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My Situation and Whether to File or Not

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Valued Contributor

My Situation and Whether to File or Not

Hello all,

 

Well I hoped to never write on this board, but life sometimes calls for such actions.  I wanted to list my current situation and see your opinion.

 

Current household income:  $40,000 ($30,000 mine and $10,000 wife - she cannot work for several months now) 

 

Below my questions is a list of my accounts for your review.  As you can see I have a lot of charge-offs due to loss of work and one collections account.  I have 3 open accounts (2 unsecured and one secured credit card).

 

 My questions:

 

1.  I am unsure whether to file for bankruptcy or not.  If so, should I file chap 7 or chap 13?

 

2.  I will not be able to pay anything for a couple years at least due to current issues, so if I decide not to file for bankruptcy do you think I will be sued by the creditors?  I know this is an impossible question to answer, but just curious your thoughts.

 

3.  I own 2 vehicles (Honda KBB $5,500, Jeep KBB $4,700).  Do you think I will have to liquidate these or will they allow my family to keep them?

 

4.  I have 3 open cc accounts (2 unsecured, 1 secured).  I can get these down to $0 in the next few months when my tax return money comes in.  Will I be able to keep them open?  I have read to not file for 6 months after I pay off the cc's, but just asking to make sure.  I guess my second part of this is whether the cc companies will keep my account open if I file bankruptcy.

 

5.  Do you think there is another option?  I owe around $50,000 now and I have very little money left over after rent and the essentials.  I just do not see a way other than to avoid the creditors.  If only I knew they were not going to sue.

 

$532 Pays account as agreed - US Airwarys CC (unsecured)

$980 Pays account as agreed - Wells Fargo CC (secured)

$2,428 Pays account as agreed - Hooters CC (unsecured)

 

$2,781 Bad debt/collection        

$2,667 Bad debt/collection

$15,055 Bad debt/collection

$2,386 Bad debt/collection

$11,627 Bad debt/collection

$6,289 Bad debt/collection

$1,275 Bad debt/collection

$3,917 Collections Account        

 

                                                          

Thank you all for your help. I am sure other people have been worse off than me, but it just feels as if the pressure is coming from all sides.


Starting Score: 583 EQ, 612 EX, 569 TU
Current Score: 658 EQ, 648 EX, 618 TU
Goal Score: 720 EQ, 720 EX, 720 TU


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Message 1 of 6
5 REPLIES 5
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Re: My Situation and Whether to File or Not

 

File chapter 7.  This will clear all of your debt, except student loans

If you are not able to start repaying things for a few years, chapter 7 is the way to go.  13 puts you into a payment plan.  Your two vehicles should be exempt.  Depending on your state, you are exempt certain amounts for personal property and cash. 

If you file bankruptcy, you can't keep any accounts open, so don't pay them with your tax return.  Also, if you file, your tax return will be taken by the trustee if you file 13, 7, may not be.  It depends.  As far as being sued it is a waiting game.  They have so many years to sue you based on your state and your state's SOL. 

For me, I stopped paying my bills Dec 2007.  I obtained an attorney and had to make monthly payments to him to pay his fee, about $1900 total with filing fee and credit counseling.  Anyways, when I received calls from my creditors, I notified them of my bankruptcy coming up and gave them the attorneys info.  I finally paid off my lawyer in May 2008. By December 2008, he STILL had not filed my case.  He said he was backed up.  Anyways, I fired him, obtained a new lawyer in January.  Not even one week into Feb, Bank of America sent me papers to sue me.  Well, they didn't win since my lawyer had filed the bankruptcy papers that next week.  He took care of Bank of America and it was dismissed.  I was in your shoes.  I had 50K in credit card debt, 20K in a car loan that was valued at 10K.  My income had been cut in half and our health insurance was cut by our employer so we had to spend almost $1200 a month in medical insurance out of our pocket.  There was no way I was going to chose credit cards or health care.

Anyways, the choice is up to you.  You should contact an attorney to find out if it is the best option for you.

