cancel
Showing results for 
Search instead for 
Did you mean: 

Buried. Is it possible to dig out or should I just file Bk?

tag
jason0618
Frequent Contributor

Buried. Is it possible to dig out or should I just file Bk?

Hi,
So I'm in a bad spot. I'm trying my best to avoid a bankruptcy filing, but at this point it's looking like it may be my best and only real option... Any advice is welcome.

Here's the specifics. I had credit score right around 700. Good job, decent living wage of around $75k a year. Two kids, stay at home wife. Insurance through my employer. Wife got pregnant with triplets, which put us from a family of four to a family of seven.
-Traded wife's five passenger vehicle for a 7 passenger. Kept my commuting car. Payment went from $480-$525. About six months later, the triplets were born.
-triplets are usually early. Ours were no exception. Nicu stay x3 for 2 weeks. Insurance paid some ridiculous amount ending in million. I was left with my copays, max out of pocket, and out of network bills for a few things totaling $50,000. I called, sent pay stubs, pleaded. Got charity reduction to a total of $20,000. Due now. Asked for payment plan. They'll do three years, no interest. Payment is $555.
Credit cards are now being used and not paid off to buy silly things like diapers and groceries. Car payment is still $525, rent is still $1000, etc etc etc.
credit cards become maxed out and/or over limit. Getting spread thin and missed a payment. Went from $100 minimum on the one to $246. Still $100 on the others.
Huge mistake number 1. Emptied savings account to pay toward hospital bills. $10,000 gone. They say thank you, but still want $555 a month.
We get behind on wife's car. I call the credit union, they tell me not to worry about it yet. I pay what I can. Three months later, they call. Now they're worried about it. Willing to let me sell it on my own and will release title. I sell it for $21000. Payoff is $33000. They're willing to let me settle for 25% of the difference, so $3,000 and they'll let me do that when I get my tax return.
Wife needs a car since we can't get by with just my car. Not only because I drive it to work, but because 7 people do not fit into a Honda Accord. So we get her a beater van to hold us over. 2000 Honda Odyssey. Legitimately not a very safe van. Rusty, lights, exhaust leak, just a crappy van.
Now I'm running either negative outflow each month, or just barely breaking even.
I talked to Bk attorney and he says we are the perfect candidates for bankruptcy, but then he's a Bk attorney so...
He tells us we should do our taxes, get refund, spend it and then file. Thought process being to get her a better van. My tax refund will be about $7000.
With all of this long winded post, am I missing anything? Looking at about $100,000 total debt now. Medical, credit cards, car loan balance, etc. income went down to about $65000 due to missing work when the babies were sick in the hospital. Wife is still not working, but with five kids, day care isn't an option anyway.
So.... Thoughts?
Scores as of 04/2021





Gardening until further notice
Message 1 of 16
15 REPLIES 15
jason0618
Frequent Contributor

Re: Buried. Is it possible to dig out or should I just file Bk?

Oh, just to add.. Credit score has gone from 696 to 466 as of this morning.
Scores as of 04/2021





Gardening until further notice
Message 2 of 16
StartingOver10
Moderator Emerita

Re: Buried. Is it possible to dig out or should I just file Bk?

I agree with the Bk attorney with the limited info you posted so far.  My concern would be this:  what if heath situations crop up again in the short term? In other words, with a Ch 7 you can't file a Ch 7 again for the next 4 years IIRC. Are the triplets out of the woods yet with their health? Hospital bills quickly go to outrageous even with one person, no less three. If your children are healthy, then seriously consider a Bk.  Congrats on all of your children!  And I sincerely hope they are healthy and happy Smiley Happy

Message 3 of 16
jason0618
Frequent Contributor

Re: Buried. Is it possible to dig out or should I just file Bk?

Thanks. Yes they're all healthy now and growing like they should. They recently had their first birthday and are doing everything they should be. Of course, with a total of five kids, chances are someone will get sick and/or hurt. My insurance at work isn't the best, but it's decent. I think they just had no idea how to handle triplets. We had to prove there were three because they initially were denying every duplicate charge when in fact there were three deliveries, three nursery stays, three nicu beds, three of everything. Even now, when we go in for well baby checks, they have to bill them all separately.
Scores as of 04/2021





Gardening until further notice
Message 4 of 16
Anonymous
Not applicable

Re: Buried. Is it possible to dig out or should I just file Bk?

