Finally Decided to file for Chapter 7

[Anonymous]

Hello Everyone, 

After 4 months of extensive research, consultations and agony I've decided to file for Chapter 7 bankruptcy. I did not come by this decision easily but Ive basically come to the conclusion that it needs to be done. I am in the middle of a garnishment that takes 15% of every paycheck. Considering I was living paycheck to paycheck before the garnishment - imagine what that does to me now. I have taken the information i have gotten from attorney's Ive spoke with along with the information I could find on bankruptcy laws in my State (FL) as well as the information Ive found on this forum to help me prepare for filing. I do have a few more questions that maybe someone out there can answer for me. 

• Do I need account numbers for the debts I am trying to discharge? I would think as long as they have my SSN they wouldnt need it. I do have some as they were listed on my credit report but I dont have all

• If I reaffirm my car (which I will most likely have to) can I trade it in after discharge to possibly get something used with a lower interest rate/monthly payment or do I have to continue payments? (Currenly have just under 2 years left on it)

• The attorney I spoke with said I need to be current on my carpayment before I file but other research shows that I dont necessarily have to be. Im currently a month behind but I dont want to have to play catch up once the automatic stay is lifted. 

• Since I am already being garnished (since January) how will my employer know to stop taking the money out of my paycheck? Will they receive notice of my BK? What about the money that has already been taken out? 

I definitely appreciate any feedback you guys can give me. Im torn between two attorneys (still doing research on them). Attorney's fees are not cheap so I need to make sure that they dot every I and cross every T. 

[Anonymous]

I can't answer all your questions, I will say that when I did my BK7, it was a little easier then expected, but we had already gone through a foreclosure and didn't have a car note.  This was over 3 years ago, so I'll tell you what I remember and maybe somebody a little more learned then I can chime with with corrections or more information:

I will also add that we stayed debt free for 2 years after the BK7 and I, now, feel that was a mistake.  I feel like I'm 2 years behind rebuilding my credit.  I had tried for a secured CC with my bank but was declined because of the BK7 and didn't try any where else.  It turns out my bank is a conservative lender and has fairly strict guidelines.  I thought they were universal so it never occured to me to shop around.

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@Anonymous wrote:

Hello Everyone, 

• Do I need account numbers for the debts I am trying to discharge? I would think as long as they have my SSN they wouldnt need it. I do have some as they were listed on my credit report but I dont have all

I had to include all the account numbers for everything I wanted to include in the bankruptcy to my lawyer.  I just obtained all 3 credit reports and claimed everything that was on them that needed to be discharged.

• Since I am already being garnished (since January) how will my employer know to stop taking the money out of my paycheck? Will they receive notice of my BK? What about the money that has already been taken out? 

I too, had my pay garnished at the time.  My lawyer (iirc) gave me a letter, once we filed, to send to my employer's HR dept to stop the garnishment.  I did not get any money I had already paid back.  I was just happy to not have to pay more. 

[StartingOver10]

OP, you only have to be current on your car payments if you plan to keep your vehicle and reaffirm the loan. If you plan to surrender you don't have to be current. The lender will file a motion to lift the automatic stay to get the car if you aren't current. It's SOP. There is another way, you might be able to buy back the vehicle, but that takes cash. Ask your attorney about all of your alternatives.

Is your car payment reasonable for you to make? In other words, can you afford the existing payment if you didn't have the garnishment and other debt you are paying now?

Are you financed by FMC?  Ford Motor Credit doesn't do reaffirmations.

A reaffirmation is a specific written agreement between you and the lender restating interest rate, terms and balance owed. I had two vehicles in my BK, one I reaffirmed and the other I surrendered. The one I reaffirmed I made many changes to the standard agreement sent to me by the lender.  I had the interest rate reduced, the payment reduced and the term extended for a several more months (maybe 4 or 5 additional months). I also specified that they would continue to report the payments to the 3 CRA's and send me my title within 10 days of payoff of the vehicle. I had to write that into the reaffirmation and all the parties had to sign off on it (my attorney, the lender and myself). Then it had to be filed with the court prior to my discharge in order to be in effect.

Don't let the lender tell you it can't be done. I did it with one, the other was uncooperative. The other lender told me it couldn't be done so I surrendered that vehicle in the Bk even though I was current with my payments and never had been a day late. No use keeping a payment that is going to put you in a bind. It is easy to get financed afterward. I chose to buy a little beater for cash and keep it for two years post BK while I got back on my feet financially. Then i was able to finance something for a decent rate.

Do what is best for you. BK is the big nuke. Make sure you take advantage of all that it offers you since you will have to pay the "penalty" of rebuilding afterward. PM me for the name of a forum that has much more specific info on BK that is helpful....prior to you actually filing.

[Anonymous]

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@StartingOver10 wrote:

OP, you only have to be current on your car payments if you plan to keep your vehicle and reaffirm the loan. If you plan to surrender you don't have to be current. The lender will file a motion to lift the automatic stay to get the car if you aren't current. It's SOP. There is another way, you might be able to buy back the vehicle, but that takes cash. Ask your attorney about all of your alternatives.

Is your car payment reasonable for you to make? In other words, can you afford the existing payment if you didn't have the garnishment and other debt you are paying now?

Are you financed by FMC?  Ford Motor Credit doesn't do reaffirmations.

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I am financed by GM Financial who recently bought out Americredit. Without the Garnishments and other bills I would definitely be able to afford the payments however I would feel allot more confident if I had a lesser payment. Thats interesting that you were able to renegotiate a better interest rate with yours. I will bring that up when i go speak with an attorney. I am basically looking at every scenario and the pros/cons of each. I just like to be well educated as much as possible because this is all foreign to me. PM'd you for the name of that forum as well.

[StartingOver10]

Beware...your attorney may tell you it can't be done.

That's what my attorney said - and he was overall an excellent attorney.

I listened to him throughout the entire BK process. But when it came to the reaffirmations I said I would handle the negotiations myself because he said it couldn't be done. I was dead serious about turning in both vehicles and not reaffirming anything unless I was able to work out a reasonable payment with the lender. As I posted above, one was cooperative and the other wasn't, so one was reaffirmed and the other surrendered.The vehicle loan that was reaffirmed was also current at the time of filing. So have your plan in place before you file.  What have you got to lose by negotiating? Just make sure your entire agreement is reflected in the reaffirmation agreement that is filed with the court. You will have to modify whatever they send you as the standard form is a fill in the blank type form.

[DJMac]

FMC Does reaffirm your auto loan.  I filed Chapter 7 last year and Ford took care of all the paperwork, but you have to contact their BK department.

[SoulMaster]

How did this ancient thread get resurrected?  ahhaha!

-SM

Also, since it is: Reaffirmation = Bad. Unless you have equity, the judge should/will probably deny it anyway.

[StartingOver10]

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@SoulMaster wrote:

How did this ancient thread get resurrected?  ahhaha!

-SM

Also, since it is: Reaffirmation = Bad. Unless you have equity, the judge should/will probably deny it anyway.

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I agree here^^^. The one I reaffirmed only had less than a year of payments (don't remember the exact number now) and it had actual equity. Otherwise, I would have surrendered it.

[Anonymous]

Since you have an attorney (good) ask your legal representative. They should be providing you all the guidance you need. The rules do have some variation from state to state and you need the best guidance right now. I did a Bk7 also and the attorney provided me everything I needed including a reaffirmation on my vehicle.