Thinking of filing bankruptcy and have some questions

[OldDominion]

Hello all,

I was referred to this site by a relative who found it very useful.

I recently began considering bankruptcy. I am 31, single, no kids and was laid off from my job in Dec. 2009.

I live in Alexandria, VA and since I was close to DC I figured I would be able to find a job quickly, but haven't been able to. I rent and have no assets other than a 10 year old VW which is paid for and the basics like furniture. I have approx. $20,000 in credit card debt and owe $20,000 on a federal student loan.

I am on unemployment and have used up most of my severance just making the minimum payments on my cards and I can't do it any longer. I have never been late on any of my cards. I was making headway in getting my cards paid off until I was laid off. I have not called the card companies to discuss other arrangements as I figure they won't be very accommodating.

I have a few questions:
--How much am I allowed to have in savings? Right now I have $3,000 in my savings, but I don't want the creditors getting this because if I run out of unemployment, I will have nothing to live off of.

--Will they take my car? The trade-in is valued at around $1,800

--What about recent charges to credit cards? If I need to make an emergency car repair of around $600 and charge it, what will happen when I file?

--How long should I wait to file bankruptcy since I'm still current?

Thank you for any help/advice you can provide. I feel so shameful to be in this situation.

[SMinGA]

Your car is almost certainly safe - all states have some amount that is 'exempt' meaning protected. I don't know your state's exemptions, but if its only worth $1800 then its probably an issue.

I would say to stop paying the cards now - but also not to use them. And to start living cash only. I would not recommend you file bankruptcy right now however. Things are not stable for you, since you are unemployed and can only draw unemployment for so long. If you file now, you can't file again for a long time. If you get hurt, incur medical bills and such - you're stuck with them.

[Pandora]

VA's exemption is 2K for the car - you're safe on that

My first suggestion is to call your credit card companies and start talking to them - see if they can't give you a better rate or at least temporarily forbear payments for a few months. Interest will still accrue, yes, however you may be able to find a job between now and then. You also may have to look at going south towards Woodbridge, Dale City, Quantico area...

UI can be extended, but if you've already used up your first 26 weeks and are already into your extension, then you need to start looking at another type of field of work. Getting rid of your debt via BK is only part of the equation - the other part is being able to sustain yourself following discharge.

I'm not telling you to do this, but...if it were me personally, I'd remove the $ from your account and keep it out of the bank and at home somewhere...for now. Especially if your bank account is linked to your credit cards in any way as it can be frozen once you stop paying on your cards.

As SMinGA stated, if you can avoid it - do not use your credit cards as if you do end up filing, it can be frowned upon and possibly viewed as fraud since you knew you were going to file BK. Typically its no use of credit cards for a minimum of 90 days prior to filing.

[OldDominion]

I appreciate the feedback from the both of you. It is very helpful.

I think I will first contact the credit card companies regarding some sort of forbearance. Hopefully since I have never been late on the accounts, they will work with me.