I thought I'd start a new thread here related to why or when to file 13. I know much of this has been bantered about in other threads, but I don;t think it hurts to keep an active post now and then. I have learned a great deal from posts here and through the process of just "thinking of chapter 13" as an option. I've been set to file 2 - 3 times in the past 8 months. Then a semi-financial miracle occurs and I survive for a few more months. My income was climbing last year, and now it is falling dramatically. BK 13 is unavoidable. This is the first month I will not pay all of credit card bills, either those that I have reduced payment agreements with or those that will not work with me as of yet.
For me, saving my credit score is not an option. It is dropping quickly with every "agreement" I work out. The big companies still make derrogatory comments when you have a reduced agreement. (As an example, Citibank dropped off all late charges, interest, etc. for the next 12 months. I pay them 1/2 of the payment I was making previously.) I did have to stop paying them for three months before they would work with me, but they did.) At this point, I will not pay anymore credit cards, or unsecured debts, and see what actions they will take. Perhaps they will make agreements or perhaps they will not. In my opinion, if 80% of my creditors will agree (in writing) to a five year payout plan where I don't pay them much interest or late charges, then this is as good BK 13. In the meantime, I can take care of medical, vision, auto, issues that I have, for too long, ignored.
If you are thinking of BK, your credit score will be shot. If you are in a position that you cannot pay everyone as agreed, then your credit score is shot. If you don't have any assets of value, and only have a salary, and you live in a 25% of net salary garnishment state, then you can probably even survive a few judgements leading to garnishments over a few months. This is my case, so I see no reason to hurry into bankuptcy. One attorney I met with said there is generally no hurry for folks who are willing to fend off and take a few lumps from creditors (judgements, garnishments, etc). I have stopped my paycheck from direct deposit, and should I get a court order for a creditor seeking a judgment, I will simply say "please, issue a wage garnishment, your honor." 75% of paycheck is now mine. Since, the only money I have coming in is wages, the remainder is mine (State of Oregon regulation). I've even mentioned this to several creditors, and they began to work with me. We will see what the others do during the next 4 - 5 months (anticipated filing BK 13 if things go to pot.) I'm not proud to say that at one time last year I had $13000 in payday loans. I whittled this down to the current amount of $6200. I pay each of them a little bit each month. They occasionally call and complain, but I calmly tell them to go ahead and do whatever they need to do, so long as it is within the law. (If they do break the law, I've found two legal firms in my state that will sue them with no cost to me. I imagine the attorneys get the suit amount, or most of it. Again, I don't care. I am on the bottom financially.
Sorry I digressed and perhaps this belongs on another thread, but my point is that if you can find this forum earlier enough, or you have time to think things through, take the time to prepare for a future BK. In my opinion, since your credit score will be trashed due to BK 13, you are not hurting anything by trashing it up front. Use the time to catch up on secured (autos, home, etc.). Go to the US Trustees home page and download BK 13 forms and estimatewhat you will probably have left after your plan is confirmed. Practice living on this for a few months. I think you'll get a real stark look at what you MUST have and what you can DO WITHOUT.
Creditors want you money, but they don't want to deal with a BK 13. Not everyone is in the position where I am and can afford to try alternative approaches until forced into BK 13. But if you can put it off, even for a little while, you will learn a great deal about how creditors operate and how empowered you can become.
This is all my opinion, but there are options to consider before BK.
For me, saving my credit score is not an option. It is dropping quickly with every "agreement" I work out. The big companies still make derrogatory comments when you have a reduced agreement. (As an example, Citibank dropped off all late charges, interest, etc. for the next 12 months. I pay them 1/2 of the payment I was making previously.) I did have to stop paying them for three months before they would work with me, but they did.) At this point, I will not pay anymore credit cards, or unsecured debts, and see what actions they will take. Perhaps they will make agreements or perhaps they will not. In my opinion, if 80% of my creditors will agree (in writing) to a five year payout plan where I don't pay them much interest or late charges, then this is as good BK 13. In the meantime, I can take care of medical, vision, auto, issues that I have, for too long, ignored.
If you are thinking of BK, your credit score will be shot. If you are in a position that you cannot pay everyone as agreed, then your credit score is shot. If you don't have any assets of value, and only have a salary, and you live in a 25% of net salary garnishment state, then you can probably even survive a few judgements leading to garnishments over a few months. This is my case, so I see no reason to hurry into bankuptcy. One attorney I met with said there is generally no hurry for folks who are willing to fend off and take a few lumps from creditors (judgements, garnishments, etc). I have stopped my paycheck from direct deposit, and should I get a court order for a creditor seeking a judgment, I will simply say "please, issue a wage garnishment, your honor." 75% of paycheck is now mine. Since, the only money I have coming in is wages, the remainder is mine (State of Oregon regulation). I've even mentioned this to several creditors, and they began to work with me. We will see what the others do during the next 4 - 5 months (anticipated filing BK 13 if things go to pot.) I'm not proud to say that at one time last year I had $13000 in payday loans. I whittled this down to the current amount of $6200. I pay each of them a little bit each month. They occasionally call and complain, but I calmly tell them to go ahead and do whatever they need to do, so long as it is within the law. (If they do break the law, I've found two legal firms in my state that will sue them with no cost to me. I imagine the attorneys get the suit amount, or most of it. Again, I don't care. I am on the bottom financially.
Sorry I digressed and perhaps this belongs on another thread, but my point is that if you can find this forum earlier enough, or you have time to think things through, take the time to prepare for a future BK. In my opinion, since your credit score will be trashed due to BK 13, you are not hurting anything by trashing it up front. Use the time to catch up on secured (autos, home, etc.). Go to the US Trustees home page and download BK 13 forms and estimatewhat you will probably have left after your plan is confirmed. Practice living on this for a few months. I think you'll get a real stark look at what you MUST have and what you can DO WITHOUT.
Creditors want you money, but they don't want to deal with a BK 13. Not everyone is in the position where I am and can afford to try alternative approaches until forced into BK 13. But if you can put it off, even for a little while, you will learn a great deal about how creditors operate and how empowered you can become.
This is all my opinion, but there are options to consider before BK.
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