Need advice!

[PaKettle]

Okay... My income went down about 25-30% over the past 9 months or so and I don't see it coming back up that much; at least there is no guarantee that it will, and my best guess is that it won't any time soon.

I knew I was on the edge of being at a point where I would not be able to pay my bills but now it is upon me.

This month I have a $520 unsecured loan payment that I am not going to be able to pay. That is the beginning. Then, over the next few weeks I can see that I am not going to be able to pay all my credit card bills, about 12 of them, ranging in payments (minimums) from $30 to $260/month, for a total of about $2000/month (I'm guessing, I haven't added it up yet) which is about 5/6 of what we make per month, with another $1000 going to rent, so as you can see I am in over my head, now. It's taken a few months to catch up to me, I borrowed some money from credit cards (borrowing from a couple to stretch my income so that I might ride this out until my work picked back up), but now I lost that bet, so to speak.

Okay, questions: (These questions are oriented towards the idea of our being eligible for Chapter 7, not 13. If I'm going to file, I prefer to have a "new start", not be in servitude to debtors for years to come. I don't care about my credit rating, and I own no real property and do not intend to in the near future.)

1) Should I keep paying whatever debts I can, or just stop paying all of them, all at once?
2) Should I make partial payments on all, or should I make complete payments on some, while paying nothing or very minimal "token" payments on others?
3) Is it better to wait until some of these go into collection before I file bankruptcy? (I assume they will go in within 30 days of my not making a payment.) Is it helpful or a hindrance to have them go into Collection, in terms of qualifying for Chapter 7? In other words, even though I can clearly see they are GOING to go into collection in the near future, should I wait until the actually do before I file, or go ahead and file before they do?
4) Can creditors call and harrass you for payment even after you officially file for bankruptcy? Is there a source somewhere you can direct me to as to how to deal with creditors, both at this point of not being able to make payments, and after it goes to collection, and after I file?
5) If creditors begin to really drive me nuts, calling me several times a day, and so on, can I change my phone number? How do I deal with them? (They've already started to call me several times a day on one loan...)

Okay, those are the main questions I have.

I did some preliminary looking into the requirements for Chapter 7 and I think I (my wife and I - some of these debts are in her name, but based on my income) will qualify, as after paying rent and electricity and health insurance and gasoline and food and so on - the basics - , right now, we are left with almost nothing, and my wife is unemployed and even when employed can only make $7-10/hour.

Oh, and the BIG QUESTION:
How do I find a GOOD bankruptcy attorney? (I'm in the Los Angeles area.)

Thanks a lot for any light you can shed on these questions and I'd appreciate any written guides or links or books you can refer me to, that will enlighten me on this subject, and how to proceed, given this financial mess we're in. I am not looking forward to dealing with all this, it sounds like a real nightmare, but I guess I have no choice now. I can't see any way out of this mess, and I'd rather just file and start over, the sooner the better.

[BassBoy]

Okay... My income went down about 25-30% over the past 9 months or so and I don't see it coming back up that much; at least there is no guarantee that it will, and my best guess is that it won't any time soon.

I knew I was on the edge of being at a point where I would not be able to pay my bills but now it is upon me.

This month I have a $520 unsecured loan payment that I am not going to be able to pay. That is the beginning. Then, over the next few weeks I can see that I am not going to be able to pay all my credit card bills, about 12 of them, ranging in payments (minimums) from $30 to $260/month, for a total of about $2000/month (I'm guessing, I haven't added it up yet) which is about 5/6 of what we make per month, with another $1000 going to rent, so as you can see I am in over my head, now. It's taken a few months to catch up to me, I borrowed some money from credit cards (borrowing from a couple to stretch my income so that I might ride this out until my work picked back up), but now I lost that bet, so to speak.

I know how you feel. I had a 20% reduction in my salary and eventually, it caught up to us. Borrowing from one CC to pay another, or pay bills, only made matters worse for us. We were never able to prevent the inevitable, just prolong it.

