Im 21...Should I file for chapter 7?

[TPierce89]

I really hate to be dealing with this, but I dont know what else to do. Heres my story.

At the beginning of last year I was engaged and rented my first apartment. Everythng went good for a few months, but in July me and my fiance seperated and I kept the apartment alone. In the same month I was promoted to Sales manager at my job. I had plenty of money and very little debt. Well, I started running up my credit cards on junk and I got a loan for a motorcycle and bills fell behind. In December I was laid off. I was unemployed for 4 months. In April I got a new Job and 3 weeks later they laid off the whole delta area. So now I am unemployed, and not currently getting any compensation. I am 21 years old and miserable.

I currently owe American Express : $2000
Citi Bank : $1000
Regions : $3698.07

and to top it all off, I let rent get behind a few months, so the landlord had their lawyer send me a bill for $2700.

That totals to almost $10,000

I also have another Regions loan of $2600 that was charged off a few days ago, so I dont even know what the next step is with that.

Nobody wants to work with me, and Im still unemployed. The government doesnt want to give me unemployment because I was unemployed for 4 months previously without it. I dont know what to do anymore. Im not sure Bankruptcy is going to even help but I hope somebody knows. Thanks

[daylate]

Don't know that I have a specific answer for you but here are some things to consider:

-Without a job and I'm guessing very little, if anything, in the way of assets anyone who sues you won't be able to collect anything until you get some income.

-You're 21 so you have plenty of time to work out your situation

-If you file now, without a job you'll get you discharge and be able to have a fresh start but without income how are you going to live?

-While probably not in your Top 10 things to do-Is it possible to move home until you get back on your feet?

If it were me, I wouldn't file yet if that is what you decide to do-under the old "you can't get blood out of a rock" theory. imo, there is no advantage right now-if you wait until you are working at least a couple of things will be in your favor.

One you won't have to deal with a bk in the job interview process and you will have income to live on.

Secondly, even if you get sued and have judgments issued against you you can get them wiped out in a bk further down the road.

One thing to make sure you understand is the whole means test issue-If you get a decent paying job and wait to long to file you could make yourself ineligble to file a Chapter 7. Read through the forums here for info on the means test and google it but make sure you understand it.

Also understand that should you chose to file you shouldn't use your cc's for at least 90 days prior to filing and if you happen to take a cash advance against a card, that could cause you problems in your filing.

Bottom line is that there is no easy answer-my final 2 pieces of advice is check out some bk attorneys in your area for a free consultation and see what they say

And before you do that read a lot on this forum about Chapter 7 and other places-if you can swing $25 or so the NOLO book (see sticky) about Chapter 7 is a great source to educate yourself. Understanding the whole process is very key-otherwise you could do things that will make your filing problematic, if that is the route you choose to go.

Good luck to you and keep asking questions here as you learn about the process. Lots of great folks here who will help you learn and understand.

[TPierce89]

Thank you for the advice. The thing is, I havent used any of my credit cards in about 4 months. This situation isnt new to me. I havent been able to pay these bills for a while. The only assets I have are My truck that is paid off, and my motorcycle, but all my loans are unsecured and credit cards. I just dont want someone coming to my house trying to take my stuff. I live with my girlfriend, so she is able to pick up my slack. I no longer have the apartment. Basically, I need to know the best way out. Im trying so hard to find a job, but these lawsuits are about to roll around and I dont know what their next course is after sending letters

[daylate]

I think you should go talk to some attorneys in your area. I just checked the Alabama bankruptcy exemptions and unfortunately they are not very generous. As best I could tell, there is no specific exemption for a car/motor vehicle. You are limited to 3k of personal property so you could use that to exempt that much equity in your car and bike. Any chance you moved to Alabama in the last two years?

If you don't know about exemptions and how they work-lets say your truck is worth 5k-it is paid off so you have 5k in equity in it. In a bankruptcy the trustee could opt to take the truck-sell it-pay you the 3k you exempted and split the other 2k among your creditors. Same with bike except that you would have no exemption left so whatever it is worth the trustee could take and distribute proceeds to your creditors.

It is not readily apparent (to me) what you should do-if you file your debts will go away but most likely so will your truck and motorcycle. If you don't file eventually you may get sued most likely by Regents-the Amex & Citi amounts are small but may result in a suit anyway. Basically what would ultimately happen there is you could have 25% of your wages garnished until you pay off the debt.

Go talk to some attorneys and educate yourself as much as possible. At this point that seems like the best course of action.

[TPierce89]

Looks like Ill be making an appointment with an attorney. My truck is a 1998 Ford Ranger with 210,000 miles on it. Its only worth about $2000 dollars, but I hate to lose my bike. I guess I cant "sell" the bike to a family member? is that fraud?

[daylate]

If you sell your bike best to sell it for fair market value and best to a non-family member. If you do sell it, remember you can spend the proceeds on necessary stuff, including paying your attorney. Don't have to use it to pay your creditors.

