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Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007
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BK and Credit Cards

I might be forced to declare personal BK due to divorce. The fact that I have moral objections to BK may become irrelevant as it could be ordered by family court or literally leave me with no choice if I'm going to save the home of my son and I. I have no clue which chapter would be involved at this point. I have personal objections to this so please don't lecture. If you want to know details, refer to the book "Without Honor" regarding the specific court and some of the specific attorneys involved. Excerpts to that book show up on Amazon.com.

 

If I declare personal BK, what would that do to CC accounts? Kill them, kill the personal ones? Can I save any?

 

I have about $140K in balance at this point, $103K of which shows on my personal reports. I have numerous personal cards, a few business for a Sole Proprietership that are somewhat business and two for LLC that are true business and don't appear on personal at all. I have 715-750 FICO and no negatives of any kind on my report. My worst error on any CC since 2002 is forgetting to press "submit" on an online payment resulting in a late fee and then PIFing the CC when I discovered the error before the statement cut. A late fee, no late, way before anything would show. Most of my CC have 5-25 years of history. I have 18 CC, only 2 under $10K CL (Kohls & TGI), several with CL of $45K+ each. I have several cards that get $5K charged per month and then are PIFed on due date so they show about $10K balance on report even though I pay zero interest on those accounts. Before anyone goes ballistic about interest, if you include accounts that I PIF, the average interest that I pay on the balance works out to 3.87% annually.

 

Posting this in CC since it applies more to CC than BK and the BK section is about rebuilding credit. 

 

 

 

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Creditaddict
Posts: 19,524
Registered: ‎10-23-2007
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Re: BK and Credit Cards

If an account has a 0 balance when you file bk there might be a chance that it doesn't get included and closed but your not really allowed to pick and choose credit during bk.  The ones not on your report are your best chance.

I would file 7 if your going to file, that wipes everything out, 13 you pay some of the debt 

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granny031350
Posts: 951
Registered: ‎12-04-2007
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Re: BK and Credit Cards

to save a home you need to file a chapter 13.  A chapter 7 is the quicker and simply wipes out all unsecured debt.  Your secured debt would stay in place and if you file a chapter 7 you want to have all of your secured debt current (not behind).

 

If you can afford the house without all of the other cc debt, then by all means file a chapter 7.  If you are behind on the mortgage of the home you want to save then you must file a chapter 13.

 

However, to file a chapter 13 you must have income.  To file a chapter 7 your income must meet the means test although since you have a business, sometimes a chapter 7 can be filed with higher income.

 

What you need is a good attorney so shop around and don't settle on the first one.  Research and find one that does business as well as personal and is well respected in your area.

 

No one judges in today's economy.  I have filed both Chapter 7 and Chapter 13.  (just finished) and I now am a home owner and have plenty of credit.

 

All of your accounts will close no matter which chapter you file, even if they have a zero balance and are not required to be listed on your petition.  Once in a GREAT while one will slip through the cracks but it sounds like you have ALL prime cards and that won't go unnoticed by them.

 

And it doesn't matter the circumstances as to why you file to the cc companies.  All they know is that you filed. 

 

Good Luck to you!

Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007
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Re: BK and Credit Cards

When I say I want to "save my home", it isn't that I can't afford the payments. In order to keep my house, the court is so moronic that they think I should pay her attorney fees and her share of forensic accountant. This adds up to another $86K. This is all because she was arrested for Felony Intentional Child Cruelty and was fired from her job. Now the "poor" woman can't afford to pay her bills. She can't quit, but if she is fired for 3 criminal convictions, then it wasn't her fault. :smileymad:

 

This was similar logic when my brother went through the same and they forced him to declare BK on his debts so that he could pay hers. They could force me or it might just become obvious to me that I am forced financially.

 

If I now have that much debt, it becomes insane. I would be forced to do something to get out from all this debt she created.

 

Would chapter 7 let me keep my house which has around $50K in equity? Not much problem with too much income. I'm barely getting by and selling down inventory to pay bills. Business will probably fail and I will do similar work on a small scale out of my house. Income might improve a bit with the lower overhead.

 

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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: BK and Credit Cards

[ Edited ]
Sorry to read this; what a mess. :smileysad:

I don't know if you've gone poking around on the BK board, but there's a lot of specialized info there. Try these as a start:

Considering Bankruptcy?

Bankruptcy FAQ's

You might also check out the Nolo Press series of books on divorce and bankruptcy:

Nolo's Essential Guide to Divorce

The New Bankruptcy

Nolo also has plenty of articles on its online site.

I hope these can give you a start, at any rate.


eta: sorry, I meant to add, as regards your current credit cards, you should be able to keep at least some out, if it isn't a question of debt. (I'm a little confused on what you wrote.) At any rate, look through your CC collection and plan to keep your oldest cards, most useful cards, and so forth out of the BK. This will help keep some history going. But I have read of other members having perfectly good cards closed by lender anyway, even when they were excluded from BK.

