topic Re: Is bankruptcy the best option?? in Bankruptcy

Is bankruptcy the best option??

Theycallmebeezy — Thu, 22 Dec 2022 17:23:50 GMT

Good morning/afternoon all

I'm currently around 70k in debt in credit card/personal loans. Im currently being paying all my bills on time but due to a recent job change, my income has decreased and it's becoming hard to stay afloat. One of my cards in particular has a very apr and monthly that I can no longer afford. Im considering bankruptcy or settling the card for a cheaper amount . Any advice will be greatly appreciated. My current credit scores are around the 550s due them being basically maxed out. I have no late payments no collections and no judgments on my current credit reports.

Re: Is bankruptcy the best option??

Jeffster1 — Thu, 22 Dec 2022 19:16:27 GMT

I was in the EXACT same position as you in 2016-2017. I was on time on all my payments but just treading water. There was no way I would ever be able to pay the credit card debt off. The default APRs alone sank me.

Eventually, it got to be too much. Still on time with all accounts except one. After a few months, the creditor served me with papers.

I called a debt collection attorney who listened to my story over the phone. This attorney is known for handling celebrities (I live in LA). He very kindly advised me to contact a bankrptucy attorney.I was so grateful that he devoted the time to me on the phone that he did. I guess I lucked out. He gave me a name of a local BK attorney and I made an appointment for the next day. Best thing I ever did was to go in for my consultation. The hardest part for me was allowing myself to accept that it had all become too much for me. The attorney explained to me how "this is life. It happens." His advice went a long way to end my guilt.

My attorney held my hand every step of the way. I filed a Chapter 13, and, in my case, circumstances had much improved for me. I was able to convert to a 100 percent plan, and I got my discharge 3.5 years later. I learned discipline during my 13 that I did not have before. My monthly payment was high...I did not apply for credit while in BK...and I learned to live on cash.

Best decision I ever made. I know my story may not be useful for some, but, for me, it allowed me to plan for my future and possibly retire early. I am a PIF guy now. My rebuild began a couple days after my discharge, and I have built a credit profile of which I am proud.

In my opinion, the most important aspect was having a great BK attorney. He was responsive; caring; and understood how difficult that first step can be. I felt very protected.

BK changed my life. I will admit that life IN BK was easier than my life the previous year. I cannot envision any other option that would have helped get my life back on track.

Re: Is bankruptcy the best option??

Theycallmebeezy — Thu, 22 Dec 2022 20:52:39 GMT

Thank you so much. Do you have the attorney info ?

Re: Is bankruptcy the best option??

sarge12 — Thu, 22 Dec 2022 22:09:55 GMT

@Theycallmebeezy wrote:
Good morning/afternoon all
I'm currently around 70k in debt in credit card/personal loans. Im currently being paying all my bills on time but due to a recent job change, my income has decreased and it's becoming hard to stay afloat. One of my cards in particular has a very apr and monthly that I can no longer afford. Im considering bankruptcy or settling the card for a cheaper amount . Any advice will be greatly appreciated. My current credit scores are around the 550s due them being basically maxed out. I have no late payments no collections and no judgments on my current credit reports.

First of all, Bankruptcy should be considered as a last option only at reclaiming your life. Problem is to be able to objectively look at the situation to realize it is the only way that will work. Many can actually delay filing for quite some time by gradually borrowing from Peter to pay Paul. Then they are finally forced to file by some unplanned for expense, or some creditor filing suit. A chapter 7 falls off in 10 years, if you see that there is no reasonable possibility that your credit score can be very good by then without filing...then Bankrupty is almost certain, and delaying is just delaying the inevitable, and the time required to recover. If your fridge goes out, and it will at some point, you have to have a fridge. Same applies to a car, which you need for employment.

