topic Re: Questions even my bk attorney can't answer, please help in Bankruptcy

Questions even my bk attorney can't answer, please help

Anonymous — Wed, 13 May 2009 21:01:46 GMT

I have gone to two bankruptcy attorneys and neither can or will answer a few questions. If anyone can help I would really appreciate it.

First, a brief scenario. I was laid off in Septmeber and have only been able to find contract work here and there. I am currently unemployed and actively seeking employment. My husband left me with two kids and ALL of the bills. Outgoing is around $5,000 a month. Until now I had enough in savings to make the bills and currently have no late pays but a high debt ratio so my score is a 700 and 710 on two sites.

I have a budget and have cut back on EVERY out going expense imagineable. I cannot refi the house or car bc I don't have a job. Credit cards won't work with me bc I'm current. It's a horrible catch 22.

I went to a bankruptcy attorney who told me not to pay the cc bills anymore because i was just wasting money if I was going to file. I asked him if I should try to keep the cards since all history stays on your report after the BK? He couldn't answer me.

I also asked him what will happen to my credit score after I file? No answer. I am expecting it to go down but don't know how much? IS there a set point drop for BK? Also, since 75,000 will drop off the report will that help the score go up or possible help it stay the same?

I am really struggling to survive and can see the end of funds soon if I don't find a job soon. I am worried that if I file I will be denied a job w a BK on my credit and I'm worried what will happen to my car insurance rates.

Can anyone answer any of these questions? Thank you in advance!!!

Re: Questions even my bk attorney can't answer, please help

Anonymous — Thu, 14 May 2009 18:03:38 GMT

A great tool for determining the impact paying late on CCs or declaring bankruptcy is the Score Watch simulator you can sign up for on this site. It's worth the small fee because it gives you solid information - it's easier to make decisions if you can see the impact the decisions will have on you. Because every person's situation is different, it's hard to guess what the impact will be. The simulator helps by giving you information specific to your current reports.

After BK, cc accounts will show "included in bk" which has as much impact as a "late". However, it's better not to have BOTH a late and an "included in bk" note - the "included in bk" note sometimes falls off after the bk is discharged. The "late" note stays on for a full 7 years.

Not all insurance companies pull your credit files. Do you see soft pulls on your reports from your current insurance provider? Ours never pulls.

Also, I believe employers must notify you if they would like to pull your report for hire. Mine didn't pull.

Hope that helps. Best of luck to you in handling your situation!

Message Edited by utah2009 on 05-14-2009 12:03 PM

Re: Questions even my bk attorney can't answer, please help

Anonymous — Wed, 20 May 2009 09:42:39 GMT

I completely understand what you are going through. I have all the same worries except you are lucky to have a house to fight for

From what I have been told- the point drop is not written in stone and it can vary. Your score will take a hit (around 70 pts or more) but if you make your house payments and such you will see it go up again in a year or so.

Employers and insurance companies can look up your score but unless you are looking for government security clearance or a job where you have to ability to embezzle funds- you should be fine- people who file BK are everywhere and they work- otherwise how did they get credit and pay for attorneys? Most insurance companies look up reports when writing a new policy. I have AAA and most people say they don't penalize for BK.

I have reached the end of my funds and am filing before I am 30 days late because the CC's won't work with me either and even if I get a job- all the increased interest rates and payments will eat up any salary and as single moms - we need to save up for the unexpected.

Good luck

Re: Questions even my bk attorney can't answer, please help

Dee2 — Wed, 20 May 2009 23:02:53 GMT

I can only give you my opinion based on my own personal experiences. I agree with your attorney. It is a waste of money to continue paying bills that you will be including in your bankruptcy. Once creditors see that you have filed bankruptcy they will hardly care much about any lates on your file. Your credit file will be flagged by the bankruptcy. I'm not certain if this will happen when you file or when the bankruptcy gets discharged. It is highly unlikely that your creditors will allow you to continue using your credit cards after filing bankruptcy. I really don't see that happening. Having said that I believe that if you are including a vehicle in your bankruptcy you will be able to keep it and continue paying on it as long as it below a certain value.

