Very close to filing a 13

[davidmw123]

Hi All,

I am new here and I have been looking in all directions to try and fix my horrible situation. My wife and I have $60K in CC debt. ( We had lost $40K of income 2 years ago and lived on the CC's ). I'm paying $700.00 pr month in interest and I cant keep up with my minimums of almost $1900.00 pr month. The debt consolidations seem like a bad move and everyone I spoke with advised of the same. I spoke with an BK attorney ( family friend ) that looked at our situation and advised that a 13 would be our best avenue. He did say I will be at 100 % pay back over 60 months due to our income. I have an empty feeling in my gut about this situation but I see no alternate way to go. I'm sick about killing our credits but it is alrewady damaged due to debt to income ratio as well as some late payment and an Dept of Revenue lien ( paid in full now ) .
I was happy to see this forum and be able to talk about our situation. Seems like I learn a bit more everyday.


David

[davidmw123]

WOuld anyone have advice for me being that I have not actually filed yet. This is all very overwhelming to us and causing much anxiety.

[LadyInTheRed]

Welcome to bkforum, David.

Don't worry too much about your credit. As you point out, it is probably already not so great and it will get worse when you eventually cannot keep making those minimum payments. Your credit will recover after BK.

A couple of things to consider. If you know for sure you will file BK, stop paying on your cc's. Save the money to pay a retainer to your attorney and to build a savings to help you get through your 5-year Chap 13. Do you have a reliable car to get you through 5 years? If not you may want to buy one before filing. Unless there is some reason to rush, like a judgment about to become a wage garnishment, take the time to plan for your BK.

For many of us, filing Chap 13 was a huge relief with a plan payment lower than our minimum credit card payments. It sounds like the same will be true for you. With $60,000 in credit card debt, your plan payment will probably be around $1,100 if your plan is for 60 months and the payment does not include any payments on secured debt. Or, it might be higher for a shorter period of time.

Don't hesitate to ask whatever questions you might have.

[youngman]

If you are trying to plan out your Ch 13, take a look at this site. Its lets you plug in your income and expenses. It also lists the allowable expenses.

http://www.legalconsumer.com/bankruptcy/means-test/state.php?st=PA

There are many ways to reduce your payment and benefit yourself at the same time. Buy a new car, just keep it below the allowable monthly payment. You may want to buy 2 of them, since you are allowed 2 car payments. Get some term life insurance. Its probably too late, but you could max out your FSA, dental, vision, etc.

The problem is that an attorney is not allowed by law to advise you to do any of these things. Take a look at that website and see where you can improve your situation.

[LadyInTheRed]

The problem is that an attorney is not allowed by law to advise you to do any of these things.

I believe that what an attorney is prohibited from doing is advising you to incur debt on the eve of BK. That doesn't necessarily mean that they can't advise you to do things like purchasing life insurance and maxing out your FSA. Even if they can't tell you to do any of these things, you can and should get an attorney's advice before doing so. It is all in how you ask the question. Don't ask if it is okay to take a certain action. Ask how taking the action will affect your BK.

[kornellred]

davidmw123 - that "empty feeling in your gut" is so very common among people in debt when they realize that there is virtually no way out except through bankruptcy. There are some situations where good advice may be to make big payments on the credit card with the lowest balance and eventually pay it down to zero, and then apply the savings earned to do the same to another and then another until the unsecured debt is a thing of the past. But, that requires a discipline that most of us cannot abide for long, because new expenses pop up often enough to erase any gains that might have been made.

Absolutely forget about debt consolidation in any form. As a pre-filing requirement for Bankruptcy, debtors must receive debt counseling from an accredited source, which is where you will have your situation examined, and the counseling agency will propose a single payment for "x" number of years as settlement of your indebtedness. Chapter 13 bankruptcy will inevitably be a much better deal than anything that the counseling agencies can come up with.

There is no way that a debtor can bypass some measure of sacrifice in pursuing the goal of escaping from debt. Success depends largely upon the relative stability of your overall life circumstances. Once you fully understand the situation you are in, bankruptcy is a sound financial decision, albeit a difficult one.

