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Chapter 7 questions ? ?

Contributor

Chapter 7 questions ? ?

Hello all, I have a few questions regarding a chapter 7 that i'm about to file and was hoping I could get some answers. First the reason for filing for BK7 is due to about $20K in medical bills and over $5K in other collection accounts that my wife and I have on our credit. I was told by our lender that these would need to be resolved prior to closing. I simply do not have enough $$$ to pay per the terms offered by the CAs. Most of the balances are held by the same CA(Medicredit) and they WILL NOT settle for less than 85% lump sum payment. This would be around $13K and if I accepted payments it would be $15K!!! All of these hospital bills are between 3-5 years old too so I though I would get some sort of break but no dice. My main question at this point is what to do with CCs that I have in good standing. I have 3 CCs(2 are at zero balance) and one has a balance of $41.00. With an eye toward rebuilding my credit afterwards should I pay this balance and close the account prior to filing? Leave it open with but with a zero balance? Leave the balance and let it be a charge off? How would these actions affcect my score after we emerge from the Chapter 7?

Message 1 of 15
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Valued Contributor

Re: Chapter 7 questions ? ?


noochski wrote:

Hello all, I have a few questions regarding a chapter 7 that i'm about to file and was hoping I could get some answers. First the reason for filing for BK7 is due to about $20K in medical bills and over $5K in other collection accounts that my wife and I have on our credit. I was told by our lender that these would need to be resolved prior to closing. I simply do not have enough $$$ to pay per the terms offered by the CAs. Most of the balances are held by the same CA(Medicredit) and they WILL NOT settle for less than 85% lump sum payment. This would be around $13K and if I accepted payments it would be $15K!!! All of these hospital bills are between 3-5 years old too so I though I would get some sort of break but no dice. My main question at this point is what to do with CCs that I have in good standing. I have 3 CCs(2 are at zero balance) and one has a balance of $41.00. With an eye toward rebuilding my credit afterwards should I pay this balance and close the account prior to filing? Leave it open with but with a zero balance? Leave the balance and let it be a charge off? How would these actions affcect my score after we emerge from the Chapter 7?


"Your lender"?  Are you trying to get a mortgage, because you will have to wait at least two years after BK7 discharge.

 

BK7 Filed 8/11/2009 Discharged 11/23/2009. Purchased new home 4/11/2012
Starting Score:11/16/2009 EQ 566 11/16/2009 TU 538
Interim Score: 12/27/2012 EQ 683 09/17/2012 EX (lender) 670 1/01/2013 TU 701
Current Score: 11/06/2013 EQ 708 11/06/2013 EX 702 11/16/2013 702 11/06/2013 TU 729
Goal Score: EQ 740 EX 740 TU 740
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Message 2 of 15
Contributor

Re: Chapter 7 questions ? ?

I know about the two years. But I won't be able to get these debts paid in the next two years anyways. I have a family of 4 with a combined income of $34K so paying the amount that Medicredit alone wants is out of the question. I offered to settle the debt for $5K and was shot down. They would only accept $13k payable within 30 days. Even on a $500.00/month payment paln I wouldn't have it paid off in 2 years. I also have $200.00/month in student loans that I must pay. So filing bankruptcy seemed like the best option and the fastest way to get this behind me.

Message 3 of 15
Contributor

Re: Chapter 7 questions ? ?

I know the student loans won't be discharges by the BK7 BTW

Message 4 of 15
Contributor

Re: Chapter 7 questions ? ?

i should have explained in my original post that my plans on getting a mortgage are postponed. . . My lender basically asked if I could pay these CAs within two years and when I said no he immediately advised a Chapter 7. . .

Message 5 of 15
Established Contributor

Re: Chapter 7 questions ? ?

About your CC's in good standing, if the amount is small, I would pay it off if you can. You will come out of 7 with a few good marks on your report. I would take a shot at keeping them open (others may disagree.) Most likely they will be closed, but sometimes they make it through.

Message 6 of 15
New Member

Re: Chapter 7 questions ? ?

My thought is, depending on who the credit cards are through, they will either close the account or reduce your available limits.  If you want to keep a good standing with the credit card companies where you have small balances, then pay them off.  Otherwise, including them won't hurt you any more.


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Current Score: 701
Goal Score: 777


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Message 7 of 15
Contributor

Re: Chapter 7 questions ? ?

Thanks for the advice. I only had one card left with a balance remaining. I closed all of my secured cards prior to contacting an attorney so those shouldn't be an issue.

Message 8 of 15
Valued Contributor

Re: Chapter 7 questions ? ?

I would pay the CCs off in full and CLOSE THEM before filing Chapter 7. It will be easier to get them back post BK.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! Smiley Happy Last App: 4/5/13 Gardening until July 2014
Message 9 of 15
New Contributor

Re: Chapter 7 questions ? ?

MovingForward,

I did this, at what time can I possibly reopen closed cards?
Message 10 of 15