Rethinking Bankruptcy

[Chucksoutalu]

Hashing it out, doin all the numbers, what I owe what I own clear, and the ramifications of bankruptcy to my credit, it is almost a toss of the coin whether or not to file!!

I may (emphasize 'MAY) be able to pay off my CCs if no other crisis comes along (wishful thinkin). 5 years is a goal.

However, I am goin to use the advice I have seen here and get at least 2 or 3 other "consultations" on my options.

I am at the "tippin point" but like most here just need to get all the info I can before I make that decison.

Anyone else here please pass your expierances on.

[BBW]

I was in the same boat last year when a friend first suggest bankruptcy (he used to be a bk attorney). At the time I decided to try to first get my expenses under control then work on paying down the debt. It has only been the last few months that I have seen my balances starting to go down. However I am not faced with a pay cut at work and therefore cannot continue to pay the credit cards so I really should have filed months and months ago and saved $1k per month in minimum payments. Even if I wasn't getting a pay cut I have sold my self on the idea of filing.

You didn't specify your debit or assets so its hard for me to say you should or shouldn't file.
But here is my situation. I owe $45k which with interest will be over +$60k repaid after 5.5yrs. That is assuming I keep paying $1k per month even as my min payments get lowered. And that is not assuming my rates go up. But rates are going up. I was paying on avg 7% in 2008, now I am someone near 13-14% in 2009. Where will I be in 2010?

As far as credit goes, I think it is very important and worked very hard to get and maintain a 750 score. Just because a lot of cards cut my lines and maxed me out my score dropped to a 690 which is steal decent. But I know even though I have an ok credit score, I can't really get much credit because they look at my high balances and then my debt to income ratio. So I really won't have access to credit for 4 years anyway until my balances get lower.

So looking back filing seems like a no brainer to me. I have limit credit now, I will have no credit for a year or so then go back to limited credit for a few years. In exchange for that I don't have to make +$60k of payments that were killing me as the rates climbed anyway.

[BBW]

Now if you only owe $10k in credit cards, have some assets, etc maybe you shouldn't be filing.

You really should have included that info.

[Chowder]

.....I really should have filed months and months ago...

Nearly ALL of us are guilty of this.

[Moneypenny]

it took me a while to come around to it too. it was stressful and emotionally painful. Now, it looks silly to not do it. A lawyer (who of course wants me to file) said "it's a business decision" So, if you look at it that way, what is the most rational thing to do?

It helped that I have small children: since I could simply look at them and ask, "what is best for them in 13 years when they are off to college?" The answer was that if I dont file I wont have any way to get them to college while I work those 13 years (ironically, teaching college).

[Chucksoutalu]

$25 Gs in CCs, Mortagage $1100 and 2nd Mortgage $250,( my kids live there as part of a child support) truck payment $570 w/4 yrs to go, RV Payment $440 with 8yrs to go, Bike payment $345 w/2 yrs to go. All vehicles are not worth (in todays market) what I paid.

Fixed income (Disabled Vet) of $3600 a month.

To pay off CCs I am lookin at $700 TO $1000 A MONTH TO pay off in 5 years or sooner.

Any input would be appreciated

[HHM]

If none of your assets are at risk (meaning, you owe more than they are worth TODAY), why throw $700 per month down the toilet by paying back your creditors. If you qualify for chapter 7, do it.

Ask yourself, if you pay off your credit cards in 5 years, aside from being out of debt, what will you have to show for it? How about this, file BK now, save that $700 per month, and in 5 years, you will have at least $45,000 in the bank.

Think "big picture", PLEASE.

[Chowder]

Find an Attorney. If you know any Attorneys ask if they can recommend a good BK lawyer.

You can start by figuring up any nonexempt equity in vehicles or the hose. Some may have to be liquidated or you'll risk losing it.

What state are you in?

And Listen to HHM.

[BBW]

Now that you have posted some numbers, I ask how is it that you are only considering filing and haven't done so yet?

Here's what I read from your post.
$3600 Monthly Income
-$1100 Mtg
-$250 2nd Mtg
-$570 truck
-$440 RV
-$345 Bike
-$700 credit cards
=$195 remaining per month. That wouldn't even be enough for all the gas for your 3 vehicles. Plus food, utilities, clothes, etc, etc, etc. So unless I'm missing something, or you forgot some income you NEED to file keep the house as long as you don't have to much equity (this would be a BIG question when deciding to file), possibly keep the truck. Although $570 is a pretty big auto payment, considering auto payments should be no more than 10% of your monthly income. Lose the bike and rv for now and buy again in the future after you have a nice savings.
Obviously the vehicles aren't worth what you paid. The real question is do you owe more than they are worth and how much. If you are upside on truck get rid of that too.

