Advice needed

[mountanddo]

I had a previous chapter 7 discharge in Sept of 2004. In Minnesota you can only file chapter 7 if it has been 8 years since your debt was dismissed.

I apologize in advance for this long background but thought I might get the best answer if I explain it all.

In September of 2009 I had to leave my job for 3 months due to a medical issue and take Short Term Disability which is only 60% of your income. I went back in December but found that I could not continue to work in that environment so in March of 2010 I quit my job due to medical issues - Clinical depression and could not perform my job.

I took a job at SuperAmercia for very low pay which only lasted a few months. April 2010-August 2010. I was making half of my salary and had gotten behind on my payments. After I quit work at SuperAmerica I did not get another job for 2 months and stopped paying my credit cards altogether so I could pay my rent and living expenses.

I did find a long term long term temp job for 8 months from Ocober 2010-July 2011 which I left for another temp job with a promise of permanant hire in 30days. That job did not work out.

Currently I am working for another agency that contracted me for 3 months with a possibility of permanant hire. With the economy the way it is I am finding out that it is difficult to make that transistion from temp to permanant as the company can get the budget for temp workers but rarely get money to hire them permanantly. In betweeen these jobs I was out of work anywhere from 2 weeks to 2 months. During that time I had to use my credit cards to pay my bills. When I did get a temp job the pay was not enough to live and pay the credit cards so I stopped paying them in August of 2010.

Since the the credit cards and a couple of dentist bills have amounted to about $19,500.
I am getting calls daily from creditors and basically they want the whole amount now. Today I was served by the attorney of a collection agency for my capital one card that I owe 8k on. It's my understanding that they can seize your bank account even before the judgement is granted so I am off tommorrow to take my measly $900 out of my savings account and close it. With my income and expenses I do qualify through the means test for a chapter 7 but unfortunately can't file that for a year.

These are my questions.

Can I get a chapter 13 reorganization while I am working a temporary job? If that job should end and I can't pay the amount will that negate the chapter 13 then and I'd owe the original amount? Can you file chapter 7 if you default on a chapter 13?

If I do file for chapter 13 can I convert that chapter 13 to a chapter 7 in September 2012 when I am eligible?

Since Minnesota allows garishment up to 25% of your after tax income that means I will be paying approx 500/month if I don't file chapter 13 and wait for chapter 7. I have no idea if chapter 13 payments would end up being less that this $500. Would it be cheaper to just wait to file banckrupcy and let the creditors garnish my wages for a year and then file or should I go for the chapter 13 and then convert it. Can you convert it for any reason. With my rent, utilities, car expense, phone and the garnishment I would have about 200/month left for emergencies and food/toiletries.

I'm really unsure what route I should take. The other creditors would not even get near to a garnishment as the first creditor I own 8k to. If I let them garnish my wages (as if I have a choice) how in the world would I even come up with the $1850 it costs to fill chapter 7. I know they roll the cost of chapter 13 into your payment plan but they expect at least 1/2 for chapter 7.

Sorry this was so long. I probably should not have waited until I got a summons before I did something. Any advice would be appreciated.

[newbie2]

This is what I personally would do: Answer the summons with "yes I owe the debt" and "I tried to work out payment arrangements but they wouldn't cooperate". Then, there is a good chance that the attorney for Capital One will offer a "consent judgment" in which you promise to pay XX amount monthly in lieu of a full blown judgment. Offer what you can as a monthly settlement amount that will be acceptable to them as well as to you.

Don't file a Chapter 13 unless you absolutely have no choice. Not all of the attorney fees are rolled in to the plan. Most want upfront money also, for just the scenario you proposed (filing then converting to a Chapter 7 or having your 13 dismissed.)

[mountanddo]

So what amount would you suggest I offer on a 8k debt? If they garnish my wages they can take 25% of my salary which would be about $500. I don't want to go too low but I also can't afford for them to garnish my wages for $500 either.

The collection agency is charging me 14% as well until the debt is paid off. It isn't going to make sense to make payments if they debt is never going to go away. Can I ask for any interest charges going forward to be waived if I agree to this.

Also it states they can collect "reasonable attorneys fees". This amount was not stated in the judgement and if I agree to a payment plan I am afraid that all of a sudden I am going to have 5k in attorney fees tacked on to this bill.

If I agree to pay this will I still be able to discharge this debt with the attorney fees in a chapter 7 once I am eligible?

thanks for your help!

