Thinking ahead to chapter 7 (kinda long)

[esokev]

I've started to think about my future, and it looks pretty grim at this point. In May of 2008 I will graduate with my Masters Degree in Education. As most of you know, being a teacher doesn't pay all that well. I'm going to be 170,000.00 in the hole (yes, you read that right) from my schooling. Now, I realize that student loans cannot be discharged, and that's not my problem really. The government is always willing to work with you on a payment plan that works to your advantage as well as theirs. They are understanding. However, my problem is the the private loans I took out, which total about 45,000.00. They are not reasonable. What chaps my hyde is that the private loans/lenders get the same protection as federal direct loans, but they are not obligated to provide you with a "fair and reasonable" payment plan.

My credit is horrendous. Charge-offs galore for everything you can possibly imagine, two emergency room hospital bills, late payments like you wouldn't imagine. My current FICO is 400, and trying to go to school full time and work to keep up with bills have proven just to be too much. I screwed up. I admit it. Credit was just so inviting, and easy to get at one point... At this juncture I have no assets. I rent and have to have a co-signer just to get a lousy studio apartment, don't own a vehicle, have no bank accounts or savings, NOTHING. The only thing I anticipate changing before I file is that i will have to get a vehicle to get to and from my workplace, and may be able to open a checking account. Other than that I live a very simple life now (intentionally.)

So I guess... here's my question(s). I know I intend to file around October/November of 2008. I need to get rid of all the past collections and other garbage, so I can focus on getting my credit score up again and qualify for a consolidation loan of my private loans. It's the only way I'll be able to pay them off (private loans can be consolidated into one IF you have a decent enough FICO score to qualify from a private lender.) School has been good to me, and I want to make the most honest effort to pay all my student lenders.

1) I want to be securely in a job teaching when I file. I won't make more than 36,000.00 a year tops (starting wage for my education level.) Before I file I need to purchase a car. When would be a good time to do this (how long before I file?) Furthermore, will I be able to KEEP this car?

2) What are considered "tools" of the trade? I am going to be a teacher, and therefore need to have a computer. I own a laptop right now, although I have no idea how long it will last (2 years old now.)

3) Is the credit Matrix the only thing you list your creditors on? What about amounts specifically owed? How is all this verified?. Some of these debts are YEARS old, and I have no idea how to find where and who has them now. Are statements for each debt needed? I haven't done much research yet, and may consult an attorney when the time comes (undecided.)

Any insight one can offer would be fantastic... 28 and filing for bankruptcy. I have to admit it bruises me a bit. I wish i would have practiced some self-control, worked steadily while in school (although I do have almost a 4.0 GPA) and been more on top of my life...

[CATCHMEIFYOUCAN]

annualcreditreport.com

Pull your credit report up .. the FIRST one is FREE ! Use this link:

https://www.annualcreditreport.com

AND you don't need a credit card like other sites ask for. Go right down the list of all the debts you have and write down the amounts, even if was charged off. List all your debts! It won't harm you if you think you listed too much anyways. Find yourself a really good lawyer (perferrably an older one thats been in business with BK). Personally I wouldn't choose a BK firm that has many lawyers. I think "a single," lawyer office would do a better job and concentrate on their clients needs rather than a big firm that has many things going on.

I lead a simple life myself, but had no assets, no student loans when I filed. I had a 1999 Honda, which got flooded. So a month before I was due to file I took the insurance money $2000 they gave me for the car and put it down on a new 2006 Hyundai Sonata. You are a allowed a vehicle (nothing extravagant!) to get to and fro from work. You just might even be able to get a good interest rate before you file. Once you file, interest rates are outrageous and it might be hard for you to get a car (you'll also need the trustees permission to incur "new debt," if you are entered into a Ch13 repayment plan).

Best of Luck, Catchmeifyoucan !

Hey, I live in "hole in the wall," myself ! (Studio Apt). My rent is cheap so don't feel bad, YOU HAVE A PLACE TO STAY!

[SinkingFast]

If you're beyond the Statute of Limitations to collect the old debts,............ You might wanna consider hiring a firm like Lexington Law. A reputable "credit restoration" company.

They'll dispute items in your Credit History for you. And quite possibly get them removed. Old charge-offs and such.

The further in advance of filing you can buy a car, the better. Most especially if you're financing the car. It wouldn't look good to the Trustee to go out an take on new debt one month and file BK the next.

If you're gonna buy a car, straight out, for cash. Say an older, reliable vehicle,......... You want to keep in mind you State's Vehicle Exemption. Or, if you live in a State that allows you to choose Federal, you could cover a $9K car with no problem.