[Chucksoutalu]

I live in Florida. Yes the numbers are correct, and I appreciate and I agree with all of your responces..................


I fiqure by the latest the 1st of Nov I will have the cash to retain a lawyer and make the transition..............the hardest part is not the realization of BK but just takin that one big step to make it happen.
I need to keep the house and possibly the truck, but I know I can work the paticulars out with the lawyer/court.
Thanks again for the help and guidance. Without a doubt this site and its members are a vaulable asset..........to help me get rid of my assets/debts (LOL ) and move forward to a better future.

[LSUTiger32]

Chuck, you are just experiencing what most of us went through. I can tell you are a lot like me in that you are prideful and this is not what you had in mind for your financial future. I did the same thing, I kept telling myself that I could work out of the mess I made with real estate. Of course, by the time I had worked out of it (I figured 7-10 years) the effects of the BK would be nearly nil. I would agree with others also in that the only thing we probably did wrong was waiting longer than we should have. However, I had to know that I tried everything I could do avoid it so that I could sleep at night.

Good luck!!!!

[BBW]

Actually for me the realization of BK was the hardest part for me. I have not yet filed yet but I am completely commited to the idea and have found the attorney I want to work with. I just need 1-2 months to get all of my ducks in a row so to speak. And I will be filing.

I hope you use the next few weeks getting everything in order. I WISH I had done that at the end of last year when I should have. I would be discharged, have less stress, lower blood preasure, rebuilding my credit, and have a nice savings.

Good luck to you.

[klandsb]

I think if I was in a situation to file a 7 I would dive into it with more enthusiasm. My problem is I hve a steady normal income. My cc debt is around $36,000, hse, 2nd, and car ,taxes all up to date. My current cc pmt is around $800 and probally going up..I just cant do it anymore but I am sooo scared the 13pmts are going to be just about the same. I have lived cash only for the last 8 mths so used to having low to no cash . Just cant get anywhere and 30yrs of paying on credit cards is not very enticing.
What if the attorney comes up with a plan u just dont think u can live with ??? honestly what are ur options then ??? Also, last yr I got a large tax refund due to the fact that my son was still a dependant ...This year he is not so my refund w/go down... I enjoyed having a little money for the slush fund but know the trustee w/probally take it all..
Sorry for rambling I just wish I could look into the crystal ball and know it will all go smoothly , pmts w/be reasonable and I can be out of cc debt in 5 yrs.. I am a single and sometimes wish I had a partner to hash this all out with but its hard when u are trying to figure this all out yourself... Dont want to go into all the details w/relatives or friends...

[momisery]

We were in your boat too. Hubby lost his job, so we paid the cars off and got a unsecured note to give us a lower payment and put some cash in our pockets to pay off the CC. We paid them off, started using them again. Life is not certain is the problem with budgets. When my dad had to have colon cancer surgery, I had to be there, call it a vacation if you like and a WASTE of money, but my dad is 90 and I am not missing seeing him just in case. Then the rates increased on the CC, and my income was cut by 5%. Then hubby's new job which is all commission which started out looking okay ended up being a dud and more money out becuase we HAD to buy work tools or he would not have a job. He is still drawing unemployment and working full time on commision.. I would say people are not buying??? People around him are dropping like flies, so I know it is not just him. We now add more medical debt for him again.. and we have a BK. We spent our cash, we did the wrong thing with the cars we have made everyone bad move you could possibliliy make and I have this sinking feeling we are not done yet.. ha ha. But FILE is all I can say, don't do it our way.. it is not worth your health for a years worth of agony. Good luck...

[Moneypenny]

about 7 and 13 worries: i think the best you can do is research, research (starting here) crunch the numbers and figure it out for yourself, AND get a good attorney. Some attorneys will try to entice you in saying maybe you could do a 7, but then change it to 13, which is more profitable. This is really hard to judge, though, i know. that's why you need to have a good idea of what you can do.

1. figure out if you can pass the means test

2. figure out what the exact 6 month look back and forward would work best for you (sounds like you have time)

3. figure out what your state exemption law is

4. figure out your schedule I and J

This should give a good idea of whether you can do 7. then it makes it easier to judge your lawyer. try to get recommendations of course if you can.