I feel your pain, bro. I work in commercial health insurance. Those out-of-network bills from long inpatient stays have put many at bankruptcy's doorway. I can only speak for myself. When I filed, I had to ask myself if my situation could get any worse. To me, if a 7 is an option, I'd definitely consider it. What state are you in? I'm wondering what the median income is for a family of 7 in your area.
Message 5 of 16
Anonymous
Not applicable

Re: Buried. Is it possible to dig out or should I just file Bk?

From my research, with a family of 7, you'll just be under median income regardless of what state you're in. Since you've already gotten rid of the vehicle payment and you don't own a home, I see no reason to consider a 13. I'd definitely consider filing a 7. Within a few months, you could be debt free and on a path to rebuilding your credit profile. As it stands, you still have close to three more years just paying the hospital. The lates on your revolving accounts have already did some damage to your credit profile. You obviously can't see the future to forecast a possible need for a future filing, but now definitely seems like a good time.
Message 6 of 16
CH-7-Mission-Accomplished
Valued Contributor

Re: Buried. Is it possible to dig out or should I just file Bk?

It's really hard to gauge how much you owe.  We get the back story.  Sorry about the expenses there.

 

Can you list your debts?  List each credit card, the 20K for the hospital, and if you owe a car note?

 

 

When your total dischargable debt reaches or exceeds your annual gross income, that usually makes it an obvious choice to file.

 

I suspect if you paid the hospital $200/month, they wouldn't file suit.  Getting some money is better than no money from their perspective.

 

If your salary is 5K a month, you really can't handle more than 2.5K/month (50%) including your 1000 rent.  So that would leave $1500 maximum for debt payments including car payment.  If you use 40% total debt since you have so many kids, and income is 5K that means 2K a month total including rent, so 1K a month for debt payments, including car note.

 

You will have no trouble qualifying for a chapter 7, but as the other poster noted, if you use up your chapter 7 and the kids have more health issues, you are in a pickle.  You can only file every 8 years.

Message 7 of 16
Anonymous
Not applicable

Re: Buried. Is it possible to dig out or should I just file Bk?

I feel your pain. I too would definitely look at a Ch7 That would immediately ease a lot of your pain. If that is your plan, you might as well stop paying anything other than your monthly expenses now. I'm also not sure about purchasing a car right before you file. Does anyone know how that will look to the trustee? Whatever you decide, good luck to you!

Message 8 of 16
jason0618
Frequent Contributor

Re: Buried. Is it possible to dig out or should I just file Bk?

Since it was requested, here's my debts with minimum payments included.

Rent- $975
Electric- $380 (budget billing)
Water/trash/sewage- $30
Renters insurance -$460/yr pif, but I budget for renewal
Car insurance-$387/6' mo. Again, pif but budgeted
Cable- $40/mo basic cable, no extra channels or hd.
Internet-$25/mo bundled with cable
Groceries- this varies, but $1,000-$1,200 a month.
Health insurance-$512/mo deducted from pay at $128/wk
NFCU credit card-$100/mo $5,000 bal
Cap 1 card $25/mo $1,000 bal
Barclay card $85/mo $4,800 bal
Verizon $150/mo 2 lines. One mine, one my wife's.
Credit union signature loan $75/mo $1,400 balance
Credit union wife's car loan remainder $3000 due next month

My wife now has the pos Honda Odyssey. Can't sell it to raise money, even if it made a difference. I'll sell it to a junk yard as soon as I can.
I drive a much nicer, but still old and high mileage 2002 accord. Gets me to and from work reliably. Still old and almost 200,000 miles on it so it's not worth selling for an unreliable commuting car.

I've got about $1,000 left in savings plus around $70,000 in 401k which is exempt if I file Bk, and I've been advised strongly not to consider a hardship withdrawal or loan to get out of this situation.
Scores as of 04/2021





Gardening until further notice
Message 9 of 16
Anonymous
Not applicable

Re: Buried. Is it possible to dig out or should I just file Bk?

Maybe others can chime in, but would utilizing a 401k loan be a decent option after filing a chapter 7? My worry is that your wife's vehicle is on borrowed time. Also, what about the medical bills?
Message 10 of 16
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.