[dmc-2008]

I have learned that if you can't clean it up yourself in five years you prob a good candidate for a bk. Listen you sound like you are throwing good money after bad, it's what I was doing. Now I have a plan and see a light at end of tunnel. Good luck!!

[catleg]

You need to learn how to prepare a budget to submit as part of the ch13 case.
If you post a list of your major income/expenses here maybe we can help.
The important thing is having vehicle(s) in good working order going into the plan.
It might make sense for you to buy one or two vehicles now with 6 year financing going into the plan.
This might pay for itself by reducing what your credit cards get, it just depends on your budget.
The main things are, do you owe taxes and do you own with a mortgage or rent?

[klandsb]

Hi David. I can relate too a lot of what your feeling. I was , like you, paying so much interest every month I would have never paid off my cc debt. I went with a debt relief company for a period of time (huge mistake) before filing . When the sheriff showed up with papers filed by a cc company was the day I made the decision to file. Bankruptcy was the life raft I needed to get out of the financial mess I had gotten myself into. I had a very reasonable plan. I am in the Western part of PA. I got to keep any income tax refund which was a blessing for savings during my 5 yrs. My wages were automatically garnished so I never had to worry about sending in payments and it really was the best scenario for me. The trustee paid mortgage, helco & auto payment every month also. When I think back about all the interest I paid to the cc companies it makes me wonder why I didn't file sooner. Good Luck

[catleg]

Key things to remember about bankruptcy:
1. it means you have income or assets worth protection.
2. it turns the normal creditor-debtor power relationship upside down. you, or the court on your behalf, dictates terms to the creditors.

[Drazil65]

Forget about the almighty credit score, my goodness think back at everything you have done to make sure those payments were made, because why??? The banks do not care if you eat or not or keep a roof over your head, when did the banks become more important than your family? Your score is irrelevant at this point and only a rouse by the banks to make you do exactly what you have been doing all this time to continue those payments, Funny when you stop and think about how you would do just about anything to make sure those payments were made, huh?? Yeah, you fell for it and now you will need to educate yourself on bankruptcy. Why not a chapter 7???

Its a business decision for the benefit of your family and that should be the only business you should be thinking about. Treat your family as a business and make the same decisions that most businesses would make in the face of a business losing money daily. Big business would not continue to throw good money after bad, they would make the decision and move on. Happens every single day!

Keep in mind that bankruptcy is a lifestyle change completely, not a temporary fix to a financial problem. Stop using credit cards, get a 2nd job if need be, bring in more income or learn to live within the means of your current income. Live on cash, adjust your lifestyle, move, do whatever it takes for the benefit of your financial future.

[jange]

Welcome David, I am in Eastern PA. BK is a hard decision and should be. I also know that feeling in the gut, where you just know you can't keep going the way you are. Meet with several lawyers before you decide, but there is power in knowing you are taking charge of the situation and not just letting things happen.

We went through years of trying to make ends meet, late payments etc.. I just couldn't do it anymore, we were getting sued and it was time to do something.
BK is not for everyone and it has changed my life, but not for the worse, for the better. I am now debt free with only a small home equity loan to pay. I feel like my paycheck is finally mine and not the credit card companies. Don't worry about your credit score at this point, you can fix it once you are out of debt.
Good luck to you.

[switch625]

Welcome David! I'm also a Eastern District PA filer. Did it over a year ago after years of struggling with over 100K of unsecured debt and in 2012/13 falling behind on mortgage and home equities, IRS, Dept of Revenue and even the local earned income tax. It was a decision over three years in the making that I wish I made a lot sooner after wrestling with the concerns you had. I realized that my wife and I were climbing an increasingly slippery slope on an ever increasing grade and made the decision to file the 13. While a Ch 13 plan is not easy, I find it easier to manage than my pre-BK situation. If you file, do not underestimate your monthly expenses because you will need every penny to live on a Ch 13 plan and get to discharge. Don't worry about your credit rating, you can rebuild that after you are done with the 13. My lesson learned is that one should borrow only for a house, a car and emergency expenses only. I could never go back to living beyond my means willingly.