Will I qualify for Chapt. 7?

[OldDominion]

Hi,

I was laid off from my job in 11/2008 and have been on unemployment since that time. I just received a job off for a position here in VA paying in the low $50s.

I have approximately $22,000 in CC debt (incurred prior to my layoff), single, I rent and my 10-year old car is paid off. I have used up the money I had in investments. I don't have much in savings.

I was looking at filing bankruptcy before I got a job and am wondering if I still qualify since I've landed a job.

Any feedback is appreciated.

Thanks.

[dm415]

Filing on only 22,000??

[OldDominion]

An attorney suggested that to me because I had been unemployed for so long, high cost of living, etc.

I was just looking for second opinions.

[uzforce]

I have thought about filing on close to that much but the reason I have been thinking about it is due to the fact that I can't pay my bills because I have no income. Plus I'm about to be sued for one of my CC accounts. If you think you'll be able to pay your bills with your new job you may not want to go the bankruptcy route.

[Maine]

We are in a similar situation. 15 months of unemployment, back to work now. We meet the means test because the 6 month look back includes 4 months of unemployment. The new job income is being used on the schedule I, and expenses reflect this income on schedule J.

The lawyer thinks we will be fine and not challenged on the income difference between the means test and our actual current income. Make sure all of your expenses are reasonable on the schedule J and hopefully you should be ok as well.

Good luck!!!

[OldDominion]

We are in a similar situation. 15 months of unemployment, back to work now. We meet the means test because the 6 month look back includes 4 months of unemployment. The new job income is being used on the schedule I, and expenses reflect this income on schedule J.

The lawyer thinks we will be fine and not challenged on the income difference between the means test and our actual current income. Make sure all of your expenses are reasonable on the schedule J and hopefully you should be ok as well.

Good luck!!!

Thank you for this information. It really helps. I forgot to mention that I have $22,000 in student loans so I hope they take that into consideration and hopefully that would help me qualify.

[OldDominion]

I have thought about filing on close to that much but the reason I have been thinking about it is due to the fact that I can't pay my bills because I have no income. Plus I'm about to be sued for one of my CC accounts. If you think you'll be able to pay your bills with your new job you may not want to go the bankruptcy route.

Thanks...you make a good point. I was pretty sure I was going to file until I got a job offer today. Ideally I would pay it off, but I've been laid off twice in two years and I've not been able to make any headway.

[tcreegan]

consumer credit counseling

Here is an option; since you have a job now, settle the cc debt. Go to the nearest consumer credit counseling office and ask for an appt. to talk to someone about what to do with 22K in cc debt.

You could do BK, but you are stuck for the next 8 years with no recourse. And if you ran up the cc debt from the last layoff, what is going to happen with the next lay off?

Seriously reconsider, cc debt settlement is probably a better road than BK

Just my 2 cents,

Tom in Colo

[OldDominion]

Here is an option; since you have a job now, settle the cc debt. Go to the nearest consumer credit counseling office and ask for an appt. to talk to someone about what to do with 22K in cc debt.

You could do BK, but you are stuck for the next 8 years with no recourse. And if you ran up the cc debt from the last layoff, what is going to happen with the next lay off?

Seriously reconsider, cc debt settlement is probably a better road than BK

Just my 2 cents,

Tom in Colo

Thanks, Tom.

I was just thinking about this option late last night. I would hate to file BK and ruin my credit rating. I haven't been late on a payment in 10 years and my credit score was around 690 when I last checked it in the fall. It would be much higher if not for the high balances I'm carrying.

If I wasn't living in the DC area where the cost of living is so high, it would be much easier to pay off.

I just want to find a good consumer credit counseling place as there are a lot of bad ones out there from what I hear.

[SMinGA]

Credit score should not be a factor in deciding on bankruptcy, in my opinion.

If you're current now, then settling may not work so well. I don't know that the creditors are too willing to chop the balance when it looks like you can afford to keep paying. Yet if you stop paying, the balances sky rocket from interest & fees.