Okay, questions: (These questions are oriented towards the idea of our being eligible for Chapter 7, not 13. If I'm going to file, I prefer to have a "new start", not be in servitude to debtors for years to come. I don't care about my credit rating, and I own no real property and do not intend to in the near future.)

1) Should I keep paying whatever debts I can, or just stop paying all of them, all at once?
2) Should I make partial payments on all, or should I make complete payments on some, while paying nothing or very minimal "token" payments on others?

If you're not going to file anytime soon, I would try to do the best you can in order to keep the creditor calls to a minimum. Just remember, do not make any definate agrements with them. Tell them you are/will do the best you can.

3) Is it better to wait until some of these go into collection before I file bankruptcy? (I assume they will go in within 30 days of my not making a payment.) Is it helpful or a hindrance to have them go into Collection, in terms of qualifying for Chapter 7? In other words, even though I can clearly see they are GOING to go into collection in the near future, should I wait until the actually do before I file, or go ahead and file before they do?

You can file BK at anytime. There is no need to wait until they are in collections, however it is easier if they are not in collections because paperwork does get lost in the shuffle and/or the debt gets sold off a couple of times and the new collector may not be aware of your BK filing, therefore you and/or your attorney will need to mail a lot of notices to these people. Basically, you want to eliminate too mcuh leg work on your part.

4) Can creditors call and harrass you for payment even after you officially file for bankruptcy? Is there a source somewhere you can direct me to as to how to deal with creditors, both at this point of not being able to make payments, and after it goes to collection, and after I file?
5) If creditors begin to really drive me nuts, calling me several times a day, and so on, can I change my phone number? How do I deal with them? (They've already started to call me several times a day on one loan...)

Once you file for BK, the creditors/collectors CAN NOT contact you at all. If they do, which sometimes happens, you simply tell them you have filed for BK, give them the case number and instruct them to contact your attorney.
We have plenty of threads under the Collections Section of the forum that have some sample letters and/or links for you to use.

I did some preliminary looking into the requirements for Chapter 7 and I think I (my wife and I - some of these debts are in her name, but based on my income) will qualify, as after paying rent and electricity and health insurance and gasoline and food and so on - the basics - , right now, we are left with almost nothing, and my wife is unemployed and even when employed can only make $7-10/hour.

As long as your past 6 months of combined income is not enough to pass the means test, you may qualify for Ch.7.

Oh, and the BIG QUESTION:
How do I find a GOOD bankruptcy attorney? (I'm in the Los Angeles area.)

Consultations are usually free, so make appoinments with 3 or 4 attorneys. If no one on the board is from your district, then you'll have to use your best judgement in choosing an attorney.

Thanks a lot for any light you can shed on these questions and I'd appreciate any written guides or links or books you can refer me to, that will enlighten me on this subject, and how to proceed, given this financial mess we're in. I am not looking forward to dealing with all this, it sounds like a real nightmare, but I guess I have no choice now. I can't see any way out of this mess, and I'd rather just file and start over, the sooner the better.

We all know how you feel. Sure, it can be overwhelming, but once you have moved forward with your fresh start and retained an attorney, you'll be amazed with the amount of weight that has been lifted off of your shoulders and you'll soon find out that this is not the end of the world and that there is a light at the end of the tunnel.

Welcome to the forum and feel free to ask any questions you have and we will do our best to help you. You can come here anytime just to vent and rant.

[BKTango]

First of all welcome to the forum, PaKettle. Come on in and sit awhile. As far as your questins go, I will try my best to answer them and maybe someone else can come along and give some more insight as well.

1. If you are certain, under no doubt at all that you are filing bankruptcy, there is no sense to continue to send money to those debts that will be discharged. Start using that money for necessary living expenses.

2. Don't bother sending token payments, the only debts you want to continue to pay on faithfully are those debts you plan on keeping through and past discharge (car, home, etc.)

