Is this a mistake?

[Rozi]

Hey Yall!

So I went ahead and bit the bullet and got a lawyer. I am going to a bankruptcy mill and the attorney is charging 1400 for a Chapter 7 non asset case. I stopped paying my credit cards bills this month and I am about to stop paying for my car. Now I just feel so horrible and I keep going back and forth on this. I am filing bankruptcy on 37K worth of debt. 23K is a upside down car. I have filed bankrupcy before back in 2001 but I was so young so I can't remember the process. The bankruptcy is due to fall off my credit report in October. I am wondering if I should wait to file until it falls off or just go ahead and do it? My other problem is my car. I am so scared that if I file I won't be able to get another car. I need a car to go back and forth to work but I won't have enough time to save for a beater. So now I just feel hopeless and scared. Is this a normal feeling? What should I do about my car?

[drowning123]

Oh boy, bankruptcy twice, but who am I to judge. If you really want to keep the car, I'm gonna use the "R" word. Reaffirm.

[HighUnder]

Why have you decided to file BK now? Are you being sued or garnished? It sounds to me like you're doing this mostly because of the car. Would there be any possible way for you to do a voluntary repo and work something out with your finance company? How much upside down is the car?

[helpmeout]

What to do about your car? Well, if you want to keep it, you will have to make the payments or it will be repossessed.

I would also take a long look at why you find yourself in this position a second time and what changes you can make so that there isn't a third time.

[Rozi]

Well the first time I filed I was 20 years old unemployed with a shopping habbit. Now 10 years later I am employed but, I do not make enough money to keep up with my $600.00 car note. I can pay my other bills just fine but, the car is just too much. Along with rising gas prices and food prices and not getting a raise in three years my finances have taken a beating. I am really struggling with the fact that I have to file bankruptcy. This is not an easy decision and I have been back and forth and crying and such. The first time I didn't care because I was young. Now that I am older I feel guilty and restless. I am upside down in my car by about 10K. I am not being sued yet. I just stopped paying my bills a month ago.

[Selador]

Well the first time I filed I was 20 years old unemployed with a shopping habbit. Now 10 years later I am employed but, I do not make enough money to keep up with my $600.00 car note. I can pay my other bills just fine but, the car is just too much. Along with rising gas prices and food prices and not getting a raise in three years my finances have taken a beating. I am really struggling with the fact that I have to file bankruptcy. This is not an easy decision and I have been back and forth and crying and such. The first time I didn't care because I was young. Now that I am older I feel guilty and restless. I am upside down in my car by about 10K. I am not being sued yet. I just stopped paying my bills a month ago.

Emphasis added.

Keep paying the rest of the bills.

Stop paying the car payment.

Save that car payment.

By the time they come to repo the car, you'll have enough saved to get a good reliable, 'beater', car from craigslist.

Buy it outright, and you won't have monthly payments.

[discouraged]

I bought my car for 1500 5 years ago. Sure, I've put some money into it since then, but much less than 600 a month. Let the car payment go and take that money and buy an older car. I'm not sure what you would pay for one now but...

Also, if I'd had any sense, I would have bk'd yearss ago myself but didn't even think of it, just paid the bills. When I look back, I should have done it because I was still paying on some of those cc's when I finally did bk, 10 years after I should have. So don't feel bad about being young and stupid but learn from this and learn to live with a budget. It can be done but you really have to put forth effort.

[bcohen]

I would say yes it is a mistake to consider bankruptcy now--not because you filed before, but because there's no imminent threat to justify filing now. You are not being sued or garnished now, and even assuming that you quit paying on ALL your debts--which I don't recommend doing--you still won't be sued or garnished for at least a year. Also, we live in extremely difficult economic times, and you never know what the future might hold. If you lose your job, or end up with costly medical bills that you cannot afford, you will want that bankruptcy "escape hatch" handy. If you file now, that "door" will be closed to you for at least another 8 years.