[despritfreya]

Three things you need to think about:

1. The discharge date of your 2004 case is not relevant. You become eligible to file a Chapter 7 eight years from the FILING date of your prior case. If you were discharged in 9/04, my guess is that you filed around May, 2004 meaning you become eligible in May, 2012, not September, 2012.

2. Working temp jobs is not a bar to filing a Chapter 13 so long as you routinely keep you income up. Even if you are out of work a couple of months, no big deal as there are ways to handle short term unemployment while in a 13.

3. If you file a 13 now you CANNOT convert it to a 7 in May, 2012. Everything stems from the filing date. You would have to dismiss the 13 and file a NEW Chapter 7 once the 8 years has passed.

Des.

[mountanddo]

Would it then make sense for me to try and make payments with this one collection I am being sued for and then file chapter 7 in May instead of filing chapter 13 now?

[despritfreya]

Would it then make sense for me to try and make payments with this one collection I am being sued for and then file chapter 7 in May instead of filing chapter 13 now?

If you can find a way to suck up to pesky creditors until you can hit them with a straight bk then do it. It may be cheaper in the end.

Des.

[mountanddo]

If you can find a way to suck up to pesky creditors until you can hit them with a straight bk then do it. It may be cheaper in the end.

Des.

Well now I'm not even sure that this is a summons. It SAYS it is but there is no court date. It says I must respond within 20 days whether or not it may be filed with the court and there may be no court file number on this summons. If it isn't "filed" with the court then who do I respond to? It is telling me I need to send my answer to the attorney that served me on behalf of Capital one.

I have a free consultation with a bankrupcy attorney on Saturday so I guess I will have her look at it and tell me if it is a legal summons or just a attempt to get me to respond.

[mountanddo]

If they garnish my wages it going to be $547/month. I am concerned that the attorney is going to encourage me to file chapter 13 now and then I will just find myself trying to convert that to a chapter 7 in May. Seems like an awful lot of money I won't have to get out of debt! Has anyone had experience trying to make a deal with a creditor after they have served you a summons. They pretty much know that they will get a default judgement since I do owe the money so filing a response is a waste of $320 for the filing fee. How much would you think I might have to offer a month to stop the garnishment?

I have NO idea if attorneys take advantage of someone in my situation or if they would tell you your best options. Any idea?

[bpokey]

File the response, show up in court and make as many documentation demands as you can possibly think of. They'll eventually ask for a continuance and don't object to that. I'm fairly positive you can drag this out another six months fairly easily. There's also the idea of just sending a payment of some kind in and showing that to the judge proving that you are trying to make payments and see if he'd be amiable to a continuance so that settlement conferences can be held. Just my two cents...

[ttg1]

File the response, show up in court and make as many documentation demands as you can possibly think of. They'll eventually ask for a continuance and don't object to that. I'm fairly positive you can drag this out another six months fairly easily.

Seriously.

This is the only sane advice. You may need to learn a little bit about the law if you do it pro se but if you have an attorney and he/she can't figure out a way to stretch it out six months fire them NOW. Another option to consider is to throw them into arbitration.

[mountanddo]

Decided to file chapter 13. It's going to be about 150/month and the attorney fees are included in that. If I try to hold off until I'm eligible for chapter 7 this one creditor could garnish 25% of my wages which is 3 times as much as a chapter 13 plus if my wages are garnished I will barely be able to live much less come up with the 1600 to file once I'm eligible. It is only for 3 year so I figure I can come up with 150 for that long. Found out it was filed in September so I have a year to wait. Plus judgements and garnishments are much worse for your credit than a bankrupcy. I think I will be able to sleep better tonight. At least I can eat hamburger now instead of Raman.

[newbie2]

Decided to file chapter 13. It's going to be about 150/month and the attorney fees are included in that. If I try to hold off until I'm eligible for chapter 7 this one creditor could garnish 25% of my wages which is 3 times as much as a chapter 13 plus if my wages are garnished I will barely be able to live much less come up with the 1600 to file once I'm eligible. It is only for 3 year so I figure I can come up with 150 for that long. Found out it was filed in September so I have a year to wait. Plus judgements and garnishments are much worse for your credit than a bankrupcy. I think I will be able to sleep better tonight. At least I can eat hamburger now instead of Raman.

That's what matters (sleeping well at night). Glad you made a decision that you feel is best for you, and now you can have some peace. Good luck to you.