23 year old looking for advice...

[rameyx87]

I am looking for some advice on my situation and if chapter 7 could work for me. I have just looked at my credit report and i have $11,000 unsecured debt from one credit card. I also have $2600 secured debt through a student loan. My interest rate was low but now 3 years later it jumped to 27.99! May 2009 I lost a job where i was being paid almost double of what i make now. I was forced to move home and After 3 months of searching for a job i got hired now I get 39rs/wk and pays $10 an hour fueling for a truck company(dead end job). After taxes and insurance i take home about $300 a week. Drowning in credit card debt and feeling hopeless someone brought to my attn CCCS and told me I should ask them for help. After going to credit counselling session in March my counselour came up with a $350 once a month payment for 42 months to pay off my debt. My credit counselour knows that my monthly expenses are $150 more than i actually make per month. I do not have any assets or even a car in my name and from researching im pretty sure im conisdered a "judgment proof debtor". I would like to file chapter 7 BK because i have no intentions on trying to have any assets in the next 7-10 years anyways and would like to have a life without thinking about my debts 24/7, I am very depressed and do not make enough money to pay for everything. I would like to go back to college and further myself and have something to live for. My father is getting married in a few months and is moving her young children in. I am going to have to move out with a friend whos only charging me $350/mo everything included, which is very cheap. If i continue to pay CCCS and only have the income i have now there is no way i will survive. On top of that knowing that i am going no where with my life for the next 39 months is like being in jail. Would it be possible for me to file Chapter 7 BK even though the car i pay for isnt in my name, nor the rent that i pay now or in a few months will be paying to a friend isnt in my name. But the simple fact is that i still have to pay these expenses monthly even though they are not in my name. At this point I am ready to try and file and live the next ten years of my life based on the money that i make without any credit involved. I would be much happier that way and eventually i plan on going back to school and furthering myself. If i keep going at the rate I am now i will go nowhere for the next 3 and half years not able to have any money and not able to go to school. I know i fall below the "means" for my state income-wise. My question is is it possible to file with my expenses being over actual income, and is it going to be an issue that my expenses are not in my name. I have no savings and nothing to try to offer the creditor to try for a settlement. Im ready to give up and file Ch7 because i wont have enough money to buy a house or get a loan for anything in the next decade anyways. I would rather go that route than to feel like i am wasting the next 3plus years paying off a credit card and not be free to do anything with my life until im 27 years old IF ANYONE HAS ANY ANSWERS TO THESE QUESTIONS PLEASE HELP. OR IF ANYONE HAS ANY OTHER SUGGESTIONS ON WHAT TO DO IN MY SITUATION IM OPEN TO ANYTHING!

[JSFleischman]

Would it be possible for me to file Chapter 7 BK even though the car i pay for isn't in my name?

Yes - one thing has nothing to do with the other. I assume you mean, however, that you want to include the expense for the car payments on the means test; if that's the real question, the answer is you cannot list the ownership or loan expenses on your means test.

... nor the rent that i pay now or in a few months will be paying to a friend isnt in my name.

So long as you pay the rent by check or money order, you can list it as a proper expense.

[rameyx87]

OK, say i go to an attourney and they tell me that Chapter 7 would not work in my case because my expenses have been paid cash and not in check or money order. What if i tell CCCS i no longer want the services they offer me. Take on the credit card myself again... then choose not to pay it. They will take some time to send it to a collection agency. In the meantime I save that money up and wait until i get my tax return next year and offer them a settlement. Either way my credits going to be shot. It would almost be liking filing Chapter 7 except for the fact i would have to dish out 4 or 5 grand for a settlement im sure. I just want to get it out of the way as soon as possile and move on with my life. I cant imagine doing the same thing im doing right now for the next 3 plus years..

[JSFleischman]

You're worrying in advance. Talk with a lawyer, get a sense of how they recommend moving forward (perhaps starting to pay those rent bills by check now would be a good idea) and put together a plan of attack.

If bankruptcy is right then it's right. And if it isn't then take that scenario when it comes down the pipe.

[rameyx87]

I appreciate your help, and i will take the advice to pay all expenses by check from now on. I pay my dad for everything so I've never thought I would need to pay by check. In your experience would you recommend ignoring the credit card payment and saving for a settlement before filing for bankruptcy... Or would the outcome be pretty simular either way? And should i save some money now to talk with an attourney or do some attourneys trully offer a free counsultation..