Perhaps instead contact your creditors, explain you've been on unemployment and are now trying to get back on your feet. See if they will stop or lower interest for the next 12-18 months or so.

If they agree, you can then decide what is best to do. Probably pay aggressively to get the balances down will be the best move. Filing ch. 7 will cost $1500 at best, possibly upwards of $2500. And since you have the job offer now, I imagine you are due to start soon. (Or face losing the job offer.) It takes time to gather information and interview attorneys, and by the time you could get filed you'll probably actually be working and earning the new pay. @ $50k salary you might not qualify for ch. 7. (I don't know your expenses, of course.)

See if your student loans are eligible for income based repayment. (IBR) Based on last year's tax return AGI it could get you a temporarily reduced payment. IT has to be applied for each year, based off of the AGI for the tax year. Since you're starting the new job more than 1/2 way thru 2010, your 2010 AGI won't be too high either. So you can probably have a reduced payment on student loans for the next 1 1/2 years or so, and in that time make a lot of progress on the credit card debt.

[SMinGA]

ps-If I were in your shoes, I'd try to work with the creditors directly before going to a consumer credit counseling service. Those charge fees - which is not unreasonable when you consider they stop late/overlimit fees on the cards & lower the interest rates to around 6-12% on average. But it sounds like you're not yet dealing with late/overlimit fees. So if you can get the rates down on your own, no need to pay someone else for that service.

[OldDominion]

ps-If I were in your shoes, I'd try to work with the creditors directly before going to a consumer credit counseling service. Those charge fees - which is not unreasonable when you consider they stop late/overlimit fees on the cards & lower the interest rates to around 6-12% on average. But it sounds like you're not yet dealing with late/overlimit fees. So if you can get the rates down on your own, no need to pay someone else for that service.

Thanks for both of your posts. Yeah, I think working through the CC companies would be best. I never had problem asking for lower interest rates before the economy tanked (I was in the mid-single digits) and then after that credit card reform bill was passed, I got notices that my rates were going up and they wouldn't budge.

Perhaps if I explain my situation, they'll work with me.

I would hate to ruin my credit rating with a BK or go through debt counseling if I don't need a middleman.

I will probably end up spending a significant amount of my paycheck paying down the debt so I can get out from under this mess ASAP.

[SMinGA]

And contacting them directly does not limit any of your other (eventual) options. There is no harm/cost in trying, yet it does not lock you into any permanent plan of action.

[OldDominion]

And contacting them directly does not limit any of your other (eventual) options. There is no harm/cost in trying, yet it does not lock you into any permanent plan of action.

I did contact one of them today...Chase. The lady said no one is allow now to lower interest rates. It's the highest rate of any of my cards.

She said she would make a note and the Great Oz would consider it when reviewing my account. My interest rate doubled last fall and I think it's because of the new cc regulations. Chase always easy to deal with before.

What's dumb is that I just got a notice in the mail last week letting me know they were increasing my credit line by like $2k, which I didn't even request.

I'll try to call the other ones, but will probably target this one to pay off first and be done with 'em.

[2manybills]

I did contact one of them today...Chase. The lady said no one is allow now to lower interest rates. It's the highest rate of any of my cards.

She said she would make a note and the Great Oz would consider it when reviewing my account. My interest rate doubled last fall and I think it's because of the new cc regulations. Chase always easy to deal with before.

What's dumb is that I just got a notice in the mail last week letting me know they were increasing my credit line by like $2k, which I didn't even request.

I'll try to call the other ones, but will probably target this one to pay off first and be done with 'em.

That is the problem. Most of them, from my experience, did not work with us. It was an neverending cycle of going from one person to the next. Amazingly though, as soon as I stopped paying BofA and Chase and Citi, I got letters from them offering to settle my accounts.

Even if you settle your debt, it will stay on your credit report for a long time also. $22K may not seem like a lot to some, but it is all relative to the amount of money you are making and how much money you have to live on.

If it were me, I would make my best effort to attempt settlement, and if that doesn't work, go foward with your fresh start.