep your house and your car in Ch 7 so long as you are current on the payments and reaffirm the debt. If you are not current on the payments, only Ch 13 can help you save the home. Your mortgage modification may bring you "current" on your payments. Make sure to work with your bankruptcy attorney in scheduling the timing of the bankruptcy filing with respect to the mortgage modification.

In Ch 13 it is customary to include most of the attorney fee in your repayment Plan and repay it over 3-5 years. You usually do not have to pay the entire attorney's fee up front for Ch 13. In Ch 7, you typically do need to pay your attorney's fees before you file the bankruptcy. Most bankruptcy attorneys recommend that debtors stop making payments on unsecured debts that will be discharged anyway and apply those to the attorney's fee instead. Do NOT stop making payments on secured debts for assets that you intend to keep.

You cannot "elect" to "just get rid of credit card" debt. Which creditors receive payment in which order is determined by the bankruptcy law. Unsecured creditors are typically treated differently from secured creditors. All your credit card debts are probably unsecured, which is maybe where you got the idea that you can just "get rid of credit card debts." All unsecured non-priority creditors will be treated alike.

You do NOT have to pay income tax on debt that is discharged in bankruptcy. You DO need to pay income tax on debt that is "settled" for less than you owe OUTSIDE of bankruptcy. If you are considering filing bankruptcy it was probably an unwise move to "settle" with one credit card company. You will owe taxes on the forgiven amount, and you can't discharge recent taxes in bankruptcy, so you'll probably be stuck paying taxes on that. You wouldn't have had to pay those taxes if you'd waited and just discharged the debt in bankruptcy.

If you are filing bankruptcy but not filing jointly with your husband, you must count all of your husband's income, but then the Means Test allows you to deduct those portions of his income that does not go toward joint expenses. Usually if it is as "close" as you say, by doing the "long form" of the Means Test (kind of like the "long form" of Federal Income Tax form 1040 rather than the abbreviated 1040A or 1040EZ) your attorney can probably find a way for you to file Ch 7. If not, consult a different attorney for a 2nd opinion.

You need to get together with a good bankruptcy attorney whom you trust and then follow that attorney's advice. Your attempts at "self help" are hurting you more than they are helping.

Bankruptcy attorneys are quite accustomed to working with people who "have no money." EVERYBODY who files bankruptcy is "broke." Your bankruptcy attorney should have some ideas for you on how you can afford to pay his or her attorney fee. Bankruptcy attorneys cannot afford to work for free. They need to rent their office space, keep the lights and the heat/air conditioning on, pay their office staff, etc. too. Bankruptcy is one of the lowest paid legal specialties. Believe me, your bankruptcy attorney is not "getting rich" off of others' financial woes (and neither is his or her staff).