Reasons not to file bankruptcy/ chapter 7?

[cashless]

Hi all-
Are there any good reasons not to do a chapter 7?

Well i have done the research, talked to a couple of bk attorneys, had quite a few sleepless nights thinking about the matter and currently about 99% sold of doing a chapter 7. My question is am i missing something? A big disadvantage by filing chapter 7?

Here is me in a nutshell.
Over the last 4 years i have pretty much been living month to month. Two years ago i bought a home, was able to do so using a usda backed loan. Long story short my home has declined 40% in value, and needs a seven thousand dollar roof. For the past couple of years i have really watched what i spend, buying almost nothing that is not required to get by. Have not used the credit cards in the past few years either.

I am single, so i can scrimp pretty good, props for the folks who have a family and kids, and make it happen. I imagine it would be more difficult being their are more variables to contend with. At the end of this year i have almost the same amount of cash that i had last December, almost none. I also have no assets to speak of. If i sold everything i had i would be surprised if it amounted to a grand.

I am about 25k upside down in my vehicle (long story). Even if i did not choose bk, and let it be repod, the deficiency payment would be a burden, and the credit report takes a good whack as well.


Disadvantages i see are after bankruptcy-

More difficult to obtain a rental house.
Cost more/ harder to get a loan directly after chapter 7.


I really feel for my situation that it would be easier to deal with life after chapter 7 with bad credit than keep living month to month and not being able to make any headway, not being able to have any kind of savings or retirement plan, and needing to spend money on repairs that i do not and will not have in the future. I would like to get rid of the house, credit cards, and vehicle payment and have a fresh start, and to me that overrides the disadvantages. Am i looking at this the right way? I keep asking myself, it seems to easy to be true. I know bk is not easy on folks, but it sure seems easier than my current financial situation.
Thanks for listening...

[prindia]

Honestly, I waited to long to file because my credit was bad before filing it can't get any worse. You can recover after BK, of course you should not jump into more credit after discharge. Since you say you are underwater for your car and home that is a good reason to file now and not later. Good luck.

[karm43]

Seems like you answered your own ? Good luck. Is it cheaper to rent? I think being in your situation single it is a easier decision.

[JackBauer]

In your situation, it sounds like BK is the right choice. Just make sure you be honest with yourself and if there are other bills, you need to throw them in the pile/fire as well. Clean slate and start completely over if you can. Had my wife allowed me to walk away from our home I would have. It's a money pit. Then things we do for love. But we have 3 children and have been married 22 years. I'm considering filing again because of a debt that has gone rogue... thus the name "Jack Bauer" as my user name. Collection Agencies are Terrorists.

[shark66]

It doesn't sound to me like anyone could really come after you for anything. There would be next to nothing to take.

I'd wait to get a stable job with health insurance, and then file.

If you were to get ill or injured - God forbid - you could run up tens of thousands in medical bills and not be able to BK on them.

My $0.02 only...

Good luck to us all.

[JackBauer]

Good Point. As least not for the first 7 years. Medical bills in our state fall under a different catagory. I don't know a soul where medical bills worked against them. THey'll drive you crazy trying to collect, as I've experience. But they worked with us and eventually, between medical issues with oureselves and our children we finally got caught up, save on $600 bill left on a medical credit card and a doctor's visit. It's the loan sharks that create the chaos. They souldn't be allowed to practice business in a free economy. Mediators should be the law for any follow ups during the process. But that would eliminate the cut throat profits from such scumbag businesses. I'd love to do some research to discover who actually owns those collection agencies.

[JackBondLove]

It doesn't sound to me like anyone could really come after you for anything. There would be next to nothing to take.

I'd wait to get a stable job with health insurance, and then file.

If you were to get ill or injured - God forbid - you could run up tens of thousands in medical bills and not be able to BK on them.

My $0.02 only...

Good luck to us all.

He'll get insured in 2014 - IF Obama wins reelection.

Since he is basically judgement proof, he may as well wait until then - unless he thinks he could get a job giving him the medium income (sounds doubtful from here.) A very good reason to file for BK is to take advantage of a low income now to just do a Chapter 7, rather than be forced to do a Chapter 13.

[shark66]

He'll get insured in 2014 - IF Obama wins reelection.

Since he is basically judgement proof, he may as well wait until then - unless he thinks he could get a job giving him the medium income (sounds doubtful from here.) A very good reason to file for BK is to take advantage of a low income now to just do a Chapter 7, rather than be forced to do a Chapter 13.

No, he'll be fined if Obama wins re-election......for his inability to afford health insurance.

