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Have to file Bankruptcy and unhopeful.

Regular Contributor

Have to file Bankruptcy and unhopeful.

In 2012, I joined this forum to rebuild our credit. Everything here provided a wealth of information where we were able to rebuild our credit and get approvals on everything. Things were starting to look up for us until my husband lost his job. Then we hit hard times. He had to take a job that paid less than his previous one and then came the surprise of our second child. We dived into debt without even realizing it. In an attempt to fix it, I took out a credit rebuilding loan, but because we couldn't pay for things like food and electric, we had to rely on credit once more.


Needless to say, it left us in debt. Our credit cards fell into further disarray when our electric company came after us for their budget billing scheme. Now we sit with a few charge-offs (4-5) and perhaps a few more expected to do the same. 

I feel like we have no choice but to file bankruptcy. I'm scared because the bank that my husband has our car from has been so kind and generous to us by not repossess his vehicle. That is the only thing I am afraid of. I do not want to stop paying for his car, we're almost done with it anyway. The only thing preventing us from filing is the fear of them repossessing his vehicle. Yet we just did a hardship package with them and it was approved and should square away lates, but I don't want this file to mess up our relationship with them.

On top of that, I'm afraid I waited too long. I have always been afraid of bankruptcy and thought that it was just going to cause more problems. But the more I read up on it, the more I can see that it would have saved us so many headaches. It would have been the answer to our problems instead of letting credit cards go into charge off status.

 

I have two questions. Will filing make us lose our car? And what happens to charge-offs? I know it will prevent collection, but is there any way to repair the damage after our BK? I want us to go forward and have a house in a few years. It's looking less unlikely... I just want to know if there is light after this dark tunnel.

15 REPLIES
Frequent Contributor

Re: Have to file Bankruptcy and unhopeful.

Well your attorney who files for you should advise. But once the bankruptcy petition has been filed, all communications, phone, mail or any attempts to collect (including repos) should cease. If you are wanting to keep the car, tell the attorney you would like a reaffirmation agreement on the car if filing a Chapter 7. 

 

You and your husband both will have to attend the creditors meeting, this is where the trustee looks over all your debts, income, assests, will ask some questions, then any creditor that shows up ( usually only ones that are secured) to see if you wish to let the property go or keep it with an agreement. To ease your mind, keep the auto payment paid if you can. Again, consult your attorney. 

 

Things that can be "secured", buying large ticket items on a credit card, ie. Appliances, Big Screen TVs, etc. that have been recently bought. Even though I myself had to file due to illness in 2000, I used to work at a financial institution and attended many creditors meeting. Can not count the times people had charged items with intent to file Chp 7 and think they didn't have to pay for it (cost of appliances, not the grocery, gas purchases, clothing). 

 

You can bounce back quicker than you think. My husband and I regretfully did not even seek credit for minimum 5 years, and it would just be a small, high interest loan secured by autos, personal property, etc. We hung our heads in shame. Especially myself being in that industry. 

 

Be sure to include everything, every medical bill, magazine subscription, gym contracts, all loans, credit cards, furniture stores (those would be viewed secured). Really would be a good idea just to pull your credit reports to make sure you aren't missing some old collection. You can do a $1 trial with Credit Check Total and cancel within the week. 

 

 

Starting Score: 2/23/2017 Score 8 EQ 651 TU 659 EX 679
Current Score:11/10/2017 Score 8 EQ 744 TU 745 EX 743
Mortgage Scores 11/10/2017 EQ 756 TU 771 EX 754
Goal Score: 750+ ATB FICO 8, Middle Mortgage Score 760
Regular Contributor

Re: Have to file Bankruptcy and unhopeful.

We definitely have medical bills (due to a pregnancy loss) but thankfully they haven't come after us. However, I will be sure to include that and everything under the sun. The sad thing is that we started to use the credit cards for basic necessities (paying utilities, getting groceries) and that started to pile on. I wish we DID purchase amazing things but that wasn't it at all, we just couldn't afford to take care of our family with the income we were bringing in at the time. Things are doing better but we're drowning in debt now.


Reading this brought me some comfort. I really want to come back to this situation and feel relief and not heartache. 

Contributor

Re: Have to file Bankruptcy and unhopeful.

Definitely talk to an attorney (or a few).  Thousands of people every year go through what you're going through.  Don't feel bad about it; situations like yours are EXACTLY what the bankruptcy laws are for.  I'll say that again... this is the sole purpose of the bankruptcy laws.  Trust me, I know you feel like a failure.  I felt the same way before I filed, and once it happened I felt like an enourmous burden had lifted off me (but not too much, I'm chapter 13 with a 100% payment plan lol).  I understand that the people at the bank have been so great to work with and you don't want to hurt them.  But remember, that bank wouldn't hesitate to file bankruptcy if they needed to.  The rates they charge reflect the risk that some loans won't be repaid.  They aren't losing money overall.

