Bouncing Back from My Credit Problems Post-BK

[Anonymous]

*Sorry for the long read in advance

Hey guys,

Looking for some help for the messy situation that I'm in and ways that I can plan for the future and work on rebuilding my credit. My overall goal is to get a house in 2-3 years (I know it'll be tough, but I have the confidence!!) A few years ago I had a handfuls of cards, and unfortunately went through some very rough moments in life, and also had a reposession on there as well. I had a lot of chargeoffs, and wanted a clean slate as I learned the tough way of how credit works, and so after taking a lot of time to debate, I decided to file Chapter 7 in October 2020. I wasn't being sued, but had a lot of chargeoffs and negative marks on my credit, and trying to chip away at things made it super difficult. I decided to file as pro-se, thinking I didn't have any assets. I couldn't afford an attorney, and was very confident with myself, although I didn't attend law school or specialize in bankruptcy.

At the 341, the Trustee asked me under oath if I had any pending claims. I told her that my vehicle (that I wanted to reinstate), did not have a title provided from the dealer (bought in Feburary 2020). So I initiated a claim with the American Arbitration Association (it didn't go anywhere since I didn't provide all of the documents). She discovered that claim as an asset and the fact that the vehicle loan was not secured since no title was there. I couldn't find anyone to represent me, and she hired a powerful attorney on her behalf that immediately moved to take possession of the vehicle. I literally could not get approved ANYWHERE even after the 341 since the "notation of abandonment" was not filed. The only place that would approve me was a buy here pay here called Superior Auto. Without transportation, I would lose my job, face eviction, and pretty much be homeless. I got into an overpriced contract, and discovered the vehicle was a "gas hog", and had way too many problems to where it was not reliable. This contract was bi-weekly payments with repo after 1 day of late payment. I lost time from work due to covid, and they would not work with me on payments. I voluntarilly repo'd the car by dropping it off with them and had to default on the contract.

Now I have a post-petition repo and debt that I need major help with. Do I allow them to garnish wages (max 25% in Indiana), or do I immediately file Chapter 13 after my discharge in a few days? The problem that I have is realistically, if I waited for a garnishment, I could pick up another part time job after the order is issued, correct? If I filed Chapter 13 I'm afraid that since it's not dischargeable, my payments would be extremely high and unaffordable. I'm tired of the creditor calling 3-4 times a day but at the same time don't want to put myself in a financial position with a Chapter 13 to where, A, I become financially unstable, and B, mortgage lenders seeing two BKs immediately following one another. I am aware that with a judgement that I generally won't get approved until after it's closed, but I don't know how I feel filing a 13 just to protect myself from a suit. (I also know if I pick up a part time job I must also report that income as well to the court)

I rent (lease expires in August), and I have bought a vehicle from my girlfriend's mom in which I'm making payments. I don't know how or if the Trustee will allow that in my plan. With the non-dischargeable Chapter 13, is it possible to have some of it discharged if I put this in a 5 year plan? I REALLY wanted to see if I could have my Chapter 7 discharged and then include it, but that doesn't seem possible with my current Trustee as well as it turning into an asset case.

I'm just not sure what to do at this point, and I really want to look at my large future plans. I feel like the world just wants me to continue to fall, and I'm feeling more and more helpless over time. I don't know if filing 13 is needed, or just to deal with the judgement, open cards and keep utilization low, and look at FHA and first time homebuyer lenders. I continue to look at ways to increase my overall income.

Thank you all in advance, I appreciate you all!!

[rebuilding88]

I am compleatly confussed, you filed chp7 and waiting for discharge or you filed chp7 but want to change it to 13?  

So you bought a car after your 341 meeting and then let it get repoed?  I would give up the house idea, sounds like your a long ways from that. 

You can not file chap13 after your 7 is discharged, you have to wait 4 years. 

If you listed all your collections, judgements ect...in chap7 creditors should not be calling. You should of listed EVERYTHING when you filed chap7. 

[mich800]

Agree with the above.  Way too many holes to give advice. 

Was the chapter 7 discharged or still open?  If you had debts discharged that precludes you from filing a Chapter 13 on the back end within four years.

I don’t understand this no title for the automobile.  Many states the lender keeps the title as security.  Some states they are just noted as a secured party on the title and the borrower keeps the title.  If the lender screwed up and did not perfect the lien, yes the trustee will go after the asset.  Although, I am surprised you had much equity being such a new purchase. 

[jmw1]

I got some general advice as well as specific advice.

Stop financing cars for the rest of your life. This is counter to what most of this forum does. Skip the auto loan sub-forum. In good times, you are giving away $500/month to a lender instead of your emergency savings or retirement account. This $500 money sink becomes a lifetime loss once you get in the habit of rolling old cars in. In bad times with a conventional lender, you will get repo once you are more than a month behind with a deficiency that can be collected in judgment.  Now you have two creditors. The buy here pay here and girlfiend's mom with only a single vehicle to show for it. 

I understand everyone needs transportation to get to work, eat, and survive. But look at those who file chapter 13. They are stuck with whatever piece of crap they drive for a long five years, cannot take out another loan without permission of the court for five years (which can be denied), and all of their disposable income goes to the trustee.  The solution in the 13 is to make the budget as livable as possible and then once you are in, cut to the bone to squirrel away any money you can. Sometimes that means buying a bus pass if it is viable in your town. Otherwise it's save up for a $3k reliable basic junker like a 20+ year old Toyota Corolla. No SUV. No gas guzzler. No fun car. Just a reliable Toyota or Honda sedan and that's all you can choose from. That's what many folks do in a 13 once their car is totaled. There are some advanced strategies with a 13 where it makes sense for a high income person to deliberately finance a new car prior to filing the 13, but in general don't ever, ever finance a car again even at 0%.

I'm afraid you will have to pay off that buy here pay here as quick as possible. With an asset case, you already know you can't dismiss the 7. You need to get 2 or 3 jobs at the same time because the balance will grow fast.  I doubt you could afford a 13 and you'd need to raise $2k upfront for a lawyer to work on a 13 anyway. Instead of looking for ways to pay it off slower like in a 13, I think you need to go intense and pay it off as fast as possible with an extra fast food job, Doordash, whatever. Yeah you need to increase your income, but you need to do it today. There is no getting out of this. Once you pay off the buy here pay here and mom, you can quit the extra jobs. But the next year is going to be very rough for you since you need to spend every waking hour working at crappy low paying jobs.

One final note. Did you exempt your car properly in your initial filing? There is a non-perfected lien so you have a very valuable asset which is a "paid off car". You should be getting a check from the trustee for the exempt amount. If you didn't exempt it, the trustee will with 100% certainty pocket the money and not give it to you just because you are pro se. You have to amend your filing if you messed up the exemption for the car. If you get a check, pay down the buy here pay here debt with it.  The lender got screwed with a non-perfected lien and the trustee will screw you too for not doing your paperwork properly. Stop putting off dealing with paperwork like you did with the arbitration and make sure you exempted the car.

[Anonymous]

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