I filed my bankruptcy in 2001 and it was discharged in April 2002. This was before the BK laws changed so I'm not certain what the new laws are, but I can tell you that I filed where I lived at the time which was Washington, DC. I can also tell you that my Attorney informed me that I had to include all of my creditors whom I owed money and I had to sign something (affidavit I think) attesting that I was including all of my creditors to the best of my knowledge. Again...this was Washington, DC so I'm not sure how BK laws differ in each area.

There is not set amount (I don't think) that your score will drop, but know that it will in fact drop. Unfortunately there is nothing you can do about that.

Good news is that once you file you can immediatly begin working to get your credit file back in order.

Please keep in mind that this information is based on my own experience with filing BK under the "old" laws and that I filed in Washington, DC.

I'm sure you will do what is best for your family.

Good luck and keep your head up.

~Dee

edited: I forgot to mention that I filed Chapter 7.

Message Edited by Dee2 on 05-20-2009 04:02 PM

Re: Questions even my bk attorney can't answer, please help

Anonymous — Fri, 22 May 2009 19:10:59 GMT

If you don't list a creditor on a bk, there are a couple of things that COULD happen, but whether they WOULD happen is a matter of chance and how cranky your trustee, judge, and creditors are.

1. the creditors listed in your bk, if they find out you did not list debts, can file a motion with the court protesting your filing as being in bad faith

2. if your trustee finds out, HE can make a filing

3. the judge can dismiss the case based on the filings

4. you're still responsible for the debts you don't list and have no protection from them under the bk and then you have to wait 7 years to file again (unless you do a "20" and do a 7 and then turn around and go into a 13)

I did BK law for 7 years (though I "retired" when we had kids). A good BK attorney may not be up on every nuance of how it affects your CR and FICO, but they should be able to tell you the nuts of what can happen in the legal system if you don't follow the Code.

Re: Questions even my bk attorney can't answer, please help

Anonymous — Sat, 30 May 2009 12:41:45 GMT

I understand and while I cant offer legal advice, I can offer something based on my experience, I would say you're a good canidate for Chapter 13. Your current with your debt, but your standard of living is declining because of a life changing event.

With the CH13, you at least pay back some of your creditors versus a complete discharge with a 7 and unless the law has changed, CH13 drops off credit report in 7 years, CH7 stays on for 10.

Of course, you'll surrender all your CCs and at the CH13 hearing, work out a repayment plan with creditors that show up, if any. You're discharged from CH13 in three years and some creditors maybe willing to work with you at that time, but the bankruptcy will remain on the report until 7 years lapse. At that time, I'm not sure when it happened for me, but all creditors came off at either discharge or 7 years. Sorry, it been so long ago.

It doesn't suprise me the attonery advised to not pay CCs. Afterall, when I filed, that is the first thing I was told, except to keep making house and car payments.

But yeah, your score will tank. I wouldn't even worry about. As long as a bankruptcy is reported, your life is going to pretty much cash-n-carry.

The laws have changed since I went CH13 years ago, but I think the changes only make it harder to file multiple times, thanks to deadbeats that abused the protection.

You can't sustain this much longer and without knowing what your liquid assets are and how much of a mortgage, if any, car payment, unsecured debt owed and property holdings/rights, and so forth, it be hard to speculate.

Just short of recommending you sell your house and hope (hope is not a plan, BTW) you have enough left over to pay off debt, after the mortage, to save your credit rating is not worth it to keep a good score.

You have a tough choice. Your quality of life or credit score. I would forget about the score and do what you have to do survive and take care of the kids. BTW, I 'm assuming you've gone after your deabeat husband?

Unless an employer specifically asks about a bankruptcy, why bring it up? However, I strongly recommend not concealing the fact it on an application if asked, because it could get you fired later if discoverd. I can't imagine an employer not giving you the opprotunity to explain the circumstances for the bankruptcy, of course subject to the law of what they can ask you.

Whatever happens to your score, it'll recover in time.

Re: Questions even my bk attorney can't answer, please help

Anonymous — Wed, 15 Jul 2009 11:15:10 GMT

File legal separation, or better yet: Divorce/custody papers. Put all the debts on the divorce against him, and he'll come to the table. A judge will look at the situation (abandonment, insolvency on your part, kids, bills) and make things "equitable".

