Last chance for someone to talk me out of CH.13...

[NeedOptions]

I am 99% sure my wife and I will file for Ch. 13. We pay a total of $4500/month in minimum payments, a $2800 mortgage and a couple car payments and have $0 left over. Here are our stats once again:

1. $240k in credit card debt
2. Income=$145k/year
3. Minimum payment is $4,500/month on unsecured debt (100% credit cards)


All our payments are up to date, however, in 2 weeks, a lot of them will be late. Once they are late, there is no turning back from CH. 13. We have no hope to pay any of these cards off as it would take decades. We pay all our bills and have to use the credit cards for basic necessities as we our broke for the rest of the month. It's a vicious cycle that will never end. I just wanted to make sure one last time that we are doing the right thing. Thank you once again as depression is setting in.

[Flamingo]

Personal decisions are tough and it's difficult to advise someone we don't know or know their entire situation that they are doing the right thing. I will tell you right now that it is difficult to get past the denial of the situatoin and think someone is going to come to your door with a $500,000 check to bail your household out but it isn't going to happen. If you have no other way to pay off your debt, believe me, unless you file it will get so bad that you will wonder why you waited. If you wait, you will just get further in debt as you will start borrowing from Peter to pay Paul and get sucked right down the "black hole spiral" - which I usually describe the period before one actually realizes they HAVE to file. We waited one year to file - the entire time hoping for a fix as to a job loss and major income loss; our mistake was not filing sooner. If you have talked to an attorney and have no other way out of your situatoin or cannot by yourself get out of debt in five years, you really have no choice. Chapter 13 is an eye opener and you will be required to change your lifestyle substantially to make it but if you buckle down, budget, learn to do without, shop discount, stay home instead of vacationing, etc., etc., the reward is at the end. Best of luck to you...

[debtinohio]

We too had around $250K in unsecured, 2 cars, $2500 house payment & $150K in income and we filed for all the same reasons you have already noted.

I kept the house, both cars and my payment is in my signature (1 car included in the payment for 9 months, the other is included all 60).

[NeedOptions]

Thanks guys. Yes, we were robbing Peter to pay Paul and now Peter is broke as well. I wonder if I should just file asap and not worry about all the collection calls I am about to receive. The only reason I am waiting to file is so I can save up some sort of reserve so we can get through the 5 years of hard time. What would you do? Would you file Ch. 13 immediately before the calls came in or would you wait and save up as much money as you can and then file? I am in CA so I believe up to $20-$25k in cash can be exempt from the filing. I figure I can save around $20k if I wait 6 months to file. Thanks again.

[NoTomatoCan]

Save up as much as you can and as much as your exemptions allow. You will need the reserves for any potential bumps in the road during your CH13.

The calls suck, but there are ways to handle them (see good links on Collections section of thsi forum). Plus, if you think you can save up $20k and it will be exempt, then go for it! The creditor calls don't such THAT bad!

[debtinohio]

Thanks guys. Yes, we were robbing Peter to pay Paul and now Peter is broke as well. I wonder if I should just file asap and not worry about all the collection calls I am about to receive. The only reason I am waiting to file is so I can save up some sort of reserve so we can get through the 5 years of hard time. What would you do? Would you file Ch. 13 immediately before the calls came in or would you wait and save up as much money as you can and then file? I am in CA so I believe up to $20-$25k in cash can be exempt from the filing. I figure I can save around $20k if I wait 6 months to file. Thanks again.

Heck yeah - wait as long as possible and save as much as possible.

[lrprn]

I am in CA so I believe up to $20-$25k in cash can be exempt from the filing. I figure I can save around $20k if I wait 6 months to file. Thanks again.

Be very careful here. There are two CA bk exemption systems, and only System #2 allows that much cash to be exempted - http://www.bankruptcyaction.com/caexemptions.htm. When you file, you may have to use System #1 to be keep the assets you want after filing.

