About to file chapter 7- am I really better off doing this?

[Anonymous]

Hi,

New here but lurking here reading about life after bankruptcy and it gives me some hope if I go with this.

The situation I am in is this... I met with an attorney and so far planning to head to court at the end of April to file if I dont change my mind before then. Still not decided fully if I can do this but really have no choice almost.

Debt is almost $89k listed on report.

CC debt is about 50k of my own cards and about 10k is my wife who made me an authorized user.

Car Loan is 27k left but I want to keep the car and continue making payments. Attorney stated to do an reaffirmation.

I cant keep up with the debt after minimum payments and living expenses and now have 2 babies I end up being negative and only able to continue if I use the card again 1 or 2x a month when I try to live cash only since December. It will take me over 4 years if nothing happens in between to pay off which is unrealistic things happen like brakes or kid needs more medical treatment or anything which makes it worse.

I work full time and wife as well I mostly paid for everything but she has not much debt. She is not filing and not involved at all and dont want her involved at all. We separate and filed taxes as such so not included in household when seeing if I qualify for chapter 7 which I am.

Also never miss payments super clean just have high utilization which brought my score to low 600s. Still making on time payments to everything.

Heres the breakdown:

Amex- 14.7k

Bank of America- 2 cards combined- 21.5k

Chase- 2.2k

Citi- 2 cards combined- 5.2k

Capital One- 10k

Discover- 500

Paypal/Synchrony Bank- 0  (never got to use it before I realized stop charging all CC)

An extra Citi and Chase card that is not mine but my wife who made me an authorized user- 10k combined

Car loan from Capital One- 27k left

Salary 68k with 2 kids so I qualify so far for chap 7 for my state.

I want to get a house for my kids in the future which led me to do a bankruptcy even faster. I was told I can do FHA after 2 years and if I wipe out the debt I can start saving this year if bankrupt and by 2 years have enough downpayment to cover a house.

Now with this information I have some concerns that I feel were confusing by my attorney.

She said the 2 cards from my wife will hurt her or be close if I file bankruptcy since I am just authorize user. I keep seeing horror stories online that sometimes they make a mistake and my wife has to dispute it or worse they just close out the card but she has to pay the debt even though she is fine making payments and it has nothing to do with me.

This leads me to have my wife remove me from the cards now a month before filing will this be a problem?

My car is from capital one and have a cc from them. Will that affect my car loan at all like they wont give me the title after I pay off the car due to burning them off in chap 7? Better yet will they allow me to keep the car making payments if the loan is 27k? Need it for work.

I will have discover paid off since it is only 500 with my tax return and my other 0 dollar card is from paypal Synchrony Bank. Will this mean I have a better chance to reopen a relationship with discover and Synchrony Bank after bankruptcy? Paying off 500 on Discover can it cause an issue with filing about a month away?

Checking account is with Bank of America which I have 2 cards. Will this affect my checking account at all? Should I look for another bank just in case?

Tax return is being used off to pay living expenses and rent so I already know that is what I have to tell the court and it should be okay I am assuming.

Lot of information but I really dont know where else to turn to.

Attorney fees is usual range and was recommended to me by a friend but his scenario was worse like already in the bottom missing payments and no job so it worked for him great now.

Any help would be greatly appreciated.

Future goal if successful chap 7 discharged this year is to build credit as best as I can using myficoforum tips and have a house in 2 years with a good amount saved for downpayment since debt was wiped out clean thanks to bankruptcy.

[Anonymous]

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@Anonymouswrote:

Hi,

New here but lurking here reading about life after bankruptcy and it gives me some hope if I go with this.

The situation I am in is this... I met with an attorney and so far planning to head to court at the end of April to file if I dont change my mind before then. Still not decided fully if I can do this but really have no choice almost.

Debt is almost $89k listed on report.

CC debt is about 50k of my own cards and about 10k is my wife who made me an authorized user.

Car Loan is 27k left but I want to keep the car and continue making payments. Attorney stated to do an reaffirmation.

I cant keep up with the debt after minimum payments and living expenses and now have 2 babies I end up being negative and only able to continue if I use the card again 1 or 2x a month when I try to live cash only since December. It will take me over 4 years if nothing happens in between to pay off which is unrealistic things happen like brakes or kid needs more medical treatment or anything which makes it worse.