I received my discharge in May 2009 and looking back it was the best thing I ever did.  Good luck to you.

Message Edited by Wantsanewhouse on 11-12-2009 03:23 PM
Message 2 of 6
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Valued Contributor

Re: My Situation and Whether to File or Not

Thank you for your reply.  I think I should at least sit down with a lawyer and talk with him/her.  Supposedly it is a "free" consultation, so I suppose I have nothing to lose.  I just somehow hope that I will be able to repay the debt, but I know this is not the case.  Also, I can hope they will not sue, but if they do then I will be in real deep crude.

Starting Score: 583 EQ, 612 EX, 569 TU
Current Score: 658 EQ, 648 EX, 618 TU
Goal Score: 720 EQ, 720 EX, 720 TU


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Message 3 of 6
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Senior Contributor

Re: My Situation and Whether to File or Not


@Wantsanewhouse wrote:

 

File chapter 7.  This will clear all of your debt, except student loans

If you are not able to start repaying things for a few years, chapter 7 is the way to go.  13 puts you into a payment plan.  Your two vehicles should be exempt.  Depending on your state, you are exempt certain amounts for personal property and cash. 

If you file bankruptcy, you can't keep any accounts open, so don't pay them with your tax return.  Also, if you file, your tax return will be taken by the trustee if you file 13, 7, may not be.  It depends.  As far as being sued it is a waiting game.  They have so many years to sue you based on your state and your state's SOL. 

For me, I stopped paying my bills Dec 2007.  I obtained an attorney and had to make monthly payments to him to pay his fee, about $1900 total with filing fee and credit counseling.  Anyways, when I received calls from my creditors, I notified them of my bankruptcy coming up and gave them the attorneys info.  I finally paid off my lawyer in May 2008. By December 2008, he STILL had not filed my case.  He said he was backed up.  Anyways, I fired him, obtained a new lawyer in January.  Not even one week into Feb, Bank of America sent me papers to sue me.  Well, they didn't win since my lawyer had filed the bankruptcy papers that next week.  He took care of Bank of America and it was dismissed.  I was in your shoes.  I had 50K in credit card debt, 20K in a car loan that was valued at 10K.  My income had been cut in half and our health insurance was cut by our employer so we had to spend almost $1200 a month in medical insurance out of our pocket.  There was no way I was going to chose credit cards or health care.

Anyways, the choice is up to you.  You should contact an attorney to find out if it is the best option for you.

I received my discharge in May 2009 and looking back it was the best thing I ever did.  Good luck to you.

Message Edited by Wantsanewhouse on 11-12-2009 03:23 PM

Re: Your initial attorney -- I would have filed a complaint with the state bar association and made him refund whatever fees already paid.

IAALBNYL
Message 4 of 6
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Senior Contributor

Re: My Situation and Whether to File or Not


@John060675 wrote:
Thank you for your reply.  I think I should at least sit down with a lawyer and talk with him/her.  Supposedly it is a "free" consultation, so I suppose I have nothing to lose.  I just somehow hope that I will be able to repay the debt, but I know this is not the case.  Also, I can hope they will not sue, but if they do then I will be in real deep crude.

 

Yes, you need to speak to an experienced BK attorney.  First, you don't get to file 1 or the other based upon merely your preference.  There are certain things that the BK requires to "qualify" now.  And it is possible that if the court determines your ability to make some restitution is in order, they may require you to go with BK 13.  This was part of the BK reform of 2005.  Thus, you need to talk to the BK attorney to make sure you qualify for 7 and to see what your options are, the costs will be (to the attorney), etc.

 

Good luck.

 

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09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Message 5 of 6
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New Member

Re: My Situation and Whether to File or Not

I agree with all the responses you have got so far. I would just add that if possible you may want to wait until you file your taxes and get any refund back. If you spend the money before you file it should be exempt (at least in my state). txjohn is right that you do not get to file 7 or 13 based on your preference....but.....based off your income you may be able to file 7 depending on your state median income. If you have the "choice" then I would recommend 7 over 13.

 

Good luck!

Message 6 of 6
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