Established Contributor

Re: Have to file Bankruptcy and unhopeful.

@Ple, I'm sorry to hear that things have been so difficult. I don't claim to know how you're feeling but I do know exactly how I felt when faced with filing a Chapter 7 in the summer of 2015. I was horrified, in denial, exhausted and all hope had left the building. I always lived within my means, paid my bills on time and was extremely conservative. I retired, went through a divorce that went on for months and months and as a result lost half of my retirement pension thanks to the community property state I lived in. In a matter of months, the trap door opened and life as I knew it ceased to exist. The day I had to file was the darkest day I have ever faced.

 

I went home after meeting with the attorney and in the course of the next few days, the phone stopped ringing. Within a week, the mailbox wasn't  full of 'notices'. Before I realized it, I was actually taking a deep breath. Maybe the first one I had taken in over two years.

 

I was sick to my stomach about the creditor meeting. The night before I couldn't sleep and that morning I couldn't eat. I just knew that the room would be full of creditors I named in my filing. I went to the courthouse and sat in the hall. My name was called and I went in to meet the trustee. I looked around. No one was there. The trustee asked me a few simple questions and in 16 minutes I was getting back in my car.

 

My life was overwhelmed with peace and quiet. I started to believe that the BK nightmare would be over. I was okay with being stuck with a $200 secured credit card for the rest of my life. It was all gonna be okay. While I waited for my discharge date, I stumbled upon the myFico forums and started to read. I had lots of time. I read and made notes and read some more. About a week before my discharge I had a preapproved offer from Credit One for a Visa arrive in the mail. Two days later the same from Capital One. I read about the cards on the forum and started to make a plan. My Chapter 7 was discharged in late November 2015. In January 2016, my two new cards arrived in the mail and I have never been so happy. Hope for a future with credit was restored.  

 

Fast forward to today. In a couple of weeks I will celebrate 2 years since my discharge. I am now eligible for an FHA home but I'll wait anther two years for conventional financing. By studying these threads at myFico and asking questions and reading some more, I have re-established my financial profile far in excess of where it ever was in the decades before the BK. My current status is in my siggy.

 

My friend, I know the fear, the hoplessness and the pain. If I can do it, you can do it. One thing I know for sure beyond a shadow of a doubt is that the place I was in before I filed was the worst (the very worst) part of the entire process. Once the Chapter 7 was filed, life got better by leaps and bounds daily. BK isn't for everyone and I never thought it was for me but it was the best decision I could have made.

 

Please know that you aren't alone and this community has your back. You and your family are in my thoughts and I wish you a speedy resolution. 

 

P.S. I can't even imagine a situation where you would lose your car. They will ask you if you want to reaffirm the debt. Your attorney can confirm this. Consultations with BK attorneys should be at no charge. Visit a couple and find one who you can relate to. 

 

The future is bright and we're all here for you.

 

Chapter 7: Discharged November 2015

Total Revolving Credit Lines 1 month post discharge: $2600
Total Revolving Credit Lines 1 Year post discharge (Nov. '16): $86K, Total with installment loans: $174K
Total Revolving Credit Lines 23 months post discharge (Oct '17): $196K, Total with installment loans: $338K
11/15 Fico 8: EQ-585, TU-550, EX- 551
01/17 Fico 8: EQ-695, TU-703, EX-673
09/17 Fico 8: EQ-695, TU-692, EX-683
Inquires: Next subject please

Established Contributor

Re: Have to file Bankruptcy and unhopeful.

BK can be a horrible experience to go through but so is the period before one files.

Post BK can be a little tough in the beginning and then it just gets better and better if one learned lessons.

I am not even 4 years post BK - look at my signature.

 

Tell us about the car.  How much owed, how far behind, trade in value.

 

There is a good chance you can keep the car through a BK depending on the state and details.

 

There is light at the end of the tunnel.  

 

credit rebuild started 01/01/14 ..... $100k goal achieved 10/01/17
currently in the garden with $125k total of unsecured credit

     $30,000          $25,500         $23,750           $9,000            $3,300            $1,800            $17,000           $10,000
Regular Contributor

Re: Have to file Bankruptcy and unhopeful.

Thank you SO much everyone. This has been unbelievably reassuring. I'm still not even sure how we will file but I'm remaining positive. I have a meeting with a lawyer next week and talking to another presently. I am so unsure where to begin but hope it will lead us somewhere... positive.

Contributor

Re: Have to file Bankruptcy and unhopeful.

