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Too Broke for Bankruptcy

Frequent Contributor

Too Broke for Bankruptcy

(I included the second part of the quote because I could swear I remember someone posting a similar (more in-depth) article on the Chapter-13-in-place-of-Chapter-7 issue in the South but I can't find the post.)

 

https://www.propublica.org/article/when-you-cannot-afford-to-go-bankrupt?utm_campaign=sprout&utm_med...

 

A ritual of spring in America is about to begin. Tens of thousands of people will soon get their tax refunds, and when they do, they will finally be able to afford the thing they’ve thought about for months, if not years: bankruptcy.

It happens every tax season. With many more people suddenly able to pay a lawyer, the number of bankruptcy filings jumps way up in March, stays high in April, then declines.

...

In the South, debtors often avoid the up-front costs by filing bankruptcy under Chapter 13. Unlike Chapter 7, which clears debts after a few months, Chapter 13 is a payment plan that usually lasts five years. Lawyers in the South will often start a Chapter 13 for $0 down, allowing their much larger fees (usually $3,000 to $4,000) to be paid through the plan. This provides immediate protection to low-income debtors, but most are unable to keep up with the payments. Once their cases are dismissed, their debts return.

Faced with options like these, many people simply try to muddle through, often under the threat of having their wages seized by creditors.

Ch7 discharged 10/2017. Pre-file FICOs high 400s.
04/2018 EX 644; EQ 670; TU 648
Message 1 of 3
2 REPLIES
Regular Contributor

Re: Too Broke for Bankruptcy


@capabkwrote:

(I included the second part of the quote because I could swear I remember someone posting a similar (more in-depth) article on the Chapter-13-in-place-of-Chapter-7 issue in the South but I can't find the post.)

 

https://www.propublica.org/article/when-you-cannot-afford-to-go-bankrupt?utm_campaign=sprout&utm_med...

 

A ritual of spring in America is about to begin. Tens of thousands of people will soon get their tax refunds, and when they do, they will finally be able to afford the thing they’ve thought about for months, if not years: bankruptcy.

It happens every tax season. With many more people suddenly able to pay a lawyer, the number of bankruptcy filings jumps way up in March, stays high in April, then declines.

...

In the South, debtors often avoid the up-front costs by filing bankruptcy under Chapter 13. Unlike Chapter 7, which clears debts after a few months, Chapter 13 is a payment plan that usually lasts five years. Lawyers in the South will often start a Chapter 13 for $0 down, allowing their much larger fees (usually $3,000 to $4,000) to be paid through the plan. This provides immediate protection to low-income debtors, but most are unable to keep up with the payments. Once their cases are dismissed, their debts return.

Faced with options like these, many people simply try to muddle through, often under the threat of having their wages seized by creditors.


The article conveniently leaves out the fact that most BK lawyers (at least down here in Dixie) are willing to work with clients on payment plans that fit their budget.

Message 2 of 3
Super Contributor

Re: Too Broke for Bankruptcy

Well, it IS Propublica. They do have an agenda. 

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812

Delta Reserve and CSP Jan 2018, no more 5/24 worries... unless new Chase Marriott/SPG replacement is enticing...meh, turns out not.
Message 3 of 3