3. It doesn't matter whether they go into collections or not, some people haven't paid on their cc's in years before filing and some pay right up until they day they file as cc's are not the primary reason they are going bankrupt. The only negative of letting them go too far into collections before filing is it will show up on your credit report as being in collections or even charged off before being included in the bankruptcy. So your credit will take a hit there, then take another hit with the bankruptcy.

4. No, once you officially file for bankruptcy, it stops all forms of collection. Any collector that still attempts to collect on a debt that will be discharged is violating the stay of the bankruptcy. Once you obtain an attorney(if choosing to use one) you can immediately begin giving out the attorney's name and number to those collectors that are calling. In the meantime, you can read up on the Fair Debt Collection Practices Act here http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm
for helpful information on what is legal and illegal for collectors to do.

5. Changing your phone number really won't have that great of effect, if anything it will just force the creditors to do some shady tactics of calling your family since they can't get a hold of you. Just turn off your ringer, or start screening your calls through the answering machine with the volume down. You are absolutely under no obligation to ever have to talk to a collector. Matter of a fact it's best if you don't.

As far as chapter 7 or chapter 13, if you and your family fall under the guidelines of a chapter 7 then you qualify. http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm
Go there is look at the state median income level for your family according to the number of the total people in your family. If you fall under that number then you qualify for a chapter 7, technically if you are over the median you would be in a chapter 13 but under certain circumstances (income vs. expenses) and depending on how much over the median you are you may still be able to file a chpater 7.

I cannot tell you how to find a good attorney in your area, other than let your fingers do the walking and look in the phone book. I do however reccomend you set up 3-4 consultations with different attorneys, most of those are free, tso take advantage of that and see a few so you can find the best that suits your needs and comfort.

[PaKettle]

Thanks for all the info and feedback!

Thanks to ALL for your replies! This really helps, and thank goodness for this forum!

[snip]
1. If you are certain, under no doubt at all that you are filing bankruptcy, there is no sense to continue to send money to those debts that will be discharged. Start using that money for necessary living expenses.

So it does not matter at all if I wait? It doesn't matter if I make the appearance that I am struggling to pay my bills? That is, I COULD continue to pay some bills, but sooner or later I will have to file because I cannot just pick and choose to pay some and not others. Does it not "look bad" if I go from paying - with a good credit rating - to not paying, all at once, with no period of struggling to pay? It isn't that anything happened suddenly, it's just that over the past 6 months I've made less money, and I made the mistake of borrowing more to "supplement" my dwindling income, and now I am at a point of either borrowing more or filing bankruptcy. I realize that this is a hole which I don't want to go down further, so I should file...

2. Don't bother sending token payments, the only debts you want to continue to pay on faithfully are those debts you plan on keeping through and past discharge (car, home, etc.)

Yeah, I want to reaffirm the loan on my car which I just bought a few months ago when mine went kaput. And I would not feel right about trying to file on that loan since I just bought it.

5. Changing your phone number really won't have that great of effect, if anything it will just force the creditors to do some shady tactics of calling your family since they can't get a hold of you. Just turn off your ringer, or start screening your calls through the answering machine with the volume down. You are absolutely under no obligation to ever have to talk to a collector. Matter of a fact it's best if you don't.

Okay, I'll read the threads on collection and so on. But for now, should I pick up the call from Chase, call them back, or just ignore them? This is the first payment I've ever not made on time and I feel bad about it. But I really don't know what to say to them other than that I think I'm going to have to file bankruptcy, so I have not called them back or taken their calls. They'll probably reach me at work today or tomorrow, I'm guessing...

As far as chapter 7 or chapter 13, if you and your family fall under the guidelines of a chapter 7 then you qualify. http://www.usdoj.gov/ust/eo/bapcpa/2...come_table.htm
Go there is look at the state median income level for your family according to the number of the total people in your family. If you fall under that number then you qualify for a chapter 7, technically if you are over the median you would be in a chapter 13 but under certain circumstances (income vs. expenses) and depending on how much over the median you are you may still be able to file a chpater 7.