My advice is to quit paying on the car, but keep up your other accounts. Keep the car in a locked garage, or at a friend's house to help foil repo efforts. With any luck, you should be able to get a good 5 or 6 months of payment-free driving out of this car, maybe more. Then by the time the repo man finally takes it, you should have saved up a good $3k to $4k, which you can use to buy an inexpensive used car outright (no loan) and hopefully have $500 to $600 left over to cover any necessary repairs/maintenence that the car might require.

By the time the finance company sells the car at auction, at least 2 or 3 months will have elapsed from the date it was repo'd. Then they will send you a dunning letter asking for you to pay the deficiency balance. At this point, you might be able to negotiate a settlement--especially if you threaten to file for bankruptcy. If not, then simply do nothing, don't pay it, and let it go to collections. Once the first collection agency receives the account and contacts you, then wait 20 days and send the dispute letter (certified mail, return receipt requested) and wait for their response. This will add another 15-20 days of delay time. Odds are, the first collection agency that gets the debt won't be the one to sue, so you will end up repeating this several times, delaying the potential lawsuit even further.

After a while, the finance company will likely sell the debt to a junk debt buyer such as Asset Acceptance or Pinnacle. The JDB will decide to sue (or not) based on whether you have assets titled in your name which can be seized or have a lien placed on them. If you do not own any real estate, and the only car you have is a 10-year old beater, then it is quite possible that you'll never be sued.

Just to give you an idea, I quit paying on all my unsecured debts in March of 2009 due to a loss of income and worries about the future of my job. I have more than $40k in debts, including a Discover card which charged off for about $5k but has ballooned to about $8k, and a Citibank Mastercard which charged off for about $14k, but has ballooned to more than $23k. Over the course of 2 and a half years, I have gotten letters from numerous collection agencies and law firms threatening that legal action could be taken. And yet here I am with no lawsuits and no judgements. Why? Because my credit report shows that I am not employed, have many collections and charge-offs, and do not own any vehicles or real estate.

My point is that you should NOT file for bankruptcy now simply because you need to quit paying on this car, when it's entirely possible that they might never repo it (if the value is low enough) or they might never go after you for the deficiency balance, or they may never bother to bring suit. If for some reason, you do get sued for this alleged debt, then you can file for bankruptcy at that point and stop the matter dead in its tracks. You have everything to lose and nothing to gain by filing now!

[sunshinepa]

I am in agreement with others who have said stop paying on the car. Save the money and get something for cash.

Since you already retained a lawyer, it looks like you will be filing again. Bottom line, you made a business decision and since you can't afford the car, you have to let it go. As far as getting sued, bcohn stated it takes a year but I would kindly disagee, I was sue in 7 months so it can be faster.

Regarding waiting until the previous BK falls off, what would be the point? Credit will no be rebuilt in the few months between the new filing so I don't think it really matters.

Good luck and be sure to take steps in the future that ensure you won't ever have to do this again. It would be a shame to have to deal with this every few years. You are already aware of how much stress it creates so please be careful once you get your life back this time.

[Rozi]

Thank you so much to everyone for their advice! I read all of the replies but, the one thing that stuck out to me was the fact that I do not know what the future holds. I guess I am just really cash poor because I can't even afford to put the money I was paying for my car away to save for another car. I am going to keep praying on this. I have until August 13th to make this decision. I got my first bad letter yesterday from my credit union for a loan that I have with them and they are threatning to take action. I do not have a bank account with them so I am not sure what they can do.

[drowning123]

Oh Rozi. So sorry to hear of your dilemma. Keep coming back here to us. We'll help you through. You can only do so much. You are still pretty young. There are some folks here who have worked all their lives and have lost everything. Everyone's life has pluses and minuses. Figure out your pluses and run with those. You can only do so much. If you stopped paying the bills, don't worry about it. Just try to save as much as possible. No shopping. Stop putting money into those clothes and shoe designers' pockets. Put the money into yours.

[Rozi]

Thanks for the advice Discouraged! I don't shop for desginer anything though.....

[drowning123]

Atta, girl, Rozi. Good luck!