I agree with the others: forget about worrying over your FICO scores. Work on getting cash flow going again.

Protect your secured assets: Cars, house, stuff. Unsecured debt can wait at this point. Stop blowing your savings on unsecured debt. You are using savings for short-term stuff you bought on credit.

Without considerable liquid assets, a Chapter 7 for insolvency may do you more good. IDK...

Good Luck!

Re: Questions even my bk attorney can't answer, please help

Underh20 — Mon, 20 Jul 2009 09:31:58 GMT

@Anonymous wrote:
File legal separation, or better yet: Divorce/custody papers. Put all the debts on the divorce against him, and he'll come to the table. A judge will look at the situation (abandonment, insolvency on your part, kids, bills) and make things "equitable".

Not all states embrace the concept of equity in divorce issues.

Also, it's very important to understand that creditors are generally not bound by the terms of a divorce decree / settlement. Even though a judge orders one of the spouses responsible for a certain debt, a creditor is perfectly able to -- and often does -- hound, sue and obtain a judgment against the other spouse.

Re: Questions even my bk attorney can't answer, please help

Anonymous — Tue, 21 Jul 2009 22:02:39 GMT

My Bankruptcy attorney told me that the judge can say he is responsible for half the debt but can't make him pay it. If I pay my half off the cc companies can still come after me for his portion of the debt if it was a joint account.

Here is what is going on now. I have still been unable to get a job. My unemployment is exhausted. As of April I have been unable to pay my credit card bills. So my once perfect credit is now destroyed as I have several 90 day lates. I have tried to negotiate with the Discover and BOA and they won't settle.

I have recieved letters from Citi and Chase wanting to "talk" But, I am not sure what to do. If I settle with some and the others won't settle then I ruin my chances for a CH 7 bankruptcy. If I pay off someone it is considered a "preference" therefore the debtor may challenge the discharge. I really don't want to file for Bk because a lot of employers check credit. As it is I am freaking out bc of the 90 day late pays. I am hoping an employer will understand that I have been unemployed 10 months and it was unavoidable.

Not sure how an employer will take a Bk when I am dealing with their budgets......

The 10 year stigma is what is scaring me the most. I need to buy my daughter a car in two years and will need to refi a 7yrARM soon........ For those who have filed, Would you file for bk if you had to make the decision all over again? Also how long did it take you to recoup?

Thanks

Message Edited by swatwife on 07-21-2009 03:02 PM

Re: Questions even my bk attorney can't answer, please help

Underh20 — Tue, 21 Jul 2009 23:16:14 GMT

@Anonymous wrote:
My Bankruptcy attorney told me that the judge can say he is responsible for half the debt but can't make him pay it. If I pay my half off the cc companies can still come after me for his portion of the debt if it was a joint account.

To an extent.

A family court judge can order that debts be assigned amongst the parties, but creditors are under no obligation whatsoever to accept that and can still come after the other for payment including filing suit and obtaining a judgment.

However, the family court judge can hold the party assigned a particular debt (or portion thereof) in contempt if they fail to pay. Some family court judges are more willing to do this than others and even those that are first need to be pushed to the limits of their patience.

Re: Questions even my bk attorney can't answer, please help

Anonymous — Fri, 31 Jul 2009 15:38:38 GMT

It may be a little late for you at this point, but maybe this could help someone else.

My bankruptcy attorney told me to quit making payments while we were getting our paperwork together to file and we also needed to wait for a couple of extra weeks to file due to a recent credit card charge we had made.

Common sense told me that we should continue to pay on our accounts as our credit was immaculate until the paperwork was filed at the courthouse and we had a case number.

Once the BK was filed, we only received a couple of phone calls from creditors and they were very, very nice and said thank you after we gave them our attorney's phone number and I beleive the case number. The others were notified by the courthouse or our attorney and we never heard from them. July 2005 BK filing.

My reasoning was that there were no late pays either before or after the bankruptcy. Recently I've read in a couple of forums that the late pays before the BK would still show up and could hurt us so I feel that my decision was a good one. There are none shown on any of my CRs.