[keepmine]

First thing I'd suggest is just calm down and think this through.
The student loan will survive bk. Filing bk on $11K is overkill in my opinion.
Plus, it's hard to see how you're improving your situation with bk since, you'll still just be clearing $300/week and are still going to have the attendant expenses like, transportation, shelter, food, utilities, insurance,etc.
Were I you, I'd get a pt or weekend job and dedicate those earnings plus, your tax refund next year to paying off these cc debts.It doesn't have to be forever-you could have that halved in 6 months.
Save the bk filing for if you really need it.

Just try and be more optimistic. In the grand scheme of things, this is a very minor setback. A little more work and this problem is under control in 6 months and solved in a year.

[SMinGA]

You could probably file ch. 7, but I'm not sure you need to. The student loan debt will not go away, so you'd only be discharging the $11,000 credit card balance. It will cost $1500-3000 to file bankruptcy.

If you are 'judgement proof' the logical option for now might be to just ignore it. Don't pay, if you cannot. In time things may improve in your financial outlook where you can go back and settle that debt (paying less than the balance to resolve it).

My fear is that filing now when you are not on solid financial footing could be a big mistake. What happens if you get hurt in 6 months, sounds like your current job can't possibly have good medical benefits, and you have alot of medical bills as a result? You would no longer have bankruptcy as an option - since you're only allowed to file ch. 7 every 8 years.

If I were in your shoes, I'd stop paying - deal with phone calls and such as the worst case scenario since you say you're judgement proof - and work on going back to school and improving future earning potential.

[rameyx87]

I actually do have full dental and medical benefits at my job. Which is deff a plus. I have thought about just not paying the credit company right now but then I have the chances of wage garnishment. Which probably wouldn't be much in my case because of how little I make. Another thing that would probably happen to me in that case is they could freeze my bank account. If I did decide to not pay the debt right now, how much time would I have until one or both of these things could occur? I'm at the point where I need to figure out do I go ahead and try to file Ch7, and if I did make that choice is there anyway I could file on my own? Would it be easier since I don't own anything... Or do I ignore the debt for the time being and save the little money I can possibly settle with the collection agency next april with tax return and saved money. Either way my credit will be shot and I plan on living with family or friend, and paying for a car that's in my dads name. So I won't need any credit as it is... I think I need to try and get a free counseltation with an attourney and hear his advice in my situation.

[SMinGA]

If they can garnish your wages - then you are not judgment proof. My suggestions were based off of your comment about being judgment proof.

If your state allows garnishment for credit card debt, then yes that is a possibility. But its not something that happens immediately. They would first need to file a lawsuit and serve you with notice - and from that point it would be at least a few weeks or more likely a few months before they would actually have a judgment against you and be able to garnish. Cannot garnish/attach a bank account without going thru the legal process.

Yes to free consultations. Hear all your options. Just keep in mind that filing bankruptcy is not free - and you'll need to come up with something in the neighborhood of $1500-3000. If you can do that, and go without paying your account for 6-12 months, you could very well settle it and be done that way.

[rameyx87]

Would it be possible for me to file chapter 7 without the expense of an attourney? Would this be more difficult than I expect?... Like I said I don't have any assets or anything of worth in my name besides my income. Or is it in my best interest to save up the money from not paying my credit card to pay an attourney to get it filed and accepted for me?

[NewDawn]

What state do you live in?

[rameyx87]

Ohio

[mrskal]

You can file on your own, i think it is $299 court fee. Also, if you did get your wages garnished, I believe they can only take a certain percentage, depends on your state.

[NewDawn]

According to what I just researched online, in the state of Ohio, wages can be garnished up to 25% of your disposable income. That's your paycheck after taxes. After a creditor has garnished your wages, no creditor can garnish again until 30 days have passed.

We filed on our own and paid just 299 in court filing fees and the 2 counseling sessions, which were about 50 dollars each. I highly recommend that you get the Nolo book if you're going to file on your own.

[tcreegan]

Overkill

You could do a Chap 7 on your own, but it would be like killing a fly with 50lb brick. Go to the credit card company and explain your economic situation. Negotiate with them for a payment plan you can afford.

The student loans do not go away in a bankruptcy. Not happening.

Filing now means you cannot file again for 8yrs. Is the economic situation going to get worse in the next 8yrs? Might be best to wait until you REALLY need it.

If you do decide on a chapter 7 bankruptcy.....

Your case is cut-n-dried, you could get the NOLO book (online or a bookstore), Be detail oriented and read lots of this forum. Ask questions.

Quit worrying about any expense questions, you will pass the means test w/o needing any expenses. You will list a few on your "statement of financial affairs" form, but from what you have posted, it will have no effect on your bankruptcy.

Start with a negotiation with your CC company and go from there.

Best of luck,

Tom in Colo