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So lost on what to do - should I file Bankruptcy or try to work it out - please help

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Anonymous
Not applicable

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help


@jmw1 wrote:

In Ohio, your house is quite safe due to Ohio's homestead exemption. 

 

First, I think you should get a couple of consultations with GOOD bankruptcy attorneys to see if you can squeeze into a 7 or make your 13 much more comfortable. Obviously do a 7 if you can unless you are behind on the mortgage or taxes. You don't want the cheapest law firm, you want a good attorney who will spend time on your case. You are a good candidate for either a 7 or 13. Unless you are paying 100%, the interest in a chapter 13 repayment plan is going to be zero which is not the case with the debt management programs. You might end up paying less than 100% of your unsecured depending on your income, priority arrearages and secured payments.

 

We are not behind on anything at this point but it's looming in the near future with lay-off coming for dh.  I know I cannot handle the payments on my income (since it was cut back) and his unemployment alone.  I'm trying to prepare if he can't find work during the winter months.   I even started a side business to try and make some additonal income but it isn't happening as fast as I need it to be but is helping some. 

 

When I checked the means test, we made over what we were allowed for a two person household.  Do other factors go into it beside income only?  

 

If you decide to do bankruptcy in the next year, you should pull the trigger ASAP and stop making payments on your credit cards. Use the money to pay deferred maintenance on your health, house, pets, cars, charitable contributions, elder care, 401k retirement contributions, and your BK lawyer down payment. Some of the redistributed money may help you with the chapter 13 budget depending on your trustee. 

 

I notice you guys bought a new Honda which is not the best decision while broke vs. buying a $5k junker with cash. However, you will need a reliable car with a new car warranty to survive a five-year chapter 13 so definitely keep the new car if you are doing a 13. The new car payment also reduces the unsecured dividend in a 13 or look at it another way - your unseucred creditors are paying for your new car.

 

Buying a vehicle was against my wishes.  Clearly, I wasn't involved but it doesn't help that the payment still has to be made.  We have a truck I'm pushing to sale to that the money can be paid against the loan and/or higher interest debt.  Not sure thats a wise idea if we do happen to file -  

 

The only bright side of the chapter 13 is that you will be forced to learn how to budget properly going forward. There is no room in a 13 for extras or luxuries such as a new car. The chapter 13 budget is super tight even with your lawyer's considerable involvement.  If you do a 7, nothing there will teach you how to budget and you will be in the same mess again in a few years unless you totally convert to a Dave Ramsey-like mindset of avoiding all debt other than a purchase or no-cashout refi mortgage. In the long run, you want to avoid at all costs anything that causes monthly payments other than the mortgage.  

 

If you do a 13, you should make it your family's "Come to Jesus" moment and you can do a complete 180 with spending and your relationship. In exchange for all the sacrifices you guys will make during the next 5 years, you will get a discharge of all your unsecured debt. I think it's a pretty good deal.

 

We are from a small town so I'll have to start searching for a good bankruptcy attorney for some advice to know where we stand.  Is there anything I should know in search for an attorney?

 

Thank you for all the information as well!

Message 11 of 35
angelofmusic86
Frequent Contributor

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help


@Anonymous wrote:

@jmw1 wrote:

In Ohio, your house is quite safe due to Ohio's homestead exemption. 

 

First, I think you should get a couple of consultations with GOOD bankruptcy attorneys to see if you can squeeze into a 7 or make your 13 much more comfortable. Obviously do a 7 if you can unless you are behind on the mortgage or taxes. You don't want the cheapest law firm, you want a good attorney who will spend time on your case. You are a good candidate for either a 7 or 13. Unless you are paying 100%, the interest in a chapter 13 repayment plan is going to be zero which is not the case with the debt management programs. You might end up paying less than 100% of your unsecured depending on your income, priority arrearages and secured payments.

 

We are not behind on anything at this point but it's looming in the near future with lay-off coming for dh.  I know I cannot handle the payments on my income (since it was cut back) and his unemployment alone.  I'm trying to prepare if he can't find work during the winter months.   I even started a side business to try and make some additonal income but it isn't happening as fast as I need it to be but is helping some. 

 

When I checked the means test, we made over what we were allowed for a two person household.  Do other factors go into it beside income only?  