One can make a decent income and still qualify for a Ch. 7...it's just a numbers game.

Good luck to us all.

[crackedmuse]

OP: I am very much like you and am filing bk tomorrow. (Was literally sitting here signing the paperwork, and came to peruse the forum while taking a break from re-checking my figures for the third time).

I am single, with around $1k in assets, but unlike you, have no house and my car (over 20 years old) is paid for. I am also self-employed with no wages to garnish, making me about as collection proof as they come. My total debt is approx. $28k, all cc. I also have no health insurance or savings of any kind, and being in my 50's, future medical issues are a concern, but my day-to-day existence is MORE of a concern, which is what I feel we share.

I've been frugal all my life. Seventy-five percent of my debt came about in the last 3 years when my two biggest clients retired (after working with them for 16 years) and all attempts to replace that income (including 3 major moves to 3 different cities in 2 years) with new clients or a regular job have gone nowhere. My expenses have been cut to the bone, yet, I still seem to come up short, even without the cc payments for the past 6 months. I could continue to scrape by, and with nothing for any creditor to take, logically it would make more sense for me to hold off filing, but sometimes the emotional outweighs the literal.

I relate to the OP's feeling of wanting a fresh start - not just from any financial burdens - but for life itself. After I file tomorrow, when I wake up on Wednesday, I will be just as broke and facing the same work challenges, but mentally, I'm already feeling more optimistic. Sometimes debt is just a symbol of chasing an old dream. Living a life you shouldn't be living, even if you were debt free. That's what filing bk is for me. The end of a cycle. I don't want to carry any of this baggage into my new life - and I can't wait until a better job or better health coverage comes along before I start living it.

OP, if your gut tells you it's bk time, my advice is to follow it. There will always be ways to delay, avoid, or work around, but haven't you put life on hold long enough?

[bcohen]

As another poster already mentioned, the biggest disadvantage of filing Chapter 7 is that you cannot file again for at least 8 years, and believe me--a LOT can happen in 8 years! It sounds to me like you might be better off to quit paying on your debts and take a "wait and see" approach. Perhaps the bank will offer to modify your mortgage and write off some of the principal and/or lower the monthly payment amount. Or if that doesn't happen, perhaps you can stay for a year or more, rent-free while the bank forecloses. Likewise, with the car, it takes about a year from first missed payment to judgement, and can take longer if you fight it and/or make it difficult for the bank to repo the car.

[nohoneymoney]

I keep asking myself, it seems to easy to be true. I know bk is not easy on folks, but it sure seems easier than my current financial situation.

No it is not as easy as it seems. The preparation, paper work and the 341 creditors meeting is relatively easy in the hands of an experienced lawyer. The emotional impact was much much harder. We went through the complete grief cycle before we filed. I was barely able to articulate responses at the 341 meeting. Looking back, had we been able to treat the BK7 as a business decision from the start, it would have been much easier. We had a great lawyer. He coached us when we needed it and that really helped a lot.

The time leading up to our decision to file BK7 was frustrating and stressful due to dealing with banks trying to get mortgage modifications but I believe we were in denial as well. We were very ignorant of the BK7 process so we had visions of being kicked out into the street, homeless. BK7 wasn't something we thought about. It was something that happens to other people. Our lawyer and this website helped us shed that BS.

Bottom line, BK7 turned that light at the end of the tunnel from the on-coming train to daylight. Best decision we have made is sometime. In divine hindsight, we should have done it sooner.

Interview several lawyers and get their opinions of you situation. Then make your decision. Best of luck

[Drazil65]

Just do your homework, read everything you can on this forum, search out books (a couple of the best are mentioned here in the stickies several times). Be obsessive about finding the best attorney for you that you can, it will be the make it or break it moment in your journey. Chapter 7 should almost be another job during the research stage, put all your ducks in a row. Come up with a goal, a date or month that you will pull the trigger and file. For us we started the process in June 2011 and filed at the beginning of December 2011, we are now waiting for our 341 meeting on January 17th. Now all my research revolves around the 341 meeting. We hopefully (providing everything goes smoothly at the 341) will be discharged and everything done and over with be the end of March 2012.

We are also taking steps to relearning how to make better financial decisions. We are already familar with Dave Ramsey and on January 1st will be living the Dave Ramsey way, cash, cash, cash only. By the time we have completed the chp 7 we will be on our way to a total cash budget. Chapter 7 is not just about releasing the debt but about learning a new way of living and changing how you think. Chapter 7 is not easy by any stretch and it should'nt be but use this time to use it to make changes in your life.