Unplanned expenses for repairs, slight loss of income, medical issues, and other aspects of life will almost definitely sabotage even the most carefully laid out plans for debt repayment if the amount of monthly payments are over a certain threshold as a percent of income. Some look at all normal expenses...rent, groceries, taxes, utilities, and monthly payments on debt, etc. only, and plan accordingly. That is a mistake, as you must allow for accidents, home repairs, appliances, inflation, illness, etc. that happens to everybody. If your financial situation is such that it is impossible to handle lifes unplanned for expenses to better your finances, then file, and the sooner the better. The 2 biggest mistakes people make with credit is getting so deep in debt that bankruptcy is inevitable, and delaying the filing of bankruptcy when it is, in fact inevitable.

Now certainly, life can also provide unexpected windfalls of income to prevent filing...inheritance, winning the lottery, or a greatly unexpected job offer, but planning your finances based on hope for a windfall is not the best plan of action. By the way, if you need to file, don't play the lottery or slot machines. The fridge eventually breaking is going to happen, as will your car, HVAC system, or any other appliance. A windfall is not such a certainty. It will take 10 years for a ch.7 to fall off a report. If you delay filing for 2 years, it will take 12. I can't say for sure if you are at the point where bankruptcy is inevitable, but it looks like you are.

Re: Is bankruptcy the best option??

Jeffster1 — Thu, 22 Dec 2022 22:45:54 GMT

@Theycallmebeezy I sent you a DM.

Re: Is bankruptcy the best option??

Lurker22 — Fri, 23 Dec 2022 11:47:49 GMT

@Jeffster1 wrote:
I was in the EXACT same position as you in 2016-2017. I was on time on all my payments but just treading water. There was no way I would ever be able to pay the credit card debt off. The default APRs alone sank me.

Eventually, it got to be too much. Still on time with all accounts except one. After a few months, the creditor served me with papers.

I called a debt collection attorney who listened to my story over the phone. This attorney is known for handling celebrities (I live in LA). He very kindly advised me to contact a bankrptucy attorney.I was so grateful that he devoted the time to me on the phone that he did. I guess I lucked out. He gave me a name of a local BK attorney and I made an appointment for the next day. Best thing I ever did was to go in for my consultation. The hardest part for me was allowing myself to accept that it had all become too much for me. The attorney explained to me how "this is life. It happens." His advice went a long way to end my guilt.

My attorney held my hand every step of the way. I filed a Chapter 13, and, in my case, circumstances had much improved for me. I was able to convert to a 100 percent plan, and I got my discharge 3.5 years later. I learned discipline during my 13 that I did not have before. My monthly payment was high...I did not apply for credit while in BK...and I learned to live on cash.

Best decision I ever made. I know my story may not be useful for some, but, for me, it allowed me to plan for my future and possibly retire early. I am a PIF guy now. My rebuild began a couple days after my discharge, and I have built a credit profile of which I am proud.

In my opinion, the most important aspect was having a great BK attorney. He was responsive; caring; and understood how difficult that first step can be. I felt very protected.

BK changed my life. I will admit that life IN BK was easier than my life the previous year. I cannot envision any other option that would have helped get my life back on track.

I couldn't have said it better, the only thing I'd add is each situation is unique - I'd encourage you to do a consultation with a bankruptcy attorney and see which option is best for your situation

Re: Is bankruptcy the best option??

FireMedic1 — Fri, 23 Dec 2022 16:29:12 GMT

Welcome @Theycallmebeezy

What state and what is your income. Look up the means test and make sure your under the income amount for a Chapt 7 if it comes to that.

Re: Is bankruptcy the best option??

Theycallmebeezy — Sat, 24 Dec 2022 03:13:51 GMT

I'm in California and I'm about 70k in debt 50K is credit card debt and one card in particular is killing me due to the interest. I've stopped using my cards and made hardship arrangements on the ones where that was an option. I also have a business I'm launching in late January that I don't want to have to liquidate if I file for ch 7. I've starting cutting my expenses and downsized my apartment.

Re: Is bankruptcy the best option??