 

If you decide to do bankruptcy in the next year, you should pull the trigger ASAP and stop making payments on your credit cards. Use the money to pay deferred maintenance on your health, house, pets, cars, charitable contributions, elder care, 401k retirement contributions, and your BK lawyer down payment. Some of the redistributed money may help you with the chapter 13 budget depending on your trustee. 

 

I notice you guys bought a new Honda which is not the best decision while broke vs. buying a $5k junker with cash. However, you will need a reliable car with a new car warranty to survive a five-year chapter 13 so definitely keep the new car if you are doing a 13. The new car payment also reduces the unsecured dividend in a 13 or look at it another way - your unseucred creditors are paying for your new car.

 

Buying a vehicle was against my wishes.  Clearly, I wasn't involved but it doesn't help that the payment still has to be made.  We have a truck I'm pushing to sale to that the money can be paid against the loan and/or higher interest debt.  Not sure thats a wise idea if we do happen to file -  

 

The only bright side of the chapter 13 is that you will be forced to learn how to budget properly going forward. There is no room in a 13 for extras or luxuries such as a new car. The chapter 13 budget is super tight even with your lawyer's considerable involvement.  If you do a 7, nothing there will teach you how to budget and you will be in the same mess again in a few years unless you totally convert to a Dave Ramsey-like mindset of avoiding all debt other than a purchase or no-cashout refi mortgage. In the long run, you want to avoid at all costs anything that causes monthly payments other than the mortgage.  

 

If you do a 13, you should make it your family's "Come to Jesus" moment and you can do a complete 180 with spending and your relationship. In exchange for all the sacrifices you guys will make during the next 5 years, you will get a discharge of all your unsecured debt. I think it's a pretty good deal.

 

We are from a small town so I'll have to start searching for a good bankruptcy attorney for some advice to know where we stand.  Is there anything I should know in search for an attorney?

 

Thank you for all the information as well!


I'm in Ohio (northern to be specific).  I was able to keep my house with a CH7.  I 100% recommend speaking to several BK attorneys for a consultation, they would be able to look at your specifics and provide guidance based on Ohio bankruptcy law.  I paid a premium for my attorney, but the firm was founded a former attorney general of Ohio and they were great.  Also, the means test is two part, so while you may fail the income portion, an attorney may be able to consult you to see if you qualify based on expenses (I am obviously not a lawyer by not even knowing the technical term for that second part lol).  

 

Edit: Also, I forgot to mention, that I also kept my car/car payment with a reaffirmation (did not reaffirm the mortgage).

CH7 Filed 05.01.2020; Discharged 10.21.2020

10.22.2020 FICO8 Scores: EQ 615 TU 560 EX 581
06.28.2023 FICO8 Scores: EQ 663 TU 663 EX 661

Rebuild progress: Kohl's $3,000; CapitalOne QS $0AF $3,600; CreditOne Rewards $700; CapitalOne Walmart MC $3,000; Overdraft Line $250; PenFed PCR $10,000; Kemba Visa $3,500; CreditOne $0AF AMEX $1,500; Target RedCard $1,200; paid off reaffirmed car loan!; Wells Fargo Active Cash $1,500; Comenity Ultamate Rewards MC $4,250; CapitalOne Savor One $3,000; Amazon Store Card $3,600; CareCredit $7,400; Synchrony TJ Maxx Mastercard $3,500; Well's Fargo Reflect Visa $3,500; Levin Furniture $7,400
Gardening until December 2023.
Message 12 of 35
Anonymous
Not applicable

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help

@angelofmusic86   

 

Thank you so much for your knowledge of the situation in Ohio.  I did call one attorney locally that does bk filings and set up a meeting to see what my options are.  I read google reviews and they seem to have very good reviews, no negatives.  I'm sure I'll need to talk to another, but thought this would at least give me an idea if thats the way to go, chapter 7 or chapter 13.  I would find it very difficult NOT to pay my bills meanwhile so for now, I'll be making all my payments as always.  We have a lot of equity in our house that I do not want to lose.  My car is paid off and is only 4 years old so thats not going to be an issue I don't believe.  The dh has an auto loan so not sure how that would be handled he would need it for work for sure.  Again, thank you for the feedback it helps!

