Is chapter 13 my only option?

[highnndry]

Just finished my taxes for 2011 and my take home after Federal and State tax for 2011 was $35,000, this is before any 401K deduction. I don't have any asset, no home and car is paid off. It saddening to see my income this low, I was making over $80K back in 2008 as an investment accountant. Oh well, thats life.

Since it is straight forward ch 13, just unsecured loans, I'll try to do it myself and see how it goes.

[SWConsultant]

Hello HighnDry,

Welcome. I too am new to this site.

I am a bankruptcy alternative specialist, not a BK attorney, so given that information here is what I would do:

1. What would you guys do in this situation?With how easy it is to settle with credit card companies and how simple rehabbing your credit can be, I would hold out and settle the debt. You are essentially judgement proof and if you save funds from your jobs then you wil be able to settle the debt for 20-35% of the debt owed.
2. Would I be able to get a 3 yr ch-13 plan? Possibly but not likely - either way I dont think its worth it
3. Should I just live with the judgement which will make it a secured loan. Yes, you are judgement proof. Once they obtain a judgement and are unable to collect on it they will reach out to you with settlement offers. Once you settle the debt the judgement will be marked satisfied.
4. Since no other card company sued me so far, should I just stay under the radar? Not sure what you mean here, but no. I would stay in contact with your creditors and let them know that you intend on settling the debt outside of BK... the sooner you start this process, the sooner you will be successful
5. I'm not concerned about bk in my report but I'm concerned about garnishment, because companies doesn't look took too favorably on those. with your work as a temp it sound like garnishing wages would be difficult. For a $6000 debt, it is unlikely you will receive a garnishment. Even if you do, a settlement or BK will stop that garnishment. Companies may not like seeing garnishments but seeing a recent BK filing can have the same effect - kind of splitting hairs here.
6. Also if I get hit with another suit and another garnishment then that will make it even worse that ch-13. Do you have a lot of other debts? if so than maybe a BK is right for you. Otherwise if you are only facing low amounts of debt you can avoid BK. Your state laws protect how much can be garnished; so whether there are 10 creditors with garnishments against you or just one, the maximum amount of your income that can be garnished does not change. I believe in california it is 25% of discretionary income - so given that information the most that can be garnished is 25%, so theoretically another garnishment would not make you any worse off than with one garnishment.
7. Is there a step by step procedure for ch-13 for Californians, I'm new to this? If you are serious about a chapter 13, then you should consult with a highly rated local BK attorney. Every case is unique and there shouldn't be a boiler-plate 'how-to' file BK. Talk with an attorney and have them create a plan tailored to your situation.

I hope this helps. I would post some other resources for you to check out but due to my new account on this site, I am not yet able to post hyperlinks... Feel free to message me with more questions

[highnndry]

What do you mean by "I'm judgement proof"? As soon as they get the judgement they will go to garnish my wages, at least 25%. Not sure why would they want to settle at that point after they spend so much money to get the judgement?

What you are saying makes sense if you have one or two credit card with small balance, my total debt is over $35k close to 40K.

[SMinGA2]

"Judgment proof" doesn't mean no one can get a judgment against you. It usually means you have no property that can be attached and/or your income can't be garnished. Such as some states don't allow garnishment, and certain income sources (social security) may be excluded from garnishment.

Your first post indicated you work off & on and only as a temp, so SWConsultant may have assumed you were judgment proof based on lack of steady/continous employment. That would make it difficult to get a ch. 13 plan confirmed, however. If you work consistently for one agency, and its just that your hours vary, a judgment probably could lead to garnishment.

Here in GA, net pay that is less than 30 X minimum wage can't be garnished. So the first $217.50 (30 x $7.25) is safe. And since its net pay, that would come after taxes, 401k, child support...

[GoodyYearCap]

Oye, this is interesting. My husband and I have our 341 on Feb 21st and I have been so sick of my attorney and his lack of help, I was tempted to pull out altogether and just hide... but the garnishment, lawsuits, harassment from creditors is enough to make me go through with it. We will have 5 years of $406/month. If it gets approved.

[SWConsultant]

What do you mean by "I'm judgement proof"? As soon as they get the judgement they will go to garnish my wages, at least 25%. Not sure why would they want to settle at that point after they spend so much money to get the judgement?

What you are saying makes sense if you have one or two credit card with small balance, my total debt is over $35k close to 40K.

well with $35-40K, you are right - settlement becomes more difficult than at a few thousand dollars. However, with the right financial discipline, settlement is still very possible

and SMinGA2 is correct, I assumed you work on and off and own no significant assets (indicated in your original post). While it is still possible for them to get a judgement, with your inconsistent income and exemption amounts protecting you in your state would make it very difficult for a creditor to collect from you - making their judgement valueless and you "judgement proof". Once a creditor has a judgement and realizes they cannot collect on it, they become very motivated to settle the debt because the failed judgement is a huge indicator that they would be discharged with no consideration if the debtor were to file BK. The creditor basically realizes they have spent good money after bad getting the judgement and is now motivated to settle before they are completely wiped out

[mountanddo]

well with $35-40K, you are right - settlement becomes more difficult than at a few thousand dollars. However, with the right financial discipline, settlement is still very possible

With that much debt, settlement is not a good option as you will owe taxes on whatever amount is forgiven. It's not a popular choice vs. filing bk especially here.

[shark66]

With that much debt, settlement is not a good option as you will owe taxes on whatever amount is forgiven. It's not a popular choice vs. filing bk especially here.

And for ALL the right reasons, may I add...

Good luck to us all.

[highnndry]

Thanks for everyones comment, you guys are really helpful. I think the more I see it the more I feel like ch 13 is the best option in my situation.

When filing the forms do I input the actual amount owed to credit card companies or amount it is now, ie, after all the late fees and interest and other fees. For example, I had one credit card that got closed when the balance was $1,800 but now it says the balance is $2,500. So which amount do I include in the ch 13 schedule?

[lrprn]

When filing the forms do I input the actual amount owed to credit card companies or amount it is now, ie, after all the late fees and interest and other fees. For example, I had one credit card that got closed when the balance was $1,800 but now it says the balance is $2,500. So which amount do I include in the ch 13 schedule?

You put the amount owed on each cc on filing day. In your example, if you filed now you would state you owe $2500 to this cc on your filing forms.

If you don't already, start saving *all* the bills (secured and non-secured) you receive or make copies of any if you have to return the bill with the payment before filing. You'll need this information with each one's most recent amounts owed to fill out the Ch 13 forms for filing.

[justbroke]

1. What would you guys do in this situation?

Consult with several attorneys on the right strategy.

2. Would I be able to get a 3 yr ch-13 plan?

You would need to be under-the-median income to get a 3 year plan (unless you pay 100%).

3. Should I just live with the judgement which will make it a secured loan.

That's a strategy question.

4. Since no other card company sued me so far, should I just stay under the radar?

You may be "collection" proof, but judgments can last for 40 years!

5. I'm not concerned about bk in my report but I'm concerned about garnishment, because companies doesn't look took too favorably on those.

They are all bad things and some companies do care about BK (those that have fiduciary responsibilities or public trust issues).

6. Also if I get hit with another suit and another garnishment then that will make it even worse that ch-13.

Probably.

7. Is there a step by step procedure for ch-13 for Californians, I'm new to this?

Your first step... consult several attorneys. The next step, should you decide to proceed pro se would be to call the Clerk of the Court and ask about the Pro Bono clinic!

[karm43]

How do you stay under the radar? I found once you get one everybody else follows, I feel like the judgement queen 6 of them.