FireMedic1 — Tue, 17 Jan 2023 10:36:13 GMT

Yes do all that you can to cut back and make deals to aviod BK. If it does come down to a last resort to file. The 2023 max income for 1 person limit max income to file a Chap 7 will be $69,660. Otherwise it will be a 13. With a business coming soon. As we say. Consult with a lawyer for legal advise. Hopefully you dont have to. Best of luck. Happy New Year!

Re: Is bankruptcy the best option??

Theycallmebeezy — Sat, 14 Jan 2023 03:41:33 GMT

I talked to an attorney but I think I won't be able to afford the ch 13 monthly payments. (Around 1000-1100/mo.)I was making around 69k but I recently got a pay raise to 72.5 k but with taxes, pensions and insurances , it feels more like 59k.

Re: Is bankruptcy the best option??

FireMedic1 — Tue, 17 Jan 2023 10:38:25 GMT

I had to stop all OT and put my 2 PT jobs on hold for 6 months to get under the means test. Once filed. Right back to work as before BK.

Re: Is bankruptcy the best option??

AustinOriginal — Fri, 03 Mar 2023 20:53:44 GMT

Hello all,

I have been reading through this post and thought I would offer up my experience as it may help some decide on the best route to take in a similar situation.

Up until 2021 I had pretty good credit and I had my own business. Well due to COVID my business closed down and I was left with about $200K in business debit and trying to keep the buisness afloat, I had racked up about $30K in personal credit card debit. The personal debt was starting to get unmanageble and Chase filed suit against me for $20K I defaulted on them. The same week, (almost like they were working together) Santander filed suit on me for $100K for a business vehile I let get repossessed but that I had a personal garantee on.

With these looming law suits, I had to do something to protect my personal assets.

I had never been late or missed one personal car payment nor a mortage payment.

In Novenber of 2021 I decided the only option for me was to file a Chap. 7 BK.

I will be frst to tell you that was the best finiancial decision I have made in my adult life.

I had a great attorney that help me work through to whole process, holding my hand the entire way.

I filed in 11/2021, it was discharged in March 2022 and the case was completey closed out in October 2022.

And by the way, your case is not done at discharge. It is not complete until the case is closed.

I reaffirmed both car loans and my mortgage and neither one was affected al all by the BK. The only problem I had, was my mortgage company would not let me make online payments on the account uttil the case was CLOSED (not just discharged).

My attorney montred my credit report to ensure that all accounts were reported the way they are suppsed to after a BK.

Fast forward to today, 3/3/2023. (15 months post filing, 12 months post dishcarge, and 5 months post case closure.

I am hoovering just south of a 700 FICO score, I have financed another car and have been able to re-establish approximately $15 in new credit card limits (Keeping utilization at 3% or lower).

In the BK I burned AMEX, Chase, Citi, Synchrony, Capitol One, and Discover.

I know that I will never get another AMEX or Chase card, but just last month Capitol One gave me a new creit card with a $1K limit.

As soon as the BK discharged I opened accounts with Navy Federal, PenFed, Langley CU, First Tech, United Nations FCU, and Andrews FCU.

As soon as I opend the NFCU account I got a $1000 pledge loan and a $200 secured nRewards card. And did the exact same thing for my wife. Exactly 3 months after opening each of the secured cards NFCU raised the limit on both cards to $600 and like clockwork, on the 6 month anniversay of the cards they both graduated to $2K unsecured cards and the initail $200 depsits were returned.

Other cards that gave and my wife inital credit limits between $1k and $3500.00 within 3 months of discharge were Mercury, Ollo, and Credit One. People talk alot of **bleep** about credit one, but if you search you can find no annual fee offers on their cards and if you do not carry a balance, you pay no interest.

I am done with big banks, I am doing all of my banking and credit with credit unions now. Navy Federal has been like savior to my wife and I. If you develop a good relationship with them, they will do good things for you.

One other tid bit I will offer to anyone considering filing a BK. If you bank a Wells Fargo, remove ALL of your money beofore you file. They are the only bank in the country that will freeze your account after they are notified of the BK and the only way to have your money released is through authorzation of the BK trustee. My attoney told me that becaseu We did bank at Wells prior to the BK.