The state of Texas came in with new licensing laws that made me shut my electrical contracting business down just after building a new home that took 3 years to build.

I kept all of my business credit as they were always paid in advance, kept my home, and now have 6 CCs with $39,000K limits total and only owe $1,775 excluding the mortgage. My other house here pays $800 of my $872 mortgage on the new home. Scores are mid 700s.

I opened a new business with a retired master electrician and I have a lot of business credit with several suppliers. All of the credit is in my name.

UPDATE: I just received a report from Transunion because I questioned an account and in the report, it listed the CCs listed in the BK. When I looked at the details of each card, it said "included in BK7/Never late."

I knew I had read that before.

Message Edited by audio on 07-29-2009 01:31 PM

Message Edited by audio on 07-30-2009 05:38 PM

Message Edited by audio on 07-31-2009 08:38 AM

Re: Questions even my bk attorney can't answer, please help

Anonymous — Wed, 05 Aug 2009 23:11:52 GMT

Regarding holding the spouse in contempt of court if he doesn't pay his share of the bills: Not necessarily. If the contempt charge carries a possible jail sentence (and most do), then the court can not find the non-paying spouse in contempt of court for disobeying the court order to pay on the debts. To do so would mean that the court was sending the spouse to jail for not paying a debt, and that is the concept of "debtors' prison", which is unconstitutional under the US Constitution. And it doesn't matter if the judge doesn't actually send the spouse to prison; the mere possibility in the law (such as "$500 fine or 2 days in jail") is enough to make the contempt charge unconstitutional. A great Catch-22.

Re: Questions even my bk attorney can't answer, please help

Underh20 — Wed, 05 Aug 2009 23:50:49 GMT

@Anonymous wrote:
Regarding holding the spouse in contempt of court if he doesn't pay his share of the bills: Not necessarily. If the contempt charge carries a possible jail sentence (and most do), then the court can not find the non-paying spouse in contempt of court for disobeying the court order to pay on the debts. To do so would mean that the court was sending the spouse to jail for not paying a debt, and that is the concept of "debtors' prison", which is unconstitutional under the US Constitution. And it doesn't matter if the judge doesn't actually send the spouse to prison; the mere possibility in the law (such as "$500 fine or 2 days in jail") is enough to make the contempt charge unconstitutional. A great Catch-22.

Not exactly.

As an attorney who has handled thousands of divorces for military personnel, judges can and do hold spouses in contempt of court for willful failure to pay debts as stipulated in their divorce decree. Often because the injured spouse doesn't file a motion to show cause, contempt charges are not common. Even when the injured spouse does bring the matter back before the court, judges will generally exercise an overabundance of patience prior to jailing the spouse held in contempt. But it does and most certainly can happen.

While there is no debtors' prison, per se, in America, the law most clearly does allow incarceration for failure to pay certain debts. For example, those who cross state lines owing child support can, under certain conditions, be convicted in federal court and incarcerated for failure to pay. Numerous states also use the penal code to prosecute and incarcerate those who fail to pay court ordered child support. In your theory this should not be possible. But it is.

Jailing someone for contempt of court is possible for failure to pay debts under very limited circumstances. One such circumstance includes spouses ordered to pay debts as a part of a divorce decree and who fail to comply.

Re: Questions even my bk attorney can't answer, please help

Anonymous — Thu, 13 Aug 2009 08:46:31 GMT

Well BOA wants to settle for 60 percent less than what I owe. Not bad for a first offer. Problem is, even if I make a deal can't make the payments.... And darling husband refuses to pay back any of the debt. So If I did settle all accounts I would take on 100 percent of the debt.

I pulled my fico score today and where I once had a 710 a couple of months ago, I am now at a 487!!! He still has credit ratings of between 606 and 558 which I still don't understand as has so many medical and cc bills in collections. At least 3 ccs are joint and two are authorized users, you would think that the joint ones would be pulling his score down.

House and car are in good standing with no lates yet. If I don't find a job soon I don't know what will happen as I am down to about $1500 left to my name.

I have really crushed my credit so at this point I don't see a way out other than to file BK. 487, Can it get any worse??

Message Edited by swatwife on 08-13-2009 01:46 AM