[daxtell]

you only have to worry about them making you sell assets not exempted IF you file bankruptcy. you can sign the title of your vehicles over to a family or friend that you own if you never plan to file for bankruptcy. that is not fraud. it is though if you end up filing. i would have to agree with the others who said that you are so young... and the amount you owe is not extravagant that at your age if you incur no more you could get yourself out of it once you get on your feet. a bankruptcy stays on your record a long time, and could be a hindrence to some employers or jobs. plus it costs 1,200 or more to file.

at your age or just a few years older(20 years ago for me) i also owed about the same amount with a single child and coming out of a divorce. back then i got 3 jobs and put myself thru school to pay it all off. i then experienced perfect credit for many years until now. it may seem a little hard right now as young as you are but look out for all the opportunities you have available right now...

[olivies]

My first thoughts: The debt isn't your problem, the lack of income is.
You can handle the debts, as long as you find an income.
Is the note on the bike less than it's value? If so, I suggest selling it and using the funds to pay down your debt. Your jobless, up to your knees with bills, and have other transportation. So it's not really the time to be saying "I hate to lose my bike"- especially since you'll lose the bike even if you do file. If you're going to spend a couple grand on an attorney, why not just spend a couple grand and negotiate paying off that debt? We're only talking $10K here. It is manageable with time and a source of income.

[momofthree]

I would NOT file right now. Reason being, you are essentially "collection proof" since you don't own any real estate for your creditors to put a lien on and you don't have any income to garnish. You're unemployed and therefore most likely have zero health insurance and your debt load of $10k is quite small for filing bankruptcy. You can only file every 8 years. What would happen if you were in some sort of accident or became ill over the next few years? Those medical bills will pile up faster than you can imagine and you'd be stuck with that debt. Possibly hundreds of thousands of dollars. Chances are, you'd find a job before you could file bk again, and all those medical bills will line up to garnish your wages and if you've already used your bankruptcy card on a measly $10k, there's nothing you can do to stop them.

However, if you wait to file until you have steady income and medical insurance, then you can (for the most part), safely file knowing that if something happens to you, the insurance will cover it. At that point, file for bk on your existing debt and get your fresh start.

10 years from now, I guarantee you that you will look back and be shocked that you ever contemplated filing bk on such a paltry sum.

[keepsmiling]

Reasonably good chance you could settle this for 25-50%, soon or some time in the future. I agree with those who say not to file now. Too small a sum, too uncollectible. Perhaps you could do some hauling in the truck while waiting to find a "real" job?

[AngelinaCat]

You do NOT need a BK.... You need to get out and get a job...

You need to get some kind of PT job, or many of them. Go to McDonald s or Burger-King, or both. Or any other business that might be hiring, such as WalMart. You need an income of some sort, and you need to learn to live within your means.

Since you are so young, you need to have at least two or more part time PT jobs, and work well at them, to show your worth to a potential employer down the road. You need to think about your future resume that you will present to a future potential employer. Do not include a BK at your age in that resume. It will not do you well for your future.

You are thinking about your immediate situation. You need to think 'long term' and plan for your future. Get out there and get those several part-time jobs. Do well with them, and be able to prove what you will then be able to put on your resume--that is, that you are a good, and reliable hard worker.

Good luck to you, no matter what you decide.

[TPierce89]

I guess I should clarify on the Bike. I amnot keeping it for me. My girlfriend went through a divorce sometime back, and her ex let her keep the car. Well, recently he quit making the payments, and neither of us can obviously afford $350 more a month. Therefore, I am selling, or trading, my motorcycle to get her a car that wont be reposessed.

Also, forgot to mention that my motorcycle isnt in my name. I bought it from my former roommate and didnt transfer the title yet. So, technically my $2500 truck is my only asset.

So if im understanding this correctly, my advice is to focus on finding a job and forget the debt for now? What happens then? If I get sued, and I dont have any money, what happens? If I just forget it all and focus on my necessities and disregard the CC's and bank loan and chargeoff and the rent money that the lawyer wants. Can I just forget it, and let it run its course or will it hurt me?

Oh, and thank you all for the advice. Im really glad I decided to sign up here and ask.

[keepsmiling]

They may never sue you if they can't find any assets;and if they do, at this point they can't get anything from you anyway. And there are stall tactics if/when they do; keep reading. So get some kind of job, any kind, and consider trying to work out settlements when you have some income again. You are young enough that this will be a tiny glitch in your life.

BK is a very big gun. You don't want to use a cannon when a pistol,a penknife, or even a water gun will do.

There are plenty of lawns in my neighborhood that need mowing. And people with sales experience can usually find work. Good luck and keep us posted!

[TPierce89]

That sounds like a great idea. I am applying for jobs right now. Im glad to hear that there are other ways out of this. The only thing that currently worries me is that these companies keep threatening me with future wage garnishment. Is that actually possible? It just seems cruel to someone who is honestly trying to find work and do things right. I have no problem paying this stuff off once I have money, but I dont want my wages garnished.

[keepsmiling]

Some people here are living just fine with wage garnishments. Keep reading. Sometimes that is the best way. After all, some income is better than what you have now, and a lot depends on your state laws.

Also, just FYI-- dh recently worked out a settlement for a young guy in a similar situation. Owed almost 10K on a rental contract. Settled for 1K, borrowed from parents. It's a thought.