topic Re: Should We File? in Bankruptcy

Should We File?

Anonymous — Sun, 05 Apr 2015 20:52:24 GMT

The combined debt between myself and my husband is probably nearing the $100,000+ status.

My mother and brother died in 2011 and 2012, and my husband and I had to use 401(k) funds to pay for their funerals, as well as we made the mistake of cashing in the remainder of our 401(k) money and used it to move out of state, thus causing us to owe quite a lot back to the IRS. When we moved to the new state, the job my husband thought h had fell through, so I was the primary breadwinner, but was not making a lot of money. So, I applied for two personal loans, as well as both of us applying for payday loans to help keep us afloat, which of course, we realize was a big mistake. He never was able to hold down a job, and we continued to get behind in bills.

We are now back in our home state, where he now has a steady job, and I'll be starting a new job in a couple of weeks, but we are still in a financial mess. We still owe the IRS, plus taxes in two states (and will more than likely owe again this year) which probably is nearing $20,000+. We also owe speeding tickets, some missed tolls, more payday loans, and still quite a few things in collections (medical, credit cards, past insurance carrier, etc. (Again, I have been the primary breadwinner up until February of this year, then we moved back out state, which created more debt).

Our credit is in the toilet, and our scores are in the mid to low 500s but with lot of negs on our reports.

Spouse has a previously discharged BK from over 10 years ago. I've never filed for one.

With all that, is it time to file for Chapter 13 or 7 or better to avoid BK and continue struggling along?

Thanks in advance.

Re: Should We File?

Anonymous — Sun, 05 Apr 2015 21:30:57 GMT

Wanted to add this also includes student loans from both of us - about $5000 for me and $25,000 from him.

Re: Should We File?

Anonymous — Sun, 05 Apr 2015 21:42:56 GMT

In most cases you can't bankrupt student loans so you will have to take care of them, but with $100K of debt and most of that being collections, a CH7 BK might be your best bet.

I filed last year in May after a foreclosure on my home and my scores were in the low to mid 400's, I discharged in September and my scores are below (all close to the mid 600's) and it's only been 8 months. For me the CH7 was a saving grace after a really poor decision in buying a home and then volunteering to give it back to the bank after not being able to sell it.

Re: Should We File?

DaveInAZ — Sun, 05 Apr 2015 21:46:17 GMT

Well, the back taxes cannot be discharged in BK, you'll still owe them, and most likely the student loans which are rarely discharged. Not sure about the speeding tickests & tolls, but most debt to a government cannot be discharged. It will cost you $2k-2500 for attorney & filing fees for a BK7, is the amount of the other debt so high that incurring the expense of filing BK and having it on your record for 10 years is worth it?

Re: Should We File?

Anonymous — Sun, 05 Apr 2015 23:26:13 GMT

I am aware that student loan debt/IRS may not be able to discharged, but still need help with the other debts.

I am seriously trying to weigh out all our options. Honestly, I would prefer to avoid BK altogether, but right now, I have to consider it. As far as attorney fees, I am looking into legal aid to assist us with finding an atty. to help us pro bono in the event we go ahead with a BK. I am also keeping an eye on this forum and getting as much information as I can. I believe doing a DMP through a Credit Counseling Service is frowned upon, so don't want to go that route, either.

Right now, the biggest worry is our car payment and avoiding repossession. We are about two payments behind. I have done a moratorium with the bank once last year (where they put off the full payment for 2 months, and we only had to pay $75 interest), but not sure they will do that again. I can try to plead with them that we just moved, and I am going to start a new job this month in a couple of weeks and need the car to get me back and forth to another city for orientation and training but won't get paid until next month. If anyone has any suggestions as to how I can address that situation, I'd appreciate it.

Hope others will chime in.

Re: Should We File?

Anonymous — Sun, 05 Apr 2015 23:44:16 GMT

I was going to chime in that my bk7 cost around $1300 with attorney fees and the court fees I guess it all varies on where you're at and such. Of course if you go with legal aid that's not relavant anyway. If you really don't want to file then your best option is to try to work with the bank on your auto loan. If they're not willing to work with you again you mught have to go the ch7 route and just start over.

Re: Should We File?

padme — Mon, 06 Apr 2015 02:36:35 GMT

Seems like you're way beyond the ability to pay.. Interest is piling up... I tried not to file also, but CCC wouldnt budge on rates for me..

Re: Should We File?

TRC_WA — Mon, 06 Apr 2015 15:42:40 GMT

@Anonymous wrote:
I am aware that student loan debt/IRS may not be able to discharged, but still need help with the other debts.

I am seriously trying to weigh out all our options. Honestly, I would prefer to avoid BK altogether, but right now, I have to consider it.

Hope others will chime in.

Ch 13 is another option.. and depending on the means test you may be forced into it anyway.

No up front money required... the filing and attorney fees are included in the plan. It's a 3-5 year repayment plan... you are then discharged.

It falls off your report 7 years from filing date... instead of 10 years with a Ch 7. It's also looked upon more favorably than a Ch 7 in the eyes of some lenders which to me makes perfect sense... you are making an effort to pay back debt in whole or in part vs making no effort at all with a Ch 7.

Good luck.

Re: Should We File?

Anonymous — Mon, 06 Apr 2015 23:51:53 GMT

After much deliberation, husband and I are going forward with receiving at least a free consultation with regard to filing 7 or 13. Will come back with updates as I can. Thanks to all for your advice.