Is it worth me filing chapter 13?

[Rozi]

Hello!

I have enjoyed reading this board amd now I have a question of my own. I am 30 years old and living paycheck to paycheck. I filed Chapter 7 when I was 20 years old and never looked back. Now with the economy I find myself strugging. I make about 35K a year and my bills are way more than that. Here is how it breaks down:

Household Bank MC- 751.00
Household Bank V- 753.00
Target- 770.75
Discover- 1026.12
Qwest Medical- 490.00
Doctor- 350.00
Care Credit- 450.00
Paypal- 573.91
Doctor- 200.00
Doctor- 97.05
Fingerhut- 179.51
Credit Union Loan- 8500.00
Car Note- 26,000= 598.00 a month
Rent- 420.00
Verizon- 130.00

My car note is a big burden to me because it's due to be paid off in 2013 but the car is a 2004 and the value is only worth 9K. I am also set to graduate from college in a year or so and my school loans will be coming due. Should I go ahead and file Chapter 13? I am not sure how Chapter 13 works but I am so tired of living paycheck to paycheck. In my case do you think it's worth it or should I pay down my bills and let them come and repo the car. Any help would be wonderful!!! I simply love these message boards!

[espo1357]

Hello!

I have enjoyed reading this board amd now I have a question of my own. I am 30 years old and living paycheck to paycheck. I filed Chapter 7 when I was 20 years old and never looked back. Now with the economy I find myself strugging. I make about 35K a year and my bills are way more than that. Here is how it breaks down:

Household Bank MC- 751.00
Household Bank V- 753.00
Target- 770.75
Discover- 1026.12
Qwest Medical- 490.00
Doctor- 350.00
Care Credit- 450.00
Paypal- 573.91
Doctor- 200.00
Doctor- 97.05
Fingerhut- 179.51
Credit Union Loan- 8500.00
Car Note- 26,000= 598.00 a month
Rent- 420.00
Verizon- 130.00

My car note is a big burden to me because it's due to be paid off in 2013 but the car is a 2004 and the value is only worth 9K. I am also set to graduate from college in a year or so and my school loans will be coming due. Should I go ahead and file Chapter 13? I am not sure how Chapter 13 works but I am so tired of living paycheck to paycheck. In my case do you think it's worth it or should I pay down my bills and let them come and repo the car. Any help would be wonderful!!! I simply love these message boards!

Let them repo. Take the bus. Cut down expenses. Rent a room. Downsize.

You don't have enough debt to file here for a measely 9k, especially when you make 35k.

My guess is that 99 percent of other posters would agree.

Good luck.

[SMinGA]

Your debts, not including the car loan, total under $15,000. And if they repo'd the car you'd probably end up with a deficiency balance of about $20,000 more. (Selling it at auction, they'll get less than what its worth.) You don't list ALL of your expenses, but I'd guess your net pay (based on $35k/year) is about $2k/mo? Rent is reasonable - but that car payment is a big problem.

You could file ch. 7 and just let the car go, save up money to buy something for cash after discharge. Then the lender would not be able to come after you for the deficiency balance. But whether or not you could would depend on how much money is left after paying rent, utilities, car insurance, gas, groceries, other necessary spending. Or you could try getting into a lower payment car, file ch. 13 and let the current car go - if your DMI is too much for a ch. 7.

Not really sure you need to do bankruptcy now though. It might do just as well to get rid of the car - wait and see how aggressive they are at coming after the balance?

[Rozi]

Thanks for the responses! I usually have about 100 left after I pay all my bills. I bring home 1782 after taxes a month. I thought about letting the car go to repo but it's financed through Citifinancial and I don't know how aggressive they are. Plus I am not sure if I can get financed for another car since my credit score right now is around 568. I just really don't want to file bankrputcy for the bills that I have since they are current.

[SMinGA]

Is that $100/mo left after paying minimums on the credit cards - or $100/mo left without paying on the credit cards?

Make sure you are calculating a true month... If you bring home $891 every 2 weeks, for example, you get 26 pay periods a year. So your average is $1930/mo. Not easy to budget based on that amount when most things are due monthly - but if you filed BK that would be the income amount used. (Unless you actually get paid 2 times a month like on the 15th & 30th, then you would really have a net of $1782...)

Probably best to not make any major decisions (to file or not to file) unless you speak to an attorney. Review all options. Your debts overall - except for the car - are fairly low and filing bankruptcy would cost at least $1500-3000. You may be able to make some sacrifices, like cutting out/back on entertainment, and get ahead that way. Or possibly take on a 2nd job - even something as simple as working 10-15 hours a week at a fast food place making minimum wage can add up and help you knock those things out.

Thanks for the responses! I usually have about 100 left after I pay all my bills. I bring home 1782 after taxes a month. I thought about letting the car go to repo but it's financed through Citifinancial and I don't know how aggressive they are. Plus I am not sure if I can get financed for another car since my credit score right now is around 568. I just really don't want to file bankrputcy for the bills that I have since they are current.

[Rozi]

Thanks for the response! 100.00 is left after I pay the minimums on the credit cards and the rest of my bills. I do get paid biweekly also!