What if I have no income?

[BobMango]

Now you guys have me really confused. I don't know what to do. I planned on filing tomorrow. Here is the way I'm thinking. My credit is already screwed from not paying on 4 credit cards for the last year, if I don't file I will have a judgment. So bankruptcy will be on 3 years longer than the 7 years all my late payments will show up. If I don't file then they could levy my bank account and garnish my wages if I get a job while I'm trying to finish school. I could not file and try to wait until I graduate and once I have a full time job I could afford to pay off the credit cards, but I might not make it until then as they could garnish wages and levy bank account. Am I missing something here? Please help because I have to file tomorrow so this doesn't go to judgment.

Let's think about your options. On one hand you have a creditor filing suit and presumably getting a judgment. In order for them to collect they have to find some asset they can seize. If you have a bank account, drain it and close it. It sounds like you don't really need a bank account right now based on your situation. The only option for them to collect at this point will be to take some additional action to discover other assets or wait until you have something they can take. Once you get employment and are in a position to begin paying these off you may be able to make arrangements to clear them up, potentially for lots less than you owe. This way you can avoid bankruptcy altogether.

On the other hand, you could file bankruptcy now. On the plus side the debt for your credit cards goes away and no judgment. On the negative side, you now have a bankruptcy and have jeopardized your future student loan possibilities. Additionally, you may incur other debts (potentially through no fault of your own) that you can not pay and would have to wait another 7 years before being able to file again.

My advice would be for you to consult an attorney as quickly as possible. You should be able to get a free consult that will give you an idea of what your options are and the potential impacts of whatever path you choose.

My thinking is that the amount of debt you are looking at is not that significant and that you can work around the judgment and bank account issues until you are in a position to repay. I'd save the big gun for a situation where you are threatened with losing a home or car or contemplating years of indentured servitude. I don't think you are there yet.

[dustinc]

Thanks. You've given me something to think about. One question: If they get a judgment, would they be willing to settle or will I have to pay the full amount. The judgment would be for $5k and at one point they offered to settle for $2500.

[Exployer1234]

I am not sure of you have to count your mom's income. You will have to ask your lawyer. As far as the student loans go you should still be able to get pell grants. I am in school as well. You will not be able to get any private loans. Your school can issue a waiver so you are able to get stafford loans. Stafford loans are not given out based on your credit. They are based on need. Talk with your finianical aid officer and explain what is going on.

[dustinc]

Thanks. You've given me something to think about. One question: If they get a judgment, would they be willing to settle or will I have to pay the full amount. The judgment would be for $5k and at one point they offered to settle for $2500.

Anyone know about the judgment and if I can settle for a lower amount?

[momofthree]

Keep in mind that they can only garnish wages over the amount of $217.50 per week. Since you're in school, there's a good chance you'd be making less than that if you took on a job. So they still wouldn't be able to garnish you. Just keep money out of the bank. Cash your checks and live off of cash. Bk is not your best option right now....

[dustinc]

Keep in mind that they can only garnish wages over the amount of $217.50 per week. Since you're in school, there's a good chance you'd be making less than that if you took on a job. So they still wouldn't be able to garnish you. Just keep money out of the bank. Cash your checks and live off of cash. Bk is not your best option right now....

Thanks. Just a few a more questions before I decide not to file. Do you mean that $217 is the most they can garnish, or they can take everything over $217? Also, how much worse is a BK going to be on my credit report vs. the one year of late payments I already have?

[momofthree]

Thanks. Just a few a more questions before I decide not to file. Do you mean that $217 is the most they can garnish, or they can take everything over $217? Also, how much worse is a BK going to be on my credit report vs. the one year of late payments I already have?

The most they can garnish is 25% of your income OR the amount over $217.50 (to a max of 25%).

For example:

If you earn $1000 a week, they could take $250 (25%) since the max they can take is 25%.

But, if you only earned $230 a week, they could only take $12.50--the amount over $217.50 (again, up to a max of 25%).

[dustinc]

Okay, so will my credit really be affected that much more by a BK? I already have a year of late payments on 4 cards and will have a judgment. It seems to me like a BK won't make that much of a difference? What are you thoughts about that?

Also, do you know if I can settle the judgment for a lesser amount or will they require the full amount?

[Exployer1234]

I would pull a credit report to see what your score is. A BK stays on your credit report for 10 years. Normally after 7 things will start to fall off from the BK, but the actual BK will stay for 10 years.

When I did my first BK 12 years ago my credit score prior to BK was 490. After 2 years my credit score was back in the 700's, but I had to obtain more credit cards and pay those off.

So all of these factors will affect your score. The problem with doing a BK is that it is something that creditors will hold against you for a long time. Even five years out of BK you can still have high interest rates on car loans and when buying a house.

I would first just pull up your credit report to see what your score is first. Then go from there. If it is less than 500 a BK shouldn't pull it down to much farther, but you will have a long road for pulling that score up into the 700 range. If your credit score is still in the 600's after your BK goes on your record it will range from 450-590. Then you will have dispute your credit report to get them fixed.

Also when a creditor has a judgement against you it will go on your credit.

[momofthree]

Not sure about the judgment.

I don't think anyone here is worried about your credit. They are nervous about you using your only shot at bk on such a piddly amount of money when you're basically garnishment-proof. Let's say you file bk on this $10k. 2 years from now, you get in some sort of accident and accrue $100k in medical bills. Bk is no longer an option and you are looking at being garnished for $100k once you get a job. Was filing on $10k really worth it? No.

THAT is the big picture. That is why people are steering you away from filing right now. As it stands, no one can really collect on your debt, so there's no REAL reason to file at this point in time.

[dustinc]

Thank you very much for all of the advice. I'm not clear about how much worse my credit would be. Just got my score and it is 510. If I don't file BK, how much better do you think I could make it in 2 years being that I have a judgment ad 1 year of lates vs. how much better could I make it in 2 years if I filed BK. Do the late payments and judgment have less of an affect over time than the BK would?

[plisar]

Again Dustin, I don't think your credit is your biggest concern, it's the possibility that you are using your one get out of jail free card in a period in your life when it may not be necessary.

Are you filing Pro Se, or are you using a lawyer?

[dustinc]

I'm Filing pro se. I'm not really worried about needing to file again so with that out of the equation what do u think about me improving my credit the quickest. Will filing bk take longer to rebuild my credit? Thank u.

[jacko]

Why would you file BK if you have no income? Do you have health insurance?

I live off of student loans and live with my mother. Since the only money I have is from student loans, do I put "zero" for income since a loan is actually not income? Is the Trustee going to question things since I'm going to be so negative at the end of each month? I'm not supposed to include my mom's income since I live with her and she pays for rent and utilities am I? Thanks.

[dustinc]

Why would you file BK if you have no income? Do you have health insurance?

I have health insurance. I might not have income but I do have money in bank and will be getting a job soon.