I do all of my banking with NFCU now.

Filing this BK changed my life for the better and if you use the opportunty correctly, it will do the same for you and end those sleepless nights worring about debt.

Re: Is bankruptcy the best option??

AustinOriginal — Fri, 03 Mar 2023 21:01:28 GMT

Re: Is bankruptcy the best option??

Lurker22 — Sun, 05 Mar 2023 11:01:22 GMT

@AustinOriginal wrote:

One other tid bit I will offer to anyone considering filing a BK. If you bank a Wells Fargo, remove ALL of your money beofore you file. They are the only bank in the country that will freeze your account after they are notified of the BK and the only way to have your money released is through authorzation of the BK trustee. My attoney told me that becaseu We did bank at Wells prior to the BK.
I do all of my banking with NFCU now.
Filing this BK changed my life for the better and if you use the opportunty correctly, it will do the same for you and end those sleepless nights worring about debt.

Did WF actually freeze your account? In my case my attorney advised me to be careful that Chase might do that to me so i started using my WF account, no issue at all with either bank (and I've actually read online that WF stopped doing that many years ago which is why I'm asking)

Re: Is bankruptcy the best option??

Jeffster1 — Sun, 05 Mar 2023 12:46:11 GMT

@AustinOriginal wrote:
If you bank a Wells Fargo, remove ALL of your money beofore you file. They are the only bank in the country that will freeze your account after they are notified of the BK and the only way to have your money released is through authorzation of the BK trustee. My attoney told me that becaseu We did bank at Wells prior to the BK.

@AustinOriginal I'm going to have to disagree with you. At the time of my filing, I had Checking, Savings and a Credit Card with WF. I IIB my WF CC. They never froze my Checking or Savings, and I still have them. Even better, WF approved me for a WF BILT card 1 year 8 months after my DC with an SL of $30,000.

Re: Is bankruptcy the best option??

AustinOriginal — Sun, 05 Mar 2023 13:29:26 GMT

@Jeffster1
andcwhat year was this?

Re: Is bankruptcy the best option??

AustinOriginal — Sun, 05 Mar 2023 13:32:57 GMT

@Lurker22

No sir, they did nit because I moved all the money. That us just the advice my attorney gave me. I have read where that has happed to others in BK forums. 🤷🏻

Re: Is bankruptcy the best option??

Jeffster1 — Sun, 05 Mar 2023 13:37:41 GMT

@AustinOriginal wrote:
@Jeffster1
andcwhat year was this?

Filed April 2017. Got my DC January 2021.

Plus I didn't have the best record with them. Even though I managed to keep up with all my payments, I was treading water for a while and they cancelled my Overdraft Protection in 2015. I'm sure I would have been a prime candidate for a freeze.

Re: Is bankruptcy the best option??

donkort — Sun, 05 Mar 2023 16:52:45 GMT

Like FireMedic said. If you could avoid bankruptcy, I would.

Where I live now will not take anybody who has had a bankruptcy, whatsoever. That's probably not true for most entities, though. Most of the time, entities seem to ask if you've had a BK in the past 3 years.

But....of course bankruptcy, especially Chapter 7, gives you a "clean slate," and for many people, its benefits outweigh its disadvantages.

To me, a BK13 is very similar to a Debt Management Plan, which doesn't reduce your debt obligations, only reduces the interest on your debt. This is very good for taxes (you don't have to claim a reduced debt obligation as income), as well as your credit report (there's no "settled for less than what was owed.")

I came very close to going on a DMP....but fortunate events kept me from doing so.

Here is some info on the differences between DMPs and BK13s

There's also a MYFICO thread from 2013 which is easily accessed by Googling "DMP vs BK13". I don't know how to cut and paste threads.

https://www.moneymanagement.org/debt-management/debt-management-plan-vs-bankruptcy

Re: Is bankruptcy the best option??

donkort — Sun, 05 Mar 2023 17:01:44 GMT

This might be better.

https://www.thebalancemoney.com/debt-management-plan-vs-bankruptcy-4159661