Being unsure of where to begin is fine; you've never been through this before!  When you meet with an attorney, tell them that.  Ask questions of the lawyers, even if you already know the answers.  ESPECIALLY if you know the answers (anything you read online will mostly be general advice and may or may not apply to your state/district).  Seeing how they respond to your questions, and how much they match up with what you already "know" is helpful in finding someone who will truly help you.  Ask something like "I know I can't file chapter 7 if I make more than the average income here, right?" and see what they say.  You want someone who's going to then start talking about "well, that depends.  there's a process we go through, with forms to fill out, called the "means test" blah blah blah..."  An attorney who EXPLAINS things in a manner you can understand is what I would be looking for.  Someone who just gives you very short answers would be a red flag for me.  Ask questions about everything you don't understand.  Don't assume you know what they're talking about.  BE COMPLETELY HONEST with any attorney you talk with.  Think of them like a doctor:  if they don't know everything (and I mean EVERYTHING) the course of treatment you chart together may be the wrong one for you.   Best of luck to you and let us know how it goes.  The folks on here are cheering you on, I guarantee it!

Regular Contributor

Re: Have to file Bankruptcy and unhopeful.

I definitely waited too long to file BK, but that's water under the bridge. I can't change what my situation was 1-2 years ago. I can change it now, though.

 

I began preparing for BK in Jan '17 when I was insolvent, shutoff notices for all of my utilities, all of my CCs unpaid. After a mishap with my first attorney (they were wonderful, but I had to move on to a second through no fault of the first) I was able to file in June 2017. By that time I was solvent again, ahead on my bills, had saved up enough for my BK retainer and enough to live on. 

 

I was able to keep my car, a 2015 sedan I had only just purchased a year before I filed, around $10k in value. I am a renter, so I did not have to use my homestead exemption for a home. You are able to choose between state or federal exemptions, whichever set will benefit you better - I advise looking up the PA and fed exemptions in NOLO, the KBB value of your vehicle(s), and writing down ALL of your questions for the attorney(s) you meet with, who will be better able to advise you on specifics. 

 

Whether a debt is in charge-off status or not, you should be able to include it in BK. They have to include both the original creditor (OC) and the collection agency (CA) in the filing paperwork, however, you are able to request a discharge of the debt. This is another question you can write down to ask of your attorney. 

 

Is there any way to repair the damage, heavens, YES. Just look at the threads all over this forum! Shootingfor800 has one of their own. I'm only 1 month post-discharge (today!) and my scores have gone up 125 points since filing, five months' time. All I've done is open an SSL and two credit cards, one secured and one unsecured. I have my own thread too, probably too verbose for most people's patience level :-). Anyway, as far as what specifically to do: you will learn!

 

My BK bible,

Read the BK to 700 thread for one perspective. http://ficoforums.myfico.com/t5/Bankruptcy/HOW-TO-From-BK7-discharge-to-700-in-24-months-or-less/m-p...

Read ABCD2199's rebuilding thread for another, companion perspective. http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/ABCD2199-s-Eleven-Rules-to-Credit-Rebuilding/...

Bookmark the BK friendly cards thread for later. http://ficoforums.myfico.com/t5/Bankruptcy/Bankruptcy-Friendly-Credit-Cards-Pt-2/td-p/3999737

Read the SSL thread. http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

 

Right now, you need to focus on learning about BK itself as you prepare for filing. But once you have filed, come back around here and start learning about the rebuilding process. And folks will be here to help.

Ch7 discharged 10/2017. Pre-file FICOs high 400s.
11/2017 EX 609; EQ 619; TU 558
Regular Contributor

Re: Have to file Bankruptcy and unhopeful.

You are not alone. I waited and waited, thinking some miracle would occur and I'd be able to magically pay my debt. I had great credit and then a divorce started the downward spiral. Anyway, I would highly recommend the NOLO books on Chapter 7 or Chapter 13, depending on your situation. They are intended for people filing pro se but really break down everything and can save you some calls to your attorney when you are worrying late at night Smiley Happy I ended up going pro se (all went very well) but I even if I had an attorney, or was shopping for one, I'd want to know what the process entailed.

I am sitting at around 700 for all three bureaus right now a year and a month following discharge. I was able to buy a car at a good interest rate and have all the credit I need. There is light at the end of the tunnel and in a way, the BK was a blessing. I had no idea what went into a credit score and was clueless about a lot of my finances. The whole process gave me control over it all and makes me a better consumer and a happier person who sleeps well at night. 

The thing that kind of turned my fears and shame over into action was the realization that this is a business decision. Just like the other poster said, the bank would not hesitate to do the same and BK exists because things happen to people beyond their control. I didn't set out to stiff anyone and really agonized over it. They were not getting any money whether I filed or not and not because I was a deadbeat. Crisis is an opportunity for change- take the opportunity and learn from it. You'll be happy you did.


CH7 BK Discharged 10/16
Oct/Nov 2016: EQ 632 TU 532 EX 573
Feb 2017: EQ 695 TU 673 EX 670
March 2017 EQ 702 TU 676 EX 673
April 2017 EX 683 (TU & EQ unknown)
May 2017 EQ 695 TU 685 EX 693

Gardening since 9/7/17 Aiming for a mortgage October 2018