The median for my state for my wife and I is $59k and we only made $49k together in 2006. This year it will be even less unless something changes. I am somewhat of an outdated "dinosaur" in my career, so it is unlikely (though not impossible) that I will ever make much more than this (I'm 55, and work in a field oriented towards youth.)

I understand there is more to qualifying than just the income level. What _could_ keep us from qualifying, even though our income is low enough? What kinds of snags might we run into, typically?

Thanks a lot for this info, and to everyone who replies! I feel a little better just having this info you've all provided! I'll be reading past threads and faq's and etc. this week! And no doubt I'll have more questions.

Does anyone on this forum practice b.r. law in the L.A. area?

[familyof7]

quite frankly if you are going to file bk dont pay anymore just pick up the phone and hang it right back up and obtain an attorney asap but before you make another pmt if that is what you want to do call an attorney and get their opinion otherwise dont pay and use that money to file before it gets too bad

[JRScott]

1) Should I keep paying whatever debts I can, or just stop paying all of them, all at once?
2) Should I make partial payments on all, or should I make complete payments on some, while paying nothing or very minimal "token" payments on others?
3) Is it better to wait until some of these go into collection before I file bankruptcy? (I assume they will go in within 30 days of my not making a payment.) Is it helpful or a hindrance to have them go into Collection, in terms of qualifying for Chapter 7? In other words, even though I can clearly see they are GOING to go into collection in the near future, should I wait until the actually do before I file, or go ahead and file before they do?
4) Can creditors call and harrass you for payment even after you officially file for bankruptcy? Is there a source somewhere you can direct me to as to how to deal with creditors, both at this point of not being able to make payments, and after it goes to collection, and after I file?
5) If creditors begin to really drive me nuts, calling me several times a day, and so on, can I change my phone number? How do I deal with them? (They've already started to call me several times a day on one loan...)

Okay, those are the main questions I have.

I did some preliminary looking into the requirements for Chapter 7 and I think I (my wife and I - some of these debts are in her name, but based on my income) will qualify, as after paying rent and electricity and health insurance and gasoline and food and so on - the basics - , right now, we are left with almost nothing, and my wife is unemployed and even when employed can only make $7-10/hour.

Oh, and the BIG QUESTION:
How do I find a GOOD bankruptcy attorney? (I'm in the Los Angeles area.)

Thanks a lot for any light you can shed on these questions and I'd appreciate any written guides or links or books you can refer me to, that will enlighten me on this subject, and how to proceed, given this financial mess we're in. I am not looking forward to dealing with all this, it sounds like a real nightmare, but I guess I have no choice now. I can't see any way out of this mess, and I'd rather just file and start over, the sooner the better.

1. Stop paying credit cards/rent to own/etc all at once.....
2. I would not make any partial payments.
3. They probably depending on your credit history will not go to collections for upwards of 3 months after you stop paying. They will however call you. You can file bankruptcy at any time.
4. No after you file an automatic stay goes into effect. Now for the first week you might still get a letter or call, inform them immediately of lawyer, case#, district filed, chapter filed. After being informed they can't call you back and doing so can lead to severe consequences for them.
5. Buy an answering machine. Most of them can't beat the answering machine. Let it pick up all calls. Another nifty thing is to make it such that calls that do not show the identity of the caller on a Caller ID are blocked.


Also to help your bankruptcy case I'd probably let your wife remain unemployed until filing . No need to make them think you got extra income.

[PaKettle]

1. Stop paying credit cards/rent to own/etc all at once.....
2. I would not make any partial payments.
3. They probably depending on your credit history will not go to collections for upwards of 3 months after you stop paying. They will however call you. You can file bankruptcy at any time.
4. No after you file an automatic stay goes into effect. Now for the first week you might still get a letter or call, inform them immediately of lawyer, case#, district filed, chapter filed. After being informed they can't call you back and doing so can lead to severe consequences for them.
5. Buy an answering machine. Most of them can't beat the answering machine. Let it pick up all calls. Another nifty thing is to make it such that calls that do not show the identity of the caller on a Caller ID are blocked.