I work full time and wife as well I mostly paid for everything but she has not much debt. She is not filing and not involved at all and dont want her involved at all. We separate and filed taxes as such so not included in household when seeing if I qualify for chapter 7 which I am.

Also never miss payments super clean just have high utilization which brought my score to low 600s. Still making on time payments to everything.

Heres the breakdown:

Amex- 14.7k

Bank of America- 2 cards combined- 21.5k

Chase- 2.2k

Citi- 2 cards combined- 5.2k

Capital One- 10k

Discover- 500

Paypal/Synchrony Bank- 0  (never got to use it before I realized stop charging all CC)

An extra Citi and Chase card that is not mine but my wife who made me an authorized user- 10k combined

Car loan from Capital One- 27k left

Salary 68k with 2 kids so I qualify so far for chap 7 for my state.

I want to get a house for my kids in the future which led me to do a bankruptcy even faster. I was told I can do FHA after 2 years and if I wipe out the debt I can start saving this year if bankrupt and by 2 years have enough downpayment to cover a house.

Now with this information I have some concerns that I feel were confusing by my attorney.

She said the 2 cards from my wife will hurt her or be close if I file bankruptcy since I am just authorize user. I keep seeing horror stories online that sometimes they make a mistake and my wife has to dispute it or worse they just close out the card but she has to pay the debt even though she is fine making payments and it has nothing to do with me.

This leads me to have my wife remove me from the cards now a month before filing will this be a problem?

My car is from capital one and have a cc from them. Will that affect my car loan at all like they wont give me the title after I pay off the car due to burning them off in chap 7? Better yet will they allow me to keep the car making payments if the loan is 27k? Need it for work.

I will have discover paid off since it is only 500 with my tax return and my other 0 dollar card is from paypal Synchrony Bank. Will this mean I have a better chance to reopen a relationship with discover and Synchrony Bank after bankruptcy? Paying off 500 on Discover can it cause an issue with filing about a month away?

Checking account is with Bank of America which I have 2 cards. Will this affect my checking account at all? Should I look for another bank just in case?

Tax return is being used off to pay living expenses and rent so I already know that is what I have to tell the court and it should be okay I am assuming.

Lot of information but I really dont know where else to turn to.

Attorney fees is usual range and was recommended to me by a friend but his scenario was worse like already in the bottom missing payments and no job so it worked for him great now.

Any help would be greatly appreciated.

Future goal if successful chap 7 discharged this year is to build credit as best as I can using myficoforum tips and have a house in 2 years with a good amount saved for downpayment since debt was wiped out clean thanks to bankruptcy.

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A $27k car note is too extravagant either route you go, and should be gotten rid of one way or another.

If you do file, get your cash out of any bank you owe money to and move it to one where you don't.

Honestly, if you can budget your way out of this in 4-5 years, I would seriously reconsider BK. Ditching a car note that's out of your budget could seriously help with that effort. My alternative to filing would have been probably 20 years before I could have gotten out. 4-5 really isn't so bad.

[Scupra]

If you do file, have your wife remove you as an AU first. There is no consequences to that, only benefits. I agree on the auto loan unless you have a ton of equity. Pay and stay until you can get out would be great if possible!

[Anonymous]

I spoke to my attorney and decided to hold off on paying the fee to start the process for end of April court filing for now.

I need to think more about this.

The car is worth more than what I owe since it is a rare car and I bought it at a good price due to talking down the price in dealership.

How would I go about getting rid of the car if I am not filing chap 7 wont it just mess me up almost as bad bankruptcy and now carless and not being able to get another reliable car for work which is a requirement?

I am taking myself off my wifes cards as an authorized user right now in the mean time.

I am going to pay off the small debt that is on the Discover (500) and if i do file chap 7 money from my tax return will be to pay off attorney fees.

If I do not go with bankruptcy chap 7 I will use my tax return to not only have pay off discover but also chase and 1 citi card.

Is there some section I can do some more reading if I dont file what should I do with the scenario below if i dont file?

Here is the new scenario if i dont file and use tax return money this month...

CC debt total reduced from 53k to 48k = Minimum starting monthly payments from 1419 to 1261

Heres the new breakdown:

Amex- 14.7k

Bank of America- 2 cards combined- 21.5k

Chase- 0

Citi- 3.3k

Capital One- 10k

Discover- 0

Paypal/Synchrony Bank- 0

Is it even doable?

