Deciding if I should file...

[cat1978]

Hello! I've been reading here for a few days, soaking up all the info I can. I'm thinking of filing Chapter 7 pro se but am not sure on when exactly to file.

Short background - I left a BAD relationship with my children's father, got a job and an apartment, packed up what I could and left. Once I left and had to start paying child care and rent, the payments to my credit cards went bye bye. We are scraping by, with my paycheck going to rent, the child support going to child care for two kids, and me borrowing money from family and friends to buy groceries, etc. We have no cable tv, I piggyback on my landlord's internet connection, and we eat a lot of pasta and chicken dishes since its cheap to make. The kids clothes are hand me downs and Salvation Army finds. Its tough, but I wouldn't trade the happiness we have now for anything.

I'll be getting back over 4,000 in taxes when I file thanks to child tax credits, but in reality that money is spent already - need oil for my heat, a new laptop as this one is about to crap out and I need it for work and my daughter's school work, clothes and food for my kids, and rent. I do not own my vehicle, the kid's father does and its part of our informal agreement that I can continue to drive it because of the kids.

I have about 60,000 in debt. 40,000 of it is student loans, so I know there is nothing I can do with those. The other 20,000 is medical and credit cards. I had really good credit up until I moved, and had paid off 4 cards completely, and was working on the others. Now, I have such a large deficit every month, there is no way I can pay anything. I'm trying to find another job that pays more, or pays the same with less hours so my daycare cost would go down, but the job market here is REALLY bad, especially in the field I work in.

Anyway, to try to shorten this up...is it worth me filing BK7 now or should I wait? I'm terrified of getting sued soon and having my pay garnished. There is nothing for anyone to take since I don't own anything anyway.

Also, I'm afraid they'll take my tax return if I file BK7 now. I NEED that money. I have 4 months left on my apartment lease, then we'll be moving in with my boyfriend and I won't have the rent to pay anymore. That's $850 a month I can save. Then, if I reduce daycare costs, it will be an additional couple of hundred a month.

What I'm wondering is, am I better off holding off on filing, and when my $ situation improves somewhat trying to negotiate settlements and paying the debt off or should I file the ch7 as soon as possible, so I can start with a fresh slate and rebuild my life?

Thanks for any advice!

L

[btbeme]

Welcome to the forums!

Some thoughts, for what they are worth...

It sounds like you are not in any danger of being above median income or having "too much" left over at the end of the month (which could trigger a Ch 13), so I am betting that a Ch 7 filing is the most likely one. That said, there is no reason to do it sooner than later, unless you are being sued or are in imminent danger of receiving a default judgement (with wage garnishment close behind).

Don't waste your energy or cash trying to negotiate settlements. It won't be in your best interest. For most unsecured debts (credit cards) it takes them 120 days before they can file suit, another 30-60 days before that suit hits the courts (plus a good 30-90 days that you can delay that from happening), and then another 30 days or so before garnishment can hit. Figure you have close to six months, minimum, before anything "bad" or costly happens once you stop paying credit cards. Even that can be scraped off in a Ch 7. No worries.

Be sure that you understand what you CAN spend money on before filing BK. Everyday expenses and necessities are OK. Even a car, in which you have less than $3450 in equity, would be justified (using federal exemptions). Keep receipts in case the Trustee wants proof of what you purchase.

As always, I'd make sure to speak to several attorneys just to make sure you have all the facts. Of special note, I'd seek out a well-read attorney to see what might be done with the student loans. It is typically not at all easy to get them dumped, but it isn't impossible. Usually, it requires some graduated level of disability, but ask anyway.

Tax refund - get it ASAP and spend it wisely. What does wisely mean? Ask an attorney, but I'd say that food, fuel oil, and a good working laptop for work are reasonable.

One important question... Let's say you complete a Ch 7 and your credit cards and medical bills go away. Will you still be able to subsist without a borrowed car and a "roommate" situation if those were to unfortunately go away? It sounds as if a "life adjustment" was the cause for your current situation, and nobody here would want that to happen to you a second time. BK is designed to give you a fresh start, so be sure to plan ahead and make whatever adjustments you need to make to ENSURE your success coming out the other side. Just some advice from your Uncle btbeme.