If you haven't done so, it's time to set up free initial consultations with at least 3-4 experienced bk attorneys in your area who file a fair number of Ch 13s. That's the most reliable way to find out which System is best for you to use. If it's System 1, then you do not want to save for six months - that will just create a situation where you'll have to dump most of the cash before filing.

If there's one lesson to share about filing Ch 13, NEVER assume anything about your own case from what happens to another member here, what you hear from well-meaning friends, or what you think you've figured out on your own about filing a 13.

Make sure about your CA exemptions and which system will be best for you to use so you don't waste six months saving only to find out you can't protect all of it when you do file.

[NeedOptions]

Good idea lrprn. I've had a few consultations and was lead to believe that I can exempt a good portion of cash. I will definitely find out for certain what the limit is. Thanks.

[sheilaE]

NeedOption,
One thing we've been doing-and we plan to file in a few months, is whenever we're buying groceries, we get cash back. It then gets deposited into the bank of Sheila here at home.
I'm not talking thousands, although that would be nice, but just a little here and there for an emergency. I know you can't be hiding money, but we have 3 children. They are great about not asking for material things, but still...children don't come cheap.

[researchnerd]

NeedOption,
One thing we've been doing-and we plan to file in a few months, is whenever we're buying groceries, we get cash back. It then gets deposited into the bank of Sheila here at home.
I'm not talking thousands, although that would be nice, but just a little here and there for an emergency. I know you can't be hiding money, but we have 3 children. They are great about not asking for material things, but still...children don't come cheap.

Great idea - thank you!!!

[Flamingo]

Thanks guys. Yes, we were robbing Peter to pay Paul and now Peter is broke as well. I wonder if I should just file asap and not worry about all the collection calls I am about to receive. The only reason I am waiting to file is so I can save up some sort of reserve so we can get through the 5 years of hard time. What would you do? Would you file Ch. 13 immediately before the calls came in or would you wait and save up as much money as you can and then file? I am in CA so I believe up to $20-$25k in cash can be exempt from the filing. I figure I can save around $20k if I wait 6 months to file. Thanks again.

Robbing Peter to pay Paul is the first main indication you have severe financial issues. Once you start doing that, it just gets worse as you have found out. The banks eventually realize what you are doing and then raise your rates on top of it and then you hit the credit limit and the dead end unless your bank closes your account by then as they know what is going on and know you are in trouble and don't want to lose any more money. Before you do anything, please talk to an attorney to find out what works for you. Get several free consultations and take with you a complete listing of all your debts, monthly payments, sources of income, paystubs, listing of assets and copies of your most recent federal and state tax returns. Don't ask what we would do - we don't live with you, don't pay your bills, can't guess for you and have no idea....ask an attorney in the state in which you reside.

[NeedOptions]

Thanks Flamingo. As you suggested, I have talked to several lawyers and they all say Ch. 13 is the best thing to do. I came armed with all the info you listed (pay stubs, tax info, w-2's etc) and they all said to file for Ch. 13. I suppose I just needed people who were not involved to give me an unbiased answer. I am 100% committed now to Ch. 13. There is one thing that I dread, that is all the collection calls that will soon happen. I can't really ignore the calls because I do not want them to call my job or my neighbors. That would be horrible.

Robbing Peter to pay Paul is the first main indication you have severe financial issues. Once you start doing that, it just gets worse as you have found out. The banks eventually realize what you are doing and then raise your rates on top of it and then you hit the credit limit and the dead end unless your bank closes your account by then as they know what is going on and know you are in trouble and don't want to lose any more money. Before you do anything, please talk to an attorney to find out what works for you. Get several free consultations and take with you a complete listing of all your debts, monthly payments, sources of income, paystubs, listing of assets and copies of your most recent federal and state tax returns. Don't ask what we would do - we don't live with you, don't pay your bills, can't guess for you and have no idea....ask an attorney in the state in which you reside.