Questions about filing bankruptcy

crazynurse123 · ‎05-24-2008

After alot of emotional turmoil and accepting the disappointment in myself that yes-I will be filing bankruptcy, there is no other option for me, I feel a sense of relief, but I still have some questions for those of you that have filed before.

1. What do you do when you are too poor to file? I consulted with a lawyer and got info from a family friend and it seems that to file Chapter 7 is going to cost anwhere from $900-$1000. I certainly don't have that kind of money on hand. What to do?

2. I'm willing to include my car in the bankruptcy, but currently I am so far behind that I worry that they might reposess it before I file. I need a car in order to get to work every day (yes-I've already looked into public transportation and its not feasible).

3. For those of you that have filed, how soon afte the discharge were you able to get a car loan? I have no cash saved up in order to buy a beater car, so I'm hoping to buy used-any advice?

Thank you all in advance

Uniqua · ‎05-24-2008

Hello, Nurse:

First, let me say I am very sorry you are going through this and I understand your dilemma. I've been there before so I know how you feel. Filing BK was so emotional for me (as well as a last resort), but I can tell you that it was the best decision I could have made given my circumstances. I did not file a Ch 7, even though I was not working, but because I was job hunting and knew I'd get something very soon I filed Ch 13 in order to keep my car for interviews and getting to and from.

1. If you cannot afford to file, you need to let the BK court know this as you may be able to file for free given a serious financial hardship. Call the court immediately to find out which circumstances apply to this. You also need to get on the phone with a few attorneys who are willing to allow you to make payments on their fees. Some may ask for a small amount up front, then the remainder could be paid over an agreed-upon schedule. If that does not work, try Legal-aid in your state. They can refer you to an attorney and/or organization to help you get things going and quickly. My attorney's fee when I filed was $1,800. I paid $500 upfront and the remainder in my Ch 13 plan.

2. The only way to avoid the repossession is to hurry up and file quickly. That will stop your creditors from coming after you and/or receiving judgments against you. If you can afford to get another vehicle after discharge, then by all means include the vehicle. If not, have you thought about a Ch 13 so that you can keep the vehicle and pay it off over 3-5 years?

3. You can get a car loan immediately after discharge. You should expect, though, to pay high interest fees for a period of time. If you keep up with the payments (no lates at all), you can refinance the auto loan at a later date. About 12-18 months of consecutive on-time payments should qualify you for a better interest rate. In my case, I was behind about 2 months on my car payments. I kept the car since I only had 9 months left on my term and paid it off in my Ch 13 plan.

Hope this information helps. Please keep us updated.

All the best!

Message Edited by Uniqua on 05-25-2008 06:25 AM

crazynurse123 · ‎05-31-2008

Thank you so much for your response. I hadn't thought about legal aid. I will check that out right now. Now with Ch13 are you required to pay back all your debt or an agreed upon portion?

Uniqua · ‎05-31-2008

In my case, I had CCs that had wicked crazy fees I simply could not afford to pay. I was willing and trying to pay off the CCs, but because I could never put a dent in the amount owed due to all the extra fees, I just included them in my filing. They were not high amounts and the BK court discharged them. I did not have to pay them. Usually, unsecured debt is discharged and secured debt (auto, home, etc.) as well as taxes, liens, student loans, etc. are repaid within the Ch 13 plan. I did not make any agreements. The BK court looked at my income and the amout of secured debt owed (not unsecured debt) and made my plan from there. All unsecured debt (other than my attorney's fee) was discharged.

A little more information. The auto company I financed my auto through was trying to get an additional $9,000 from me because they felt they weren't going to be able to collect this amount of interest for the duration of the loan. The BK court discharged that added interest. I was so happy. I only had to pay what was actually owed, plus a small amount of interest decided by the court.

So, if you want to keep the car, file a Ch 13 instead. If you want to just get rid of it and start over, filing a Ch 7 may be a better option. Be advised that not all debt can be discharged especially if you have a job and can pay back some or all of your debt. These debts include student loans, federal/state taxes and liens. I had two judgments that were discharged as well.

crazynurse123 · ‎06-01-2008

Hmm..well I like my car, but when I sit and think logically about it-its not a smart financial move to keep it. When I got the car I owed so much on the vehicle traded in, that I ended up financing much more than the car was worth. I'm sure my financing company would like me to keep the car because with the milage, cracked bumper, and cracked windshield they'll never be able to recoup the money.

My largest problem is I had surgry last year, my mother financed the surgery with the agrement that I'd repay the loan. Only problem is I now make much less than I did this time last year and $505 a month in payments that can't be explained when my credit is pulled makes it hard for people to understand my financial situation. The relationship with my mother is strained and probably will be until the loan is paid off.

I just feel like I can't ever make a step foward since I am in debt to my mother, I still owe school loans, I owe back taxes, I have medical bills related to some past surgeries and various credit card debts. Not to include monthly rent and all the costs that go along with maintaining a home.

I ultimately feel completely overwhelmed and just can't wait for a change to come.

Uniqua · ‎06-01-2008

I understand. However, Ch 13 does not go by how much you owe; it goes by how much you make which will determine how much you can pay back. Do me a favor and read this article (all 5 pages):
http://www.bankrate.com/brm/green/debt-consolidation/basics5-1a.asp
(you may need to copy and paste the link into your browser)

This should help you determine which filing is best for you. Let me know what you think and if you have any more questions, feel free to ask away.

Also, you should try to get more information from an attorney who specializes in bankruptcy. There are also organizations who can help you if you cannot afford to pay. I do know that the court will allow you to file for free under extreme hardship. Get on this as soon as possible. The longer you wait, the worse this situation will get.

In the meantime, work on that relationship with your mother. Do not let this loan continue to cause a strain on your relationship. It simply is not worth it.