Message 13 of 35
angelofmusic86
Frequent Contributor

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help


@Anonymous wrote:

@angelofmusic86   

 

Thank you so much for your knowledge of the situation in Ohio.  I did call one attorney locally that does bk filings and set up a meeting to see what my options are.  I read google reviews and they seem to have very good reviews, no negatives.  I'm sure I'll need to talk to another, but thought this would at least give me an idea if thats the way to go, chapter 7 or chapter 13.  I would find it very difficult NOT to pay my bills meanwhile so for now, I'll be making all my payments as always.  We have a lot of equity in our house that I do not want to lose.  My car is paid off and is only 4 years old so thats not going to be an issue I don't believe.  The dh has an auto loan so not sure how that would be handled he would need it for work for sure.  Again, thank you for the feedback it helps!


Good luck!  Everyone's situation is so different, so hopefully you are able to find the best outcome for you and your family.

CH7 Filed 05.01.2020; Discharged 10.21.2020

10.22.2020 FICO8 Scores: EQ 615 TU 560 EX 581
06.28.2023 FICO8 Scores: EQ 663 TU 663 EX 661

Rebuild progress: Kohl's $3,000; CapitalOne QS $0AF $3,600; CreditOne Rewards $700; CapitalOne Walmart MC $3,000; Overdraft Line $250; PenFed PCR $10,000; Kemba Visa $3,500; CreditOne $0AF AMEX $1,500; Target RedCard $1,200; paid off reaffirmed car loan!; Wells Fargo Active Cash $1,500; Comenity Ultamate Rewards MC $4,250; CapitalOne Savor One $3,000; Amazon Store Card $3,600; CareCredit $7,400; Synchrony TJ Maxx Mastercard $3,500; Well's Fargo Reflect Visa $3,500; Levin Furniture $7,400
Gardening until December 2023.
Message 14 of 35
Anonymous
Not applicable

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help

There is a thread in post 7 of the Scoring Primer I believe bankruptcy to 700 in 2 years.
Message 15 of 35
Anonymous
Not applicable

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help

 


@Anonymous wrote:
There is a thread in post 7 of the Scoring Primer I believe bankruptcy to 700 in 2 years.

I'm not sure what a scoring primer is?  Nevermind, I found it but a bit lost in the whoe thread.  Thank you, I'll keep searching!

Message 16 of 35
Mjhall85
Frequent Contributor

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help

Bankruptcy is never an easy decision and many of us fought about doing it for months sometimes even years. There is life after bankruptcy. I am just over 4 months discharge and my fico 8's are all 650 at least. I started In the low 500's. I have never slept better knowing I am clear also not afraid to answer random numbers that call haha. Best of luck on your choice!

Chapter 7 filed 2/3
Discharged 6/30

Fico 8
EQ 681 TU 671 Ex 665
Fico 4 TU 690 Fico 5 702 Fico 2 693
Message 17 of 35
Anonymous
Not applicable

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help

@Mjhall85   Wonderful to hear.  I have given it alot of thought as well and kept thinking we could make it but I just worry myself sick over it all.  Thank you for the response knowing there is light at some point through it all!!

Message 18 of 35
Mjhall85
Frequent Contributor

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help

@Anonymous  I debated on filing for about a year or so. Best choice I made in this crazy year of 2020. If you do file just be cautious as you will get bombarded with predatory credit cards and car dealers. I counted up my mailers from car dealers alone just for fun and I had 54 of them.

Chapter 7 filed 2/3
Discharged 6/30

Fico 8
EQ 681 TU 671 Ex 665
Fico 4 TU 690 Fico 5 702 Fico 2 693
Message 19 of 35
Anonymous
Not applicable

Re: So lost on what to do - should I file Bankruptcy or try to work it out - please help

@Mjhall85   Oh my that sounds crazy they were all over it!  I've done the opt out so I hope that helps for all the preditory mailers ect.  Otherwise, they will just end up in the trash haha

 

This year has been crazy and I'm not really sure how much worse it may get when it's all said and done.  I'm trying to be ahead of the game rather than wait until I'm behind on everything.  I thought I could work through it but the worst time of the year is coming up for my DH getting laid off and there is no way we will make it.  Agree, sometimes the more you delay the inevitable the worse it is and just face it head on.  

Message 20 of 35
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