Also to help your bankruptcy case I'd probably let your wife remain unemployed until filing . No need to make them think you got extra income.

Thank you for the info and advice. Yeah, I figured my wife may as well remain unemployed through the filing. I have an answering machine, I'll just turn down the volume and ignore any calls from creditors until I file.

One thing I was wondering about - and I apologize, I haven't searched for this here yet, but will do so - is how long I should wait after purchasing a tv (last month mine broke and I spent $1000 on a credit card to buy one) and also last month I took the credit card companies up on offers of transferring money to pay off one account with another. I borrowed around $800 from one card and $900 from another to pay off my American Express.

Also, does American Express (and the law) allow one to reaffirm one's credit account with them? Ideally we would like to keep my wife's Amex card just for purchasing flights and hotels on web sites and over the phone. But I heard somewhere that Amex does not allow reaffirmations of debts in bankruptcy? Anyone know?

[SinkingFast]

Also, does American Express (and the law) allow one to reaffirm one's credit account with them? Ideally we would like to keep my wife's Amex card just for purchasing flights and hotels on web sites and over the phone. But I heard somewhere that Amex does not allow reaffirmations of debts in bankruptcy? Anyone know?

AMEX is notoriously BK Unfriendly. Chances are, even if you do reaffirm with AMEX, they'll close your acct. And won't issue you another in it's place.

[JRScott]

Thank you for the info and advice. Yeah, I figured my wife may as well remain unemployed through the filing. I have an answering machine, I'll just turn down the volume and ignore any calls from creditors until I file.

One thing I was wondering about - and I apologize, I haven't searched for this here yet, but will do so - is how long I should wait after purchasing a tv (last month mine broke and I spent $1000 on a credit card to buy one) and also last month I took the credit card companies up on offers of transferring money to pay off one account with another. I borrowed around $800 from one card and $900 from another to pay off my American Express.

Also, does American Express (and the law) allow one to reaffirm one's credit account with them? Ideally we would like to keep my wife's Amex card just for purchasing flights and hotels on web sites and over the phone. But I heard somewhere that Amex does not allow reaffirmations of debts in bankruptcy? Anyone know?

You need to wait at least 90 days from the last purchase.

[CindyLou]

AMEX will IMMEDIATELY and without question close your account as soon as they are aware you have filed...or possibly even when you miss a payment with any other credit card! Reaffirming any unsecured debt that would other wise be dischargeable is countproductive to chpt. 7. You will be obtain pre-paid debit card such as western union or secured credit card such as orchard bank even during your BK (even though you are really suppose to wait). You could probably even get orchard bank secured or unsecured now. They will not close your account during BK especially if there is not a balance on the card. Go to WWW. Orchardbank.com and start the app. process, it will tell you what you qualify for. Usually a 300 limit but will suffice for hotel reservations. As far as airlines go, you can now make your reservation online and pay at any western union within 24 hours for a small fee.

[PaKettle]

You always have to wait 90 days?

You need to wait at least 90 days from the last purchase.

So, the advice someone else gave me about "Why wait? Do it as soon as you are sure you want to do it!" was assuming I had made no purchases during the past 90 days, or ...?

Someone else mentioned that if you wait, accounts will go to collection and that makes things more complicated... But you are saying I should wait, anyway, due to the transfers/purchases I made within 30 days ago?

Not to mention the 3 months of phone calls and hounding us...

But yes, I was also under the impression that one should wait so it does not look like one purposely went out and used credit to buy things before filing... Luckily we have not made a LOT of credit purchases this past month... but the $1k tv would send up a red flag, no doubt.

p.s. I just ordered the Nolo book on Ch 7, so hopefully it will answer most of my questions and I won't have so many questions to drive you guys nuts with...