Is bankruptcy the best option??

[FireMedic1]

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.

[AustinOriginal]

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.

[Lurker22]

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@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.

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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)

[Jeffster1]

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@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.  

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@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. 

[AustinOriginal]

@Jeffster1 
andcwhat year was this?

[AustinOriginal]

@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. 🤷🏻

[Jeffster1]

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@AustinOriginal wrote:

@Jeffster1 
andcwhat year was this?

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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.

[donkort]

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

[donkort]

This might be better.

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