I would definitely recommend a long reading of the BK board here on the forums.
Message Edited by haulingthescoreup on 12-20-2009 06:00 PM
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Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
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Re: BK and Credit Cards


GregB wrote:

When I say I want to "save my home", it isn't that I can't afford the payments. In order to keep my house, the court is so moronic that they think I should pay her attorney fees and her share of forensic accountant. This adds up to another $86K. This is all because she was arrested for Felony Intentional Child Cruelty and was fired from her job. Now the "poor" woman can't afford to pay her bills. She can't quit, but if she is fired for 3 criminal convictions, then it wasn't her fault. :smileymad:

 

This was similar logic when my brother went through the same and they forced him to declare BK on his debts so that he could pay hers. They could force me or it might just become obvious to me that I am forced financially.

 

If I now have that much debt, it becomes insane. I would be forced to do something to get out from all this debt she created.

 

Would chapter 7 let me keep my house which has around $50K in equity? Not much problem with too much income. I'm barely getting by and selling down inventory to pay billsBusiness will probably fail and I will do similar work on a small scale out of my house. Income might improve a bit with the lower overhead.

 


You need to sit down for a (usually free) consultation with a good BK attorney in your area. Exempted property varies from state to state so it is very difficult for someone to give you general advice. In FL, for instance, homestead property is exempt in BK proceedings - which is the major reason why the well-to-do move to FL and buy a big home before filing. (Think OJ.) In your case there is also a business involved. If you are forced to contemplate BK don't spend a lot of time mulling it over. Get competent, professional legal advice and then make a decision. If you do have to file delay will only increase the length of time it will take to get you back on your feet. It was once explained to me that BK is the "atomic bomb" of credit. Don't expect much to be left standing (with the possible exception of your home) after you push the button.

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MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009
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Re: BK and Credit Cards

In FL, for instance, homestead property is exempt in BK proceedings

 

This is also the case here in Texas.

Established Contributor
granny031350
Posts: 951
Registered: ‎12-04-2007
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Re: BK and Credit Cards

states have exemptions for property.  You need to find out what your exemptions are for a home.  In michigan it is like 3500 but in other states, it is up to 125,000.  So depends on what state you file in.  If you can file the chapter 7 and exempt the equity on the house.

 

What happens if you can't exempt the equity is that the trustee will ask you to pay him an amount equal to your equity to distribute to your creditors (or hers etc)  That would keep a chapter 7 open for years.  SO in that case, I would file chapter 13  

Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
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Re: BK and Credit Cards


granny031350 wrote:

states have exemptions for property.  You need to find out what your exemptions are for a home.  In michigan it is like 3500 but in other states, it is up to 125,000.  So depends on what state you file in.  If you can file the chapter 7 and exempt the equity on the house.

 

What happens if you can't exempt the equity is that the trustee will ask you to pay him an amount equal to your equity to distribute to your creditors (or hers etc)  That would keep a chapter 7 open for years.  SO in that case, I would file chapter 13  


 

Just not correct. If anyone is in a position where this might matter please consult a qualifed professional ASAP.

 

From FL law re: BK exemptions:

Homestead

222.01 - Real or personal property, including mobile or modular home and condominium, to unlimited value. Property cannot exceed: 1/2 acre in a municipality, or 160 acres elsewhere. Spouse or child of deceased owner may claim exemption. (Also refer to Florida Constitution, as "Fla. Const. 10-4." ). May file homestead declaration. Also, tenancies by the entireties in real property are exempt as to debts of one spouse [In re Avins, 19 B.R. 736 (S.D.FIa: 1982)

Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007
0

Re: BK and Credit Cards

There is some great info here and I thank all that have replied. I originally posted this in Types of Credit > Credit Cards because I was looking at what would happen to my CC and whether I could save any of them. Not having any CC would seriously impact the ability of my business to make money and there is also my CC Merchant account to consider. Certain things such as buying items from occaisional vendors in a foreign country are difficult/messy/expensive/dangerous without a CC. Info such as CreditWCID saying "BK is the atomic bomb...." and Hauling saying that I can keep some of them are great help. Thank You. I can't exactly call any CC companies and ask them if they will close the card it I declare BK.

 

It sounds like I should try to convert some of my quasi-business cards to true business cards that might be separate from a personal BK.

 

I realize that the vast majority of home owners are filing BK to try to save their house because they can't make the payments. I have never been late on a house payment and wouldn't plan to be even though my house payment (including taxes and insurance) only leaves me about $600 a month left for all other expenses. I've cut back a lot. That $600 would only pay the electric bill for one summer month when my future-ex still lived in the house. 

 

The info on exempting a house is helpful. I need to make an appointment with a good BK atty and get all that info that is specific to my state, etc.

 

 

 


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