Time is your friend. Don't rush, save your $$$ and use it wisely for approved purchases. Go in with a plan and you will be OK. Talk to a few attorneys, and keep us in the loop so we can help.

[cat1978]

I'm definitely not above median income, and my left over every month is a negative at this point. I get collection calls constantly that I don't answer, and haven't made a payment in over 6 months on some of the accounts.

I figured the oil, food and clothing would be acceptable expenses, wasn't sure about the computer.

To answer your question, if I filed to wipe out the debt and then lost the car and wasn't able to move in with my boyfriend, I would be screwed to a certain degree, though I would find a way to survive, just like I always do. I can afford my rent, but not a car payment right now. I live in a partly rural area, partly small town, and while I work only 10 minutes from home right now, its not a distance I could walk, especially in the winter with two kids.

I'm trying to make changes right now to make sure I can survive if the car and move-in situation went away. I have a job interview on Friday for a different company, same thing I do now - sell advertising - but it has flexible hours and I can work mostly from home. I'd be able to only have one child in daycare, with a few less hours a day for him while my older one is in school. That would cut my cost for childcare by 50%. If I can get the same pay I do now, but with less hours, I'd be in a much better position financially, though still well below the median income for PA. I also don't expect the move-in situation to change of course, so that will reduce my living expenses dramatically beginning in May.

There are so many variables right now - job/income, moving, tax return. I'll keep reading, planning and trying to make changes to be in a better position, before I go with filing Ch7.

L

[keepmine]

It's my understanding that wages can't be garnished in Pa. If that's the case, take your time and file when it benefits you the most.

[btbeme]

The value of your computer should fall under your exemptions limit easily. The PURCHASE of the computer might have to be explained as a work necessity - possibly a letter from your company saying that a computer is necessary for your job. In any case, so long as you don't go nuts and buy a top-line Macbook Pro, my guess is that it would hardy get a glance from the Trustee. And, the more time between the purchase and the filing, the less likely it would even get a glance.

[cat1978]

It's my understanding that wages can't be garnished in Pa. If that's the case, take your time and file when it benefits you the most.

I'll have to look that up and see if thats true. That would be a load of worry off of my mind!

[bcohen]

First of all, you happen to live in a state where wages cannot be garnished, at least not by consumer creditors. Therefore, it's not clear what, if anything, you'd gain by filing for bankruptcy versus defaulting on the debts and ignoring the collection calls. You do not own a home, or even a car, so there's nothing for a creditor to place a lien on, which means that they probably won't even sue.

Second, and I don't want to sound rude by saying this, but for whatever reason, a lot of women seem to be attracted to the same kind of bad men again and again. Unless you have been together with your boyfriend for a LONG time, and have already moved in together and made sure that the two of you are compatible to live together, I suggest you keep your apartment. What if for whatever reason you find out that this is not the man you were dreaming of, and you need to get away from him? You might end up having to move back with your parents or live in a shelter, because it may not be possible to find another apartment with terrible credit, especially if one or more of the creditors sue and get judgements. On the other hand, if you still have your apartment and things don't work out between the two of you, then it's not too difficult to pack your things and move back there.

Third, with the vast majority of your debt being student loans, which are non-dischargeable, it's not clear that Chapter 7 bankruptcy offers much of a benefit to you. If the student loans are federal, then you can take advantage of income-based repayment options, which will allow for a manageable payment based on your current income and family size. If the student loans are private, and you cannot afford the payments, then Chapter 13 bankruptcy can, in some cases, be used as a tool to prevent the student loan company from taking more money than you need to live, although the balance may continue to rise and won't be discharged at the end of the Plan.

Fourth, it's generally NOT in a consumer's best interest to settle debts. Creditors generally don't offer good settlements until the account has been charged off for a while, and by then the balance has been inflated with so many late fees and interest that even 50 percent off is not a good deal. And of course, settlements must be paid within a few months. Plus you owe taxes on the balance forgiven--unless you meet the IRS definition of "insolvent".

[cat1978]

The value of your computer should fall under your exemptions limit easily. The PURCHASE of the computer might have to be explained as a work necessity - possibly a letter from your company saying that a computer is necessary for your job. In any case, so long as you don't go nuts and buy a top-line Macbook Pro, my guess is that it would hardy get a glance from the Trustee. And, the more time between the purchase and the filing, the less likely it would even get a glance.

I wouldn't get top of the line anyway - they still break way too often lol. I get what you are saying though, and a letter from work would not be a problem since my laptop is necessary.

[ValleYum]

You can also use the federal bankruptcy exemptions in PA. This means you can exempt items *and/or* cash up to the ~10k wildcard (in lieu of homestead) if you aren't trying to protect home equity.

[cat1978]

First of all, you happen to live in a state where wages cannot be garnished, at least not by consumer creditors. Therefore, it's not clear what, if anything, you'd gain by filing for bankruptcy versus defaulting on the debts and ignoring the collection calls. You do not own a home, or even a car, so there's nothing for a creditor to place a lien on, which means that they probably won't even sue.

Second, and I don't want to sound rude by saying this, but for whatever reason, a lot of women seem to be attracted to the same kind of bad men again and again. Unless you have been together with your boyfriend for a LONG time, and have already moved in together and made sure that the two of you are compatible to live together, I suggest you keep your apartment. What if for whatever reason you find out that this is not the man you were dreaming of, and you need to get away from him? You might end up having to move back with your parents or live in a shelter, because it may not be possible to find another apartment with terrible credit, especially if one or more of the creditors sue and get judgements. On the other hand, if you still have your apartment and things don't work out between the two of you, then it's not too difficult to pack your things and move back there.

Third, with the vast majority of your debt being student loans, which are non-dischargeable, it's not clear that Chapter 7 bankruptcy offers much of a benefit to you. If the student loans are federal, then you can take advantage of income-based repayment options, which will allow for a manageable payment based on your current income and family size. If the student loans are private, and you cannot afford the payments, then Chapter 13 bankruptcy can, in some cases, be used as a tool to prevent the student loan company from taking more money than you need to live, although the balance may continue to rise and won't be discharged at the end of the Plan.

Fourth, it's generally NOT in a consumer's best interest to settle debts. Creditors generally don't offer good settlements until the account has been charged off for a while, and by then the balance has been inflated with so many late fees and interest that even 50 percent off is not a good deal. And of course, settlements must be paid within a few months. Plus you owe taxes on the balance forgiven--unless you meet the IRS definition of "insolvent".

I'm glad to know that they cannot garnish my wages here in PA.

As for my relationship, I've known him for over 10 years, we used to work together, I know his entire family, including his daughter who is 21. His ex-sister in law with whom he is still friends with, is my children's nanny and has become one of my best friends. Both he and I unknowingly moved from NYC to the same small town in North Eastern PA, met up because of his ex-SIL, and have been together since. I have no worries about him not being the right man...BUT...

At the same time, I'm not one to repeat mistakes, which my 13 year long relationship with my ex was, and I will never let myself be put in a position like this again. I'm not going to go into everything I stupidly gave up over the years (think 50,000 a year job...single...my 20s!...401K, etc....), but I will never do that again! That is one of the reasons I wanted to file the Ch7, to clean up my credit so that eventually I can buy a car of my own and return this one to my ex (further reducing my contact with him, which is only to my benefit), and if I needed to rent another apartment I could do so with no worries.

I would like to start paying back the student loans eventually, they are on forbearance right now and are not reporting negative at all. But I want the other stuff cleared up first.

[btbeme]

I'm not going to go into everything I stupidly gave up over the years

We all want to get our 20's back...

Anyway, looking at your posts the last few days, I'd summarize like this: Check with a good attorney or three to make sure you are inside the lines. I don't think you have much to worry about, but do plan to be able to explain your purchases should that need arise (and probably won't, but...). File when you HAVE to, but be ready to do it within a few weeks should the need arise. In the interim, bank what you can, exempt what you can, and start moving the chess pieces for Life After Bankruptcy.

You will do fine. God bless. We'll be here when you need us.