End of the line for us

[Seenthelight]

First of all, thanks for all the informative and helpful posts. After reading for about an hour today I don't feel like we're completely alone.

At this point I feel like were on a runaway train. I'm self employed and business has slowed considerably since January. We've slowly accumulated credit card debt over the last 8 years (65,000 total as of today) but have always managed. Never been late on anything and credit scores in the mid 700s.

We reached the tipping point about 6 months ago and sadly resorted to multiple cash advances on several cards just to make ends meet and preserve our "perfect" credit. Roughly $8,000 worth the last for $1,000 being about 2 weeks ago. Nothing frivolous whatsoever but just a situation with more going out than coming in. All the money was used for our living expenses and a steady stream of car and dental "emergencies," etc.

Obviously it has been a time of denial but that is over. A huge crash appears imminent as we decided this is insane something must change. Total income is roughly 40k and although it appears we are well under the median a chapter 13 would be needed since I have a "collector car" worth about 10k (needs lots of work) that has been in the family for nearly 30 years and would be heartbreaking to lose. I know that must sound a bit selfish but just being honest about it. I don't mind paying back what needs to be paid back. I'm willing to do whatever it takes.


My questions about all of this are:

1) Since were "under" the median is a voluntary 13 feasible based on our income?

2) If we wait to file for about 6 months is it "less likely" that we will face a creditor objection for the cash advances since we would be in a 13 rather than a 7?

3) Is it best to keep paying the cards (although this will be hard) to avoid the nasty collections and show good faith until we hire an attorney?

4) I haven't consulted with an attorney. What would be the time frame after we completely stop using the cards to do so?

Currently we aren't late on anything including house which according to the state exemptions I read would be exempted (less than 12,500 equity).

I'm sure I missed about 100 other questions but this post is already much longer than I meant it to be.

Thanks for reading and for any advice you can offer.

Sigh.

Seenthelight
(albeit a little late)

[optimistic1]

1.) Sure as long as you can propose a feasible plan that makes sense, the whole above or below thing really just means whether or not you can use your actual expenses, or be restricted by the IRS standards.

2.) I really could not tell you as I have no personal experience, but waiting the 6 months, should clear any red flags as opposed to filing today.

3.) Honestly, it would be a waste of money, your'e right, hiring an attorney can decrease the amount of calls, but in terms of "good faith", you really have none considering you are filing a BK anyway. Not paying your accounts and letting them charge off will look bad POST Discharge, compared to quickly filing a BK and only being behind say 3 or 4 months.

4.) Make sure that when you do consults, that you do just that, consults, more than one, dont hire the first attorney, act like you are interviewing someone. Most attorneys will advise you to stop paying on the cards immediately and get some instant relief to your budget.


You never know about the collector car you own, it might be valued at much less considering it needs work, and it might be able to be exempted. A good attorney can make that determination and steer you in the right direction. My personal opinion for you is to just file a Chapter 7 and get an instantaneous fresh start on life, rather than file a long and drawn out Chapter 13 just to save a car. My situation differs from yours, as I filed a Chapter 7 years ago, and cant file another one, but I can file a Chapter 13.

[catleg]

I think if I were you I would just push ahead with the chapter 7.
Part of the reason I say that is because the lawyers make more money from chapter 13's, so you tend to get steered that way anyway.
The last thing you want to do is to be paying into a ch13 plan and then for things to get worse and convert to a ch7, wasting all that time and money.
A good lawyer may figure out a way for you to keep that car at minimal cost in ch7.
Stop paying the cards, and start interviewing lawyers. Don't go with the first one unless he turns out to be the best.

Most importantly, don't get rushed into any decision.

[DeadManCrawling]

Welcome, glad to have you here.

It sounds like you have a decent handle ont he basics of your situation.

I would caution you about valuing the auto at 10k or so. Likely it is worth far less, but many times all of us tend to overvalue the things we treasure the most. Nothing wrong with this, but you should have it given a value by a professional, who buys and sells vehicles for a living.

I suspect you will find it has far less value than you imagine. If the vehicle isn't running, have someone give you an offer based on junk value and make sure you get any of these in writing.

You can probably find some way to exempt the vehicle and proceed with a 7, since it sounds like you desperately need a 7.

Remember, the terminology changes in BK. That "Collector" car is now an "old junker" and should be treated as such on paper for BK purposes. Any real value it MAY have is based on the assumption that it will be fixed up and restored in the future. No one has any way of stating that this will be a certainty.

Value it at the lowest end of the spectrum, and for goodness sake, never ever refer to it as a "Collector" car or even an antique.

As far as the cards, most people stop using them entirely once the decision to file is made.

If you have big cash withdrawals or nonessential, frivolous expenses, you would want to wait a few months and pay minimums, but only your attorney can really advise you for sure on all this.

We quit paying all of our cards almost 3 years ago and still haven't filed. Yes, the phone rings, we get nasty letters and so on, but it's really not as hard to get used to as you may think.

Only card that has sued us was a very small balance (1600 I think). I have a couple cards that have 50-60k EACH on em, and not a peep.

What state are you in, as well? That is an important factor for exemption purposes.

Again, nice to have you join the board, and look forward to hearing your story as it continues!

Best luck,

-DMC

[Seenthelight]

First off thank you for the advice, especially about the terminology when describing the car and also it's valuation. Very, very helpful!

I realized I should have given more detailed information regarding assets. The reason I was leaning toward chapter 13 is that I have more than one car.

Here is what I have:

Honda worth about the same as I owe - $7,500

2002 Minivan paid for but tired with 200,00 miles (I travel alot for work)

The classic car that is now a "junker" was nice before the motor blew up about three years ago. I paid about 13,000 for the car about 4 1/2 years ago and took out a loan to do so. I still owe about $3,500 on the car (about 10 payments).

Here is another possible unfortunate twist. We helped out daughter purchase an older car ($1,300) about 8 months ago and I titled it in my name and added it to our insurance policy (argh!). We kicked in $800 to help her out. She is living on her own now but we left the car on the policy to save her some money for the time being.

I know, a lot of complications here.

Aside from the cars we have nothing else of any real value other than the normal household goods. Nothing fancy here. No hot tubs, big screens, etc.

You would think that with the debt we've accumulated that we would have more stuff but just don't.

Also, I live in Nebraska.

I really appreciate all the help!

[optimistic1]

According to your state law for bankruptcy exemptions. You are entitled $2400 for a vehicle, and that is per person, for instance if you filed with your wife, you would double that. Also, your state has what is called a "wild card" exemption of $2500, which can be used for anything. If you are still paying for the vehicle, and you owe exactly what its worth, then you need not worry about it, it wont technically be counted as an asset, as you dont own it, and you have no equity in it. So, the minivan would be the only thing I would worry about, and at 200,000 miles, it is unlikely that it is worth more than the $2400.

The loan you speak of to obtain the classic car, what was this loan secured by? The car itself?

[Seenthelight]

The loan for the classic car is a secured loan with the bank still holding title.