Either I am doing something wrong but assuming some unavoidable expenses it will take me 5-6 years to pay it off then start saving for house which will be 2 year or so.

So I am looking at 7-8 years before I am even in a house with my kids.

Or...

Successful chap 7. discharge

Looking at 2 years to get FHA loan and have saved up money for house within those 2-3 years and already rebuilding credit in the mean time.

So same timeline as first scenario in 5-6 years I will be in a house paying it off for a few years and living in it with kids and credit rebuilding for years which would be not so bad assuming.

This is the dilemma I am in...

[Anonymous]

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@Anonymouswrote:

Is it even doable?

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Ultimately, only you can answer this question. Either way, if the kids are young enough, they wont' remember mommy/daddy driving a crappy car or not having the good Dora the Explorer toys.

As prior poster said - the 27k car sounds like a bad deal. I was dumb enough to want to keep my car too for a few reasons... but honeslty consider this - if you file and keep this car:

  -Is it worth more than 27k? if so that's equity you have to account for in your BK, if not then you're starting your new life with negative equity - one car accident and you are SOL

  -Will it last 3-5 years without any major maintainance? You will not have an easy time immediately post discharge getting a large line of credit. If there are engine problems, transmission problems - heck if it needs all new brakes/tires these expenses can quickly compound. Catalytic converters can cost 700-800 easily.

Post BK, you WILL find a car loan (this was my fear - single guy who lives about 8 miles from work... WTFrick will I do without a car??). It may not be a pretty loan (I had good car payment history pre-bk, never late, and ended up with 14.85 interest rate from Nissan Motors direct for a certified pre-owned. My OLD loan with negative equity had a 2.49% rate since it started back when my credit wasn't abysmal). You can always refinance a year or two later once your credit is rebuilt some for a better rate.

[Anonymous]

Reliable cars can be had for way less than $27k. If you have equity in it, sell it private party and buy something for cash with the proceeds.

*no concerns if you do this and end up not filing

*probably still okay if you do file, but check with the attorney regardless

Take another look at your debt picture with the ability of being able to throw that old car payment at it every month and then evaluate if BK is still right for you.

Living cheaply after BK is the best way to rebuild. Sure you could still afford that $27k with the other bills gone, but having no car payment allows you to do things like plan for retirement, save for emergencies, etc. These things ensure you will never be in this debacle again.

I have plenty of disposable income to afford even a luxury car payment on a monthly basis. But looking ahead to my long term goals, it would cost me on a big time basis. I have a five figure savings account for the first time in my adult life.

I don't love when the maintenance or repair bills on my 11 year old car come in, but it's really not a stress if it's $500 or $1000 since I have the money now. If $1000 takes me at least another year before more work/maintenance, I can view that as a car "payment" of $83 bucks/month.

Lastly, a house is a good long term goal, but don't get all of this resolved just to jump right back into debt that's over your head again. Not to mention all of the other costs that come with owning a home. Renting is really a good deal for many folks. I want one myself, but it's still years off for me. I will have a hefty down payment and plenty of savings that I won't be putting into the house.

[Anonymous]

I like everything Steeler said

I chose BK because while I could posisbly get caught up, I'd never be able to plan ahead/save. One small issue...and right back into the debt-hole I'd have to go.

The point here and moving forward isn't to maximize how much you can get with your current income, but how much you can save so that when an issue arises, you can not end up right back in debt!

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@Anonymous

[wa3more]

I agree with Steelers advice. 

Also research arbitration. Use BK as nuke option. I was about 50k+ in debt when i lost job in 2009.  I sat around and waited to see what creditors would do. Chase came after me on 1 account , i settled  and they let another 25k go and i got 1099's. It was a type of passive BK.

Over all, settling and using arbitration, i settled the 50k for about 10k. And this all took a while, a couple of years.

[Anonymous]

Update: Finally filed this week.

Will update how the trustee meeting goes which is in September.

Bit nervous...

[Lurker22]

very nerve wracking but don't let it get to you - they're typically very quick, but public, the trustee asks a few questions but it's over very quickly (your attorney should review the process with you just before the meeting)