Names of Creditors, acct numbers, mailing addresses, and $$ amounts owed are listed on Schedule F of your BK Petition.

Copies of Statements are not required to be submitted to the Court with your BK petition. But you'll wanna hang onto old copies for future reference. You may be asked to show them at some point.

[CindyLou]

first things first! go see an attorney for a free consulation ASAP. In fact go see 2 or 3. I have a question, Why do you want to wait until the end of 08 to file? If you see an attorney they can best guide on whether you are ready to file now or whether you should wait. One of your options may be to file chp. 7 while you are not making over the state median. Once you get a teaching job, you may make too much to file. Just some things to think about.

[NAL123]

I will say a couple things here:

1) Do not work the system to buy a car (new or used).
A) A cash paying customer at a car dealership is treated like a cash paying customer at a hospital without insurance, you pay the highest price possible. If you must, then buy the cheapest used vehicle you can afford from a private seller off of Craigslist or the Classifieds. Even with every payment current, having a 620 FICO score and offering to put down 20% of the price of a new car, the best a dealer could get me was a 5 year auto loan at 17.99% for a $20,000 vehicle.

2) How did you get $170,000 of student loan debt and why can't you get at least a part time job or a job working the overnight shift to pay some of it off?? At this point, having a BK on your record if you file & having the bad FICO score will eliminate you from many jobs especially gov't & teaching jobs.

3) You think having a 400FICO score makes it hard to find an apartment?? Trying having a 620 FICO score and having 'too much credit card debt' (but every payment current). Even if you make significantly more than the average household income, no one will rent to you without a cosigner or a years rent in advance (at least in Connecticut). You better fight hard to keep what you have.

You are just going to have to rough it out for the next 7 years I am sorry to say. As I have found out (though my situation is not as bad) is that a bad credit situation follows you everywhere and gives people excuses to slam doors in your face and not want to deal you purely on principle (as the example about renting an apartment)

[NAL123]

Pull your credit report up .. the FIRST one is FREE ! Use this link:

https://www.annualcreditreport.com

I lead a simple life myself, but had no assets, no student loans when I filed. I had a 1999 Honda, which got flooded. So a month before I was due to file I took the insurance money $2000 they gave me for the car and put it down on a new 2006 Hyundai Sonata. You are a allowed a vehicle (nothing extravagant!) to get to and fro from work. You just might even be able to get a good interest rate before you file. Once you file, interest rates are outrageous and it might be hard for you to get a car (you'll also need the trustees permission to incur "new debt," if you are entered into a Ch13 repayment plan).

Best of Luck, Catchmeifyoucan !

Hey, I live in "hole in the wall," myself ! (Studio Apt). My rent is cheap so don't feel bad, YOU HAVE A PLACE TO STAY!

That is TERRIBLE advice regarding purchasing a car prior to filing. First, if this person have as much debt as they say they have, the they can start making payments. Student loan debt is not dischargeable in any way shape or form unless under the most extreme circumstances.

Also, you addressed how one can buy a car prior to filing (although at todays prices even $10,000 doesn't get you a decent used car), but you didn't say how he will address the 400FICO score to a dealership. A cash paying customer usually is charged 2.5 times someone who finances thru the dealer. I was quotes rates of between 16.9% - 22.9% with a 620 FICO score. What do you expect this person to finance at 30%.

And why can't he or she use public transportation like most people are somehow able to do in the NYC metro area?? In this case a car becomes a luxury item and certainly its purchase should be disallowed should this filing go thru.

[DeadManCrawling]

NAL

I think you may be missing the point of the original post-and CatchMeIfYouCan's advice.

This person needs a vehicle to do the work they have been trained to do-teaching.

Most states have a vehicle exemption, and many have wildcards that will cover the difference.

I doubt we are talking about a new 2007-2008 Lexus. Most people with a 400 FICO know they won't be able to walk in and get good rates.

Given that student loans are not discharged in BK, it seems wise to get a car to get to work BEFORE the filing. God knows you would not be able to after filing-at least not for some time.

If you get one before the filing, you may not get the best rates, but at least you CAN get one.

On the student loans----CAN YOU LIVE IF YOU GET ALL OTHER DEBT DISCHARGED?

If filing does not give you enough room to move, so that you CAN pay the car loan, even with ridiculous rates, then you are dead either way.

You MUST be able to function, and work, one way or another.

You are in a tough place with debts that can't be discharged, but also in a place where not filing seems equally difficult.

I hope you have the chance to really talk about this with an attorney or five.

Also, a personal thanks to you-and all teachers-your skills and value to society are terribly undervalued.

Best wishes,

-dmc