Should we file Chapter 7??

[Foofy610]

Hello everyone,

My wife & I are on the brink of disaster. Unfortunately, it is of our own doing. We really need advice. Our current situation is...

We both have normal jobs, with roughly $70,000 in credit debt, and a HELOC for $73,000. We have maxed out the cards from years of frivolous spending, and my wife's small business. Our cars are 8 & 11 years old, and we have no significant assets other than our house. After factoring in the HELOC, 1st mortgage, and current value... we have approximately $5,000 equity in our home.

Over the last few years, the credit card companies have doubled our interest rates for no reason. Because of this, we have not been able to lower the balances. We have never missed a payment on any of our debt. However, we will have to start next month. Do you think we should attempt a Chapter 7 filing. We're afraid we'll lose our home & cars.

I don't know if this matters, but we both filed Chapter 7's back in the 80's before we met.

Any information would be greatly appreciated, as we are really at the end of our respective ropes.

Thanks,
Phillip

[sunshinepa]

Welcome to the forum.

You will find a wealth of information and support here!

First, have you looked at the means test to see where your DMI (disposable monthly income) falls? You can get some idea of where you stand using the means test at www.legalconsumer.com. From those results, you may have other questions or issues which can be addressed on the forum

The low home equity is a good thing and your previous bankruptcies are not an issue anymore although you will be asked if you ever filed before.

Read, read and read on here, great information available

Good luck from a fellow Keystone Stater......LOL!

[Foofy610]

Thanks for the link. Hopefully, it will shed some light.

[Foofy610]

Well... I passed the means test. Is there anyone out there with similar stories? I'd really like to hear how you made out.

[sunshinepa]

That's great, am assuming you can file a CH 7?

I was under median income and my CH 7 was no problem at all. I had 10,000 or so equity in my house and still had no problems. You will have to provide a CMA so you may want to call a local realtor and ask for one, it takes awhile. Simply tell them you are thinking about selling you home and would like a "reasonable" analysis of the value. In PA you can use the Federal Exemptions which are better than the state ones. Also, you mentioned your cars are over 7 years old, you can take an extra 200.00 expense which really helps. There are also other deductions allowed that do no show up on the mean test so you will want to consider those also to make certain your DMI is really low.

At this point, if you are sure you will file, stop paying all the credit cards and put that money towards attorney fees, stocking up on food and non-perishables. Once you stop paying, you might want to get Google Voice to avoid the hassle you will get from CC calls. Most folks don't even answer, I only ever talked to one creditor in 9 mos. before filing. Once you are late, they will start calling.

to summarize, my BK was so very simple. I was in front of a trustee for less than a 2 minutes, had no objections and actually should get my discharge any day now. All reports I have seen indicate unless there are assets and/or dishonesty in your filing, PA trustees rarely question anything.

I am sure others will chime in and provide more advice or share their experiences.

[Foofy610]

Sunshine... can you please give me a "ball park" figure regarding attorney fees? I'd like an idea of what we're in for.

[sunshinepa]

I paid 1500.00 which is about average in PA for a CH 7. My case was fairly simple and the five people I saw were all within 100.00 of that figure. Based on your PM, yours might be a bit higher because of the area but should not be much more. Just be sure not to contact what they call a BK Mill attorney, you get what you pay for is really true in bankruptcy.

Hope that helps!

[Foofy610]

We are sure we're going to file. Earlier you mentioned not paying upcoming credit card bills. This scares the hell out of me!! What happens if we file and get rejected?? Is there a high chance of getting rejected?

[sunshinepa]

It is very scary for sure, have been there. I cried the first time as I had never been late or missed a payment on anything. Buit reality is, you are throwing money away if you intend to file. Very few folks would disagree although some have paid up to filing. Bottom line, you already stated you won't be able to pay next month so it should be a no brainer!

Nobody can guarantee a smooth sail thru BK as the bottom line is how much money is left over after all legitamate expenses are met. Honestly, a good attorney will advise you wether they would anticipate any problems up front. Once you consult some, you will feel much better.

I have been on this forum for over a year & have yet to see a fairly simple BK get rejected. Yes, there are some factors that make things go smoother. I personally had a huge balance transfer that could have been a problem. After reading here, I waited almost a year from my last payment to file, was one day away from a judgement on my house and still sailed though.

Other things that could cause problems are use of credit in the 90 days prior to filing (unless used for necessities), transfer of property or preferential payments. BK's that are dismissed are usually related to those things.

I am certainly still learning alot about BK and don't profess to be an expert, just relating things I learned on this forum. Again, it's early in the day and I am sure some more knowledgeable folks will chime in soon!

[Foofy610]

Sunshine... I can't thank you enough for taking the time to respond. Hopefully, someone else will jump in so I can bother them!! :-)

Take care!

[sunshinepa]

You are welcome! I remember when I first came here, it was so scary! Again, I encourage you to ask away, the knowledge here is amazing along with the support. When you get support through the process, it really does relieve some of the stress.

[discouraged]

The thing I found helpful was the advice to interview 3 or mor attorneys. The first one I went to, on the advice of a consumer credit counselor (who I still wonder if she was paid to refer folks to them), scared me and the entire office made me feel as if I was somehow amoral. The second one - who I chose, the entire firm put me at ease and made everything so easy for me. I had never heard of them before researching for attorneys in my area, whereas the first one has tv commercials every single day.

So - the most important thing is to interview several attorneys and make sure you are comfortable with the person. It makes all the difference in the world when it comes to asking questions and neeiding hand holding prior to and during the 341. Good Luck!

[oregonpilot]

We are sure we're going to file. Earlier you mentioned not paying upcoming credit card bills. This scares the hell out of me!! What happens if we file and get rejected?? Is there a high chance of getting rejected?

Welcome Foofy...this is a great place. I don't think i would have made it thru without the support, hand holding and shoulders to cry on.

Re: Not paying cc's. that was one of the first things that my atty told me. I almost fell out of my chair.
How can you just stop paying your cc's???

Also had never missed a payment in my whole life and I'm 60.
When it was time to miss that first payment...i had to leave the house and get away from my pooter to not make that payment. Had the button up saying press to make payment. ACK. & More ACK.

So you can bother us!!!!! I think we are ALL "unbotherable"
It sure does get better.
We are here for you.

[Foofy610]

Thank you very much for the warm welcome! I am 48 and have also never missed a payment in my life. I have two card payments due on Friday, and I'm really getting nervous. I do have an interesting question for you....

We're scheduled to go on a family grand gathering the week after Thanksgiving this year. We booked it 18 months ago with my cousins. Since then all hell has broken lose financially. Anyway, I'm responsible for renting the SUV for us. I need my credit card to just hold the rental for $470. I'm going to pay for it with the cash I've been saving. Do you think I should wait until January to file... or will the rental hold be considered "abuse" if we file sooner?

[oregonpilot]

Thank you very much for the warm welcome! I am 48 and have also never missed a payment in my life. I have two card payments due on Friday, and I'm really getting nervous. I do have an interesting question for you....

We're scheduled to go on a family grand gathering the week after Thanksgiving this year. We booked it 18 months ago with my cousins. Since then all hell has broken lose financially. Anyway, I'm responsible for renting the SUV for us. I need my credit card to just hold the rental for $470. I'm going to pay for it with the cash I've been saving. Do you think I should wait until January to file... or will the rental hold be considered "abuse" if we file sooner?

Foofy..that is an interesting question.
Wow..i don't think i would use a cc for anything if i even had a hint of bk in my noggin. With that said....
is that a cc that you are going to be defaulting on?
There actually won't be a charge on that cc with it being used only as a hold-am i correct in that????
If something runs amuck...will card get charged?? or will you be able to cancel it??
hummm
Do you have a debit card w/visa or MC logo that you could use?
I dont think i would hold up filing for this!! Cuz there shouldn't be any charges to the card
but thats me......