QUESTION: Our creditors are at our door! My wife’s salary is being garnished by the State. Frankly, I’m at my wit’s end. It all started when I pulled out my 401K savings to start our own business. My wife and I purchased a fixer-upper and made money by re-selling the property. At one point, we have 4 properties and were making about $50,000 to 100,000 per month. I thought the good times will never end.
I must admit that we did live it high. Every year, we go on family vacations to Hawaii and the Philippines. Now, we are left with about $120,000 in credit card bills. A week ago, American Express sued us for our debt. On top of these, my wife’s paychecks is being garnished for our 2008 State taxes that we failed to pay. We tried consolidating our debts and paid the a debt consolidation company almost $700 every month. However, even that we can barely afford. We have cut and shaved every bit of unnecessary expenses. But the future is very bleak.
We have been behind in our mortgage payments for over a year now. I recently received a Notice of Trustee Sale for October 30, 2010! I am ashamed of the depth of how our financial situation had sunk. Imagine we used to have four houses and now, even our home is in being foreclosed upon. I know that I can file bankruptcy to stop this foreclosure but for how long will this help our financial situation?
Now our combined income is barely $5,000 per month. However, with the wage garnishment, we might not have enough money to pay all our bills. We have two minor children to support and a cannot afford to lose our house. Can you help me? Can I still save my house? What steps should I take?
Answer: You are in a very stressful and difficult financial distress. You must be afraid to open your mail or to even answer a phone call. However, there are still legal steps you can do to save your house and move forward financially.
You and your wife can file for bankruptcy under Chapter 7, a straight bankruptcy. A straight bankruptcy debtor need not pay any of his/her unsecured (credit cards) bills. Filing of bankruptcy will immediately put a stop to the wage garnishment and all the harassing phone calls. You do not even have to defend the case that American Express. Your bankruptcy attorney will just file a notice with the State court that you are in bankruptcy. Generally, this will stop the collection suit.
With regards to keeping your house, Debtors, under chapter 7 can still retain their houses, provided they are able to pay the mortgage. Since you will not be paying a single cent towards your credit cards, you will have money to pay your mortgage. Meantime, you must also negotiate with the bank for a loan modification and get them to agree to the plan. You can try to negotiate with the bank to lower your interest rate, extend the term of the loan, or even lower your principal.
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If you have any impending foreclosure, please call our office at 213-639-3888 or e-mail us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Our office is located at 3699 Wilshire Boulevard, Suite 720, Los Angeles, California 90010.
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This article does not constitute any legal guarantee or advice for any individual matter and does not create attorney client relationship with the readership.
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