Chapter 7 in Louisiana

[TeeA86]

Good morning!

I live in Southern Louisiana. I have been contemplating bankruptcy over the last year or so. Now, I am going through a separation (100% of bills on me). I am due to have a baby in May 2017 and around that same time I will have to start repayment of student loans. I met with a lawyer around October. I don't have a solid feeling about him but I have never dealt with lawyers of any kind. Might meet with another one before following through with him. Ok, so I have a few questions for the folks that have gone through or going through Chapter 7.

Lawyer suggested waiting until after income tax because "they" could take my refund. So I have a few months to figure this out.

I am current on all payments. Should I stop paying these bills?

I have a Capital One credit card ($4000 balance) I also bank with Cap One. Should I close my bank account with them?

My dad is a cosigner to one of my credit cards. I mentioned paying that card off and closing before filing. Lawyer said I cant do that because it is considered creditor favoritism and they could come back on me. What should I do about this one? Pay off or not include in case? Either one, I am ok with.

My bed/mattress is financed through Wells Fargo - Mattress Firm. I still owe about $1800. Been paying on it for a year.
My sofa set is also financed through Wells Fargo - Ashley Furniture. I owe about $1600. Only had a few months.
Lawyer said I would have to give both of these back or agree to pay them as planned (if I could afford it). Truth??

Is all my anxiety about filing necessary? I am so scared of this hurting me instead of helping... garnishments, lawsuits... I don't know. What I do know is I am struggling to make ends meet. I pay all my bills on time. But after that, I am broke... requiring me to put necessities on credit. Now with separation, I don't have that additional income to balance things out.

Any additional advice or tips would be appreciated.

Thanks
Tiffany

[Vandervecken]

I'm not one of the experts here, but I'll share some thoughts with you.

First YES, go see other lawyers! I met with four; the first three were convinced that I was going to be in chapter 13, and they wouldn't even talk to me about a C-7. But the fourth lawyer does nothing but bankruptcy. She's highly rated in this region of the country. And with her, yes, she took the time to actually review my numbers: yes, I did qualify for a chapter 7! So in short, look for an attorney where bankruptcy is their prime focus. It's sad to say, but there are a lot of mediocre attorneys who are practicing bankruptcy.

Once you have an attorney you trust, then you can discuss whether to stop payments now, or strategically plan to terminate. I can see where delaying until after the refund makes sense: you will be at the point in pregnancy that it makes sense to pre-stock baby needs (diapers, clothing, etc.) and the tax refund would help you with that nicely.

As far as bed/mattress and sofa set: yes, Wells Fargo has a security interest in the purchases, BUT in the case of a chapter 7, they would have to file a lawsuit to get them, which would cost them a chunk of money in legal fees. And once they recover the furniture, what you owe is no longer the value of the items in question. It is very likely that Wells Fargo would lose money. (What they will do is sell the debt to a "junk-debt buyer" who will try to collect. There are ways to deal with them, outside the scope of this post.) Again, this is worth speaking to other attorneys about.

The most important thing: DON"T PANIC. This is a process; it will not be solved overnight. But at the end, you'll come out of it stronger.

[leonel9]

One thing that stands out to me is the card have with your father. If you have a debt, it must be listed in your petition. You cannot simply exclude it. Options I would consider:

• Include it in your case, but voluntarily make payments (failure to make payments after discharge will affect your father's credit, but not yours)
• Have your father pay it off (e.g. via a balance transfer to another card).
• Reaffirm the debt (Not so thrilled about this one, since the card will likely be closed anyway).

Also, I totally agree with Vandervecken's post. Before you stop paying on accounts, meet with multiple attorneys. What I'd specifically want to know is if for sure you will qualify for a Chapter 7 filing.

Also, your post did not include your income and total amount of debt. Before going too far with bankruptcy, make sure there aren't other options that make more sense. For example, if negotiating lower payments and interest rates on your credit cards would make things manageable, would that be a better alternative to bankruptcy? What I'm suggesting is looking into credit counseling, or negotiating with your creditors yourself.

If your student loans are federal loans, there are typically options such as deferment, forbearance, and income-based payment plans. If you don't already, know that it is rare to get student loans discharged through bankruptcy.

If nothing else, making reduced payments via credit counseling may buy you time if that's what you need. But if you are going to file bankruptcy, I wouldn't continue to pay on your unsecured debt (unless there's a compelling reason to, such as paying toward a loan you recently established).

[bcohen]

1. You are due to have a baby in May of 2017. Even with health insurance, this means medical bills, which you may not be able to pay. Bankruptcy eliminates medical bills which were incurred prior to the filing date.

2. If you were to file now, or anytime before you receive and spend your tax return, the bankruptcy trustee would demand that you turnover the money, unless you are able to exempt it somehow.

3. You state that you are current on all of your debts. Once you have made the decision that bankruptcy is in your future, it ceases to be in your interest to pay anything toward debts which will be discharged. Therefore, once you are absolutely certain that you will be filing for bankruptcy, you should stop paying on credit cards or other unsecured debts, as well as any loans secured by property which you no longer want.

4. Although nationally chartered banks are not (legally) permitted to offset against deposit accounts, I would recommend not taking any chances. If you are planning to default on your Capital One credit card then you should move your money to another bank or credit union where you have no debts.

5. You don't say how much is owed on the credit card which your dad has cosigned. If the balance is less than $1000, I'd just pay it off. Otherwise, you can still pay it off, even though it will be discharged in your bankruptcy. Your dad might have to take over the payments, or pay it off, but you can always repay him. You CANNOT legally "exclude" or fail to list a debt in your Chapter 7 filing. Even if you did this, the creditor would still find out, and go after your cosigner for payment.

6. I would not worry too much about the alleged "security interest" which Wells Fargo may have in your furniture. Have you ever tried to sell a used mattress or used sofa? Even for $50, it is a tough sell, and Craigslist is full of people giving away used bedding and sofas in decent condition, because they are moving, and no one wants to buy them. (Note: I am not suggesting that you buy or accept a used mattress or sofa due to the risk of bed bugs; I am just attempting to illustrate the point that once used, these items are worth nowhere close to what you paid for them new.)

What will happen if you file is that a collection agency such as Bass & Associates will contact you to arrange for "payment or surrender" but they really don't want the items back--they want money. Many people have ignored them, and they will go away. They're not going to spend money filing a writ of replevin to force the turnover of used furniture that will cost them more to handle than they can be sold for.

7. Bankruptcy is not the end of the world. It is a legal tool, which is available to deal with an untenable debt burden, and improve your financial life going forward. Lawsuits are highly unlikely in the timeframe which you are considering (6 to 7 months) unless you own a home and have equity in it.

[TeeA86]

I'm not one of the experts here, but I'll share some thoughts with you.

First YES, go see other lawyers!.

Vandervecken,

Thank you so much for you reply! I called another attorney yesterday and will schedule a consultation with him. I found out an associate filed with him a few years back and said she'd go to him again.

[TeeA86]

One thing that stands out to me is the card have with your father. If you have a debt, it must be listed in your petition. You cannot simply exclude it. Options I would consider:

• Include it in your case, but voluntarily make payments (failure to make payments after discharge will affect your father's credit, but not yours)
• Have your father pay it off (e.g. via a balance transfer to another card).
• Reaffirm the debt (Not so thrilled about this one, since the card will likely be closed anyway).

Also, I totally agree with Vandervecken's post. Before you stop paying on accounts, meet with multiple attorneys. What I'd specifically want to know is if for sure you will qualify for a Chapter 7 filing.

Also, your post did not include your income and total amount of debt.

leonel9,

Thank you for your reply! I thought of having my dad do the same thing, pay it off and I pay him back. I haven't talked to him about it yet. The balance is about $2000 on that card. According to the first attorney, I do qualify for Chapter 7. I make about $42,000 a year but I have at least $60,000 (including student loans) not including mortgage. Since separation... I am in the red every month being forced to put necessities on credit. I talked to MMI. The monthly price they gave me was too expensive. It was actually more than I pay now. A few of my cards have 0% for a certain amount of time. They can not include those so I'd be paying them $650 and still paying car note plus four items not included in credit counseling. Student loans aren't covered, I'm nervous about repayment but I will get on an income plan and because I am a state employee, I will get forgiveness after 10 years.

Again, Thank you for the advice.. I will use it for future reference.

[TeeA86]

7. Bankruptcy is not the end of the world. It is a legal tool, which is available to deal with an untenable debt burden, and improve your financial life going forward. Lawsuits are highly unlikely in the timeframe which you are considering (6 to 7 months) unless you own a home and have equity in it.

bcohen,

Thank you so much for you reply and advice!

I am rushing to leave the office so I can't reply in detail. You made some great points!! Thank you again!!!