New here and considering Ch. 7

[syd74]

Hi, I've appreciated the information in the posts here! My husband and I are seriously considering filing ch. 7. We saw two BK attys yesterday to discuss. We are in TX, which is a generous state as far as assets go. My husband has had his hours reduced a lot at work to where most or all of his pay goes to pay for our (very bad) medical insurance. We can't get out of the ins. until December, so the only way out is for him to quit the job. I make most of the money, but we have a lot of debt from various struggles and then we recently got hit by a huge medical bill. We are trying to float but don't know how long we can. I have never been late on a CC payment in my life, so this whole idea is very scary to me.

I did not know anything about BK, nor was I thinking about it (just trying to struggle through), when we paid our taxes this year. I borrowed $4,700 from a CC to do it. They deposited the cash, one of those very low interest for a period of time things, into our checking account. Of course I have now learned that cash advances are a red flag in BK, and if they find out we used it for taxes, that's even worse. If we file, we will wait as long as we can (at least 6 months).

Our car's last payment is in January. We have been advised to file before we have the car paid off so we can claim the payment on the means test.

My questions are:
1. Should we file in December? Would it be better or even work out with the car ownership to wait until January?

2. I will keep paying on the card that I borrowed the cash advance from, but if we decided we had to go BK, when would we stop paying on other cards? December or January is a ways away.

3. What response can we expect from CC companies if we stop paying on CC more than 6 months in advance?

Thanks for any advice you can give!

[Drazil65]

Hi, welcome and keep the questions coming! We stopped paying our CC last June and filed on 12/13. Our 341 was 01/17/12 and we were discharged and closed on March 21st. No issues from the CC companies and any would be phone calls were nixed by Google Voice duing the period of time we had stopped paying and filing. Start your peplanning list and come up with your dates for various milestones (stop CC payments, filing date range, etc). You will feel so much better and back in control the more you plan and take matters back into your own hands. The creditors like to make you feel like you have no options and they are in control so the more you preplan you start to feel that control come back and the confidence you need to go forward and make solid decisions for your future. The best of luck!

[LadyInTheRed]

On the cash advance, the law is that a cash advance within 70 days of filing BK is presumed to be fraudulent if the creditor petitions to have the debt declared non-dischargeable. After the 70 days, the creditor would have to prove that you took the cash advance without an intent to pay it. Talk to whatever attorney you decide to hire about timing, but if the cash advance is your only reason for delaying filing, you probably don't have to wait 6 months.

It seems to be pretty rare that creditors sue and get judgments before 6 months after default.

[nohoneymoney]

Welcome to the forum and continue to search and read relevant information. This forum has a huge collection of information and ideas. Timing relative to the car will depend on your state exemptions and the value of the car. The more you pay, the more equity it has and the less likely you can exempt it. You will need to talk to your local BK attorneys.

Cash advances are an issue in any BK district but I believe that LadyInTheRed is correct on timings. Be sure to have records of the cash advance and the payment for taxes.

Typically, you stop paying all unsecured debt at least three months before filing. Six months can be OK. In our case, one CC came after us and we turned them over to our attorney and they went away. Some people use that money to pay the BK lawyer. Same for secured debt, like mortgages, if you do not plan to stay and pay.

There are numerous posts on the web discussing "struggling through it." We certainly tried to and to no avail. Preparing for and entering into BK is much like the grief cycle. The key is to focus on the end of the process, a fresh start. BK was the best business decision we have made in a long time. Looking back the stressful time was pre-filing after that the clouds cleared and we wondered why we waited so long and we couldn't think of anything that should have stressed us. What helped us a great deal was a great attorney. So keep interviewing until you find the one just right for you and your situation.

[syd74]

Thank you for your replies! We think we found a great attorney. He is highly reviewed and presented more options to us on issues we were concerned about. He is more expensive but we think he will be worth it.

In Texas, you get to keep one car per driver in the household as well as your home. You also get to keep $30k of assets ($60k for a couple). So we will definitely get to keep everything. The lawyer we are going with said Texas was a place debtors used to run to because the laws back east were so tough. So the laws here favor the debtors.

We have pretty much decided we are going to file, so I think it will be in December. The lawyer said that tax payments are non-dischargable, so if the CC company asks whether the cash advance was used for taxes, we will have to pay it back. But even if we do, he says he always negotiates a no-interest payment plan with CC companies.

My husband and I have been in agony over this decision, but tonight he said, "Well, we're pretty much going to do it, right?" And I felt relief for some reason. I need to find out about that Google Voice thing because the idea of millions of calls scares me. I do feel like it's a mourning process. I am mourning my perfect payment record and this scourge on my credit report! I feel like if my parents found out, they would be so disappointed in me ... But those things are not worth this stranglehold around our necks that keeps us stressed out and from living life. We don't do anything fun or frivolous; we haven't taken any type of vacation in years. So I keep reading the "light at the end of the tunnel" posts for encouragement!

[btbeme]

Keep reading those Light at the End of the Tunnel posts. And plan for your life after your successful discharge. It seems like a long way off, but you will make it.

As for suggestions for your questions:

1. The car ownership issue will be relevant only on your Means Test, and only if it will make a difference in passing or not passing (or having enough disposable income to get moved to a Ch 13). My guess would be that this is a non-issue for you.

2. Stop paying the cards when you are ready to start getting the phone calls. Yes, December is a ways away, and after 4-5 months of missed payments you start to run the risk of getting sued, but all of that can be resolved. Maybe wait a month or two, or cut back on the payments (make partials for a couple months). If you choose to do that, I suggest answering the phone when the creditors call and just telling them that you are doing your best and hope to do better very soon. Once you stop altogether, you might stop answering the calls.

3. See above. They cannot sue until you are 120 days late, and most will not do so at the first opportunity. Even so, it would take them anywhere from 30-90 days to get a judgement, which you can delay with some simple legal maneuvers. We were 180 days late before our first suit was filed, and we were able to delay any action on it for the 70 days more that we needed before filing BK. The biggest pain is the phone calls. I suggest answering them every now and then so they don't start calling work, family, friends, etc trying to reach you. Don't mention BK or negotiate payments, etc. Just say you are doing what you can to get them paid and thank them for their patience.

[oregonpilot]

syd...welcome. This is a great place with so much info that should put your mind at ease.
I remember missing that first payment. I was almost 60 and had NEVER in my life missed a payment to anyone. I had to leave the house to keep from pressing the "make payment" on my first missed cc. I was devastated and felt like such a failure...BUT it was the best thing i had ever done. My dear hubby was pained watching me drive myself into a mental hole.

Trust me...the light at the end of the tunnel is so much brighter than i could have imagined... after years of trying to keep it together and being worried more about my credit score than my health.

I had something similar to you but not with a cash advance. I had just stopped paying my cc's...no money to even get close to the total minimum payments. (1500. minimums with income down to 400-500 a month)
Had a dental emergency to the tune of ..think it was about $5800... signed the charge slip and came home crying not knowing how I was going to make the payments. Was able to make those payment for 4 months and then met with atty. He told me STOP. I said...but, but, but!!!! v i can't stop making the payments.

I filed 2 months later and there was no problem that i had stopped paying all my other cc's and I was still paying the one. (preferