Need help understanding BK

[Anonymous]

Lee:

I have to agree with nixit912 in spirit anyway. Considering BK Chapter 13 appears to be your only sane option as ugly as it seems; however, I think you have not come fully to the understanding of how unfortunate your situation really is. I commend you for partially owning the mess you helped create, but you are in an fight that you cannot win with credit card companies and this is why a Chapter 13 appears to be the only way. Credit card companies generally cannot be reasoned with; therefore, credit card companies deserve every loss they have coming to them; moreover, raising people's interest rates to greater than 25 %, in my opinion, is usury plain and simple and should be illegal. Lastly, I am one year and nine months out of my Chapter 13 dismissal as a result of a failed entrepreneurial venture, I chased the American Dream and failed. TransUnion 777 Experian 678 Equifax 680

#1 Dump the car with the $676 m a month payment and get a junker- I sold my car and now still drive a 1994 Honda civic with 300,000 miles on it- it looks like hell on four wheels, but it runs well.

#2 Consult an attorney. Our attorney advised us to develop our 13 repayment plan with my old expensive car payment as an established debt and then I sold the car, broke even, but I shed  a monthly car payment which I used for some "breathing room."

#3 I squeezed every penny out of the budget until my budget and I cried together. It took a long time and a lot of healing, but you can get through this IF you are willing to sacrifice in a big way. I hope that you have the ability to change in a significant enough way so that nixit19's predictions don't come true. With the job market so unstable right now, unemployment in double digits in most states, you better change and sacrifice or the soup kitchen line is not far off

[sgtm7]

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@Anonymous wrote:

lee307 :
 
I'm not going to bother reading through the rest of these replies , but I will respond to your actual questions.
 
#1 you make 100k a year, the problem is once you do the means test that others spoke about your plan will be paying unsecured creditors most likely a high percentage. I would guess around 30% or so.
 
#2 the student loans will not be affected by the bankruptcy outside of the automatic stay, They cannot collect against you, put a lien if there isn’t already one on your credit for those items, most importantly the interest stops and very little if any of your plan payment at the very end will go towards it, thus you will be paying it once again after discharge from the bankruptcy.
 
#3 if you owe any taxes , you will be required to pay 100% secured priority towards the IRS/State Taxes, their penalty and or interest is considered unsecured so you will save some money there.
 
Important to note about taxes and bankruptcy, it is VERY important that you NEVER owe money at the end of the tax year, you have to supply the tax returns to the court, and the solvency unit at the IRS does look at these, what this means to you is if you are seen not having enough income withheld from your paychecks they will take over and make your employer switch withholding to zero thus taking the maximum amount from your paychecks outside of using additional withholding option + the zero withholding.
 
#4 Credit Cards. This is where you will save a lot of money simply by the inability of the credit card companies to charge you interest , this obviously applies mostly to your defaulted APR rate on the 20 thousand dollar balance. My thoughts are this particular debt will be unsecured and paid at the plans unsecured amount, which sucks for you guys that you make the money you do because you will be paying quite a bit towards unsecured as stated above.
 
I would guess your credit scores will go down into the 550-600 range once the case is filed and creditors listed start putting the debts in a wage earner plan.
 
Regardless of your worries the bankruptcy is a public record, I have never personally heard of any employer looking down on someone for this, in these current times I’m sure a lot of others there are doing the same thing.
 
That is the last of your worries and even if they knew, I wouldn't let it bother you.
 
If you have any actual questions regarding the bankruptcy itself I can answer any direct question you have.
 
BTW: the great part about a chapter 13 is, after 36 months you have the option to pay it off and get the discharge and start moving on with your life, likely your payment will be quite large.

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The part about never owing taxes?  This must be something that applies to people who filed chapter 13 after the changes in 2005?  I filed in May 2005.  I have owed taxes every year since I filed, and have never had any problems, other than having to pay a penalty and/or interest.  

[Anonymous]

Times change and so do the  rules.  Chapter 13 Bankruptcy is a repayment plan.  It does do some damage to your score.  Are you planning on running up your credit again in the next 7 years?  I think not. 

The benefit of 13 is that it stops all interest payments and fixes your debt with a finite payoff time frame.  it is often the best way to go.  You certainly have the income.  Current events not withstanding.  Somnetimes you can do a partial payback.  Some states don't allow partial repayment plans. 

Your credit score won't drop as much as you think if you act while you can.  CCCC's  are looked at as BK without government protection.  Plus most aren't free.  Your Attorney is not paid up front on a BK13 although that may be desirable. 

BTW  Credit Card Companies are paid handsomely by the creditors.

[Anonymous]

I'm sorry if it's already been said. I used to be a banker. You need to contact your student loan companies and see if you can declare financial hardship to delay or lower your payments. You need to talk to your bank to see if you can convert credit card debt into a fixed loan. Contact the car loan companies and see if you can reduce payments. Check credit unions for car loans....they usually offer the longest terms and lowest interst which would reduce your costs. Can you sell your cars and downgrade? Can you transfer the nearly 30% rate to a lower interest card? You'll pay a transaction fee...but it could help. 

Bankruptcy is the last thing you want to do. Working w/ a professional...like a lawyer...you may be able to lower rates and / or payments.

as far as the credit card...you can do several things.

-dispute the charge in a credit bureau website noting that there was XYZ discrepancy that lead to a payment one day late.

-write to the better business bureau and file a complaint..1 day and 29% dif is BAD

 If you have more questions you can email me at edited (posting of personal info, like an e-mail addy, is a no-no and isn't allowed on these forums. However, feel free to PM each other. Click the envelope in the upper right corner of this page.)

my father attempted suicide over money...so trust me...i'm willing to help as much as i can 

Message Edited by llecs on 06-23-2009 09:53 PM

[sgtm7]

"Bankruptcy is the last thing you want to do. Working w/ a professional...like a lawyer...you may be able to lower rates and / or payments.

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You know, I hear this all the time.  At the moral/right thing to do level, I guess I can agree.  However......  I filed chapter 13 bankruptcy 4 years ago.  Three days ago, I made my last payment in a 48 month plan.  It is the BEST decision I ever made.  Although I was current on all bills, and my credit score was around 750, I was so far in debt it would have taken 20 years to pay them off.  I had barely $100 a month residual income after paying all bills.  Today, with my chapter 13 completed, I have no bills other than my mortgage and child support.  Without filing bankrutptcy, it would be MANY years before I would be able to see the light at the end of the tunnel. 

I am working overseas now, and I am getting a higher income.  My house which I purchased in 1995, will be paid off next year.   I wouldn't have been able to get to that point, that quickly, no matter where I was working, if I hadn't have filed bankruptcy.  

Yes, it is true it will hurt your credit score, and it will take time to rebuild it.  However, I discovered something while I was in the chapter 13 plan----- I enjoy being able to pay cash for everything.  I always paid cash for used cars even before I filed bankruptcy, and that isn't going to change.  I already have a house.  After I pay that house off next year, I plan on saving enough to buy another one.  Probably won't pay cash, but plan on having enough downpayment (40% or more)  that I will definitely find a bank that will approve me.  Even then, I plan on paying that house off within 3 to 4 years.  Before filing bankruptcy, I didn't mind owing money and making montly payments.  This went on until I hit a plateau, and owed over $70,000 in cc debt, on a 60K a year salary.  Since being in bankruptcy, I don't even want to have a mortgage payment for any longer than few years.  If I use a credit card, I send an electronic payment and pay it off immediately.  Chapter 13 bankruptcy helped me, and CHANGED me.  

Yes.  It was the best decision I ever made! 

[Anonymous]

Lee:

I also agree with sgtm7 about one of the best decisions I have ever made when I filed for my Chapter 13 repayment plan. It's so easy to tell people that "filing bankruptcy is the last thing you want to do- blah blah blah..." What people who expouse that linear line of thinking fail to understand is that the stress, depression, and anger that comes with the burden of carrying immense financial debt can debilitate people and sometimes can kill via suicide.

School of Hard-Knocks Lesson: I'm now hyper-aware of credit and and it works even though I don't like how the credit agencies create a credit score; at least now I know the rules.

Message Edited by Esu123 on 06-24-2009 07:30 AM

Message Edited by Esu123 on 06-24-2009 07:33 AM

[krielly]

There is no blanket right or wrong when it comes to filing. I too feel like it was the best decision I could have made. I have 1 more year to go in a 5 year plan, and I've learned PLENTY!!!!!!!!!!!

Everyone's case is unique. While BK may be the answer for some, it is not the answer for everyone, and vice-versa.

It bothers me to hear so many folks put BK down the way they do. Many folks put it off for years and years, only to eventually wind up being forced to file anyways down the road. I say learn all you can, if BK is for you, do it and get it over with, so you can start moving on with the rest of your life.

BK is not a moral decision, it's a business decision. BK is a legal right we ALL have. Folks 100% opposed to this no matter what should probably just skip over this section of the forums.

K

[MyFico_704]

Wow...my wife and I are in the exact same situation.  CC debt is less than yours...50k. My BoA card with 8 years of perfect payments, I was late 1 day b/c I was out of town, and they freak'n increased the rate from 9.9% to 28%!  1 DAY LATE!!!!!!  I have to wait six months in order for them to review my history!

We also make just above the 100k mark. We've never been 30 day on any bills, mortgage or cc. We each had FICO scores of 780 back in fall of 08'. Now I'm at 690 due to high limit....yet I've still never been 30 days late..still perfect.

We're discussing filing BK as well as we are struggling to get bills paid each month. Again still debating BK. Doing a complete budget overhaul and cutting back won't work as everything is a necessity.

I feel your pain!

BTW..you originally posted this over a year ago.....what was your decision and where are you now?

[Anonymous]

myfico_704.

Been there done that.  My decision was BK13. 100% payback over a 48 month period.  You pay the trustee once a month and you are done.  No more charging for 4 years.  Stress is gone.

You will need an attorney. There was no fee upfront because the attorneys fee was part of the payback.

It is to your benefit to do file while all your payments are current. 

Your score will recover faster after the BK13 is satisfied.

[lee307]

We did end up filing BK.  After I was told I was losing almost 3 weeks of pay my wife lost more than that which thankfully pushed

us over the edge.  I know we will feel the after effects of this for a long time but I can't tell anyone how much pain and burden

was lifted once we filed.  We have learned alot over the last 5 years.  Learned how to save money and not spend everything we have.

We we saving enough money in a CH13 that we have been able to pay cash for all of the CRAP that has sprung up over the past 5 years.

Car repairs - a couple in the ouch range

home repair - 1 over $4000 but had the cash to cover it

medical bills - hospital let us spread payments over a couple months after paying large amount down

Any or all of these items would have almost killed us before and certainly made us pull out the CC.  Now we need

to start cleaning up the reports.  We don't plan on using CC's again but we want 1 card for emergency/travel reasons.

Travel has been the biggest issue we have found.  We vow to never charge anything we don't have the savings for again

unless it is almost a life or death situation.

Now I will say I still feel BK is the last resort but I wish it hadn't taken me so long to pull the trigger.  Once you realize it is 

the best course then go ahead and make preparations.  Delaying the filing will only waste money trying to make minimum

payments.  Please don't choose BK lightly though, it is a very serious decision with life long effects.

I appreciate the criticism given on this thread.  Obviously some people use their internet cloak to say things they would

not say in person but that's ok.  I am fine with responses of all kinds, I have to be since I put it out there on a public forum.

I have grown so much in the past 5 years and also have been able to really calm down and be able to take things in.  

Stressing over all the financial aspects in my life caused me to be a time bomb ever single day.  Small things would set me off,

large things would set me off, it was horrible.  My wife and kid suffered my attitude because I was mad at everything especially myself.

Now I am much happier, we are much happier, we are more of a family than ever.

I have 1 payment left to make and it will be the most memorable payment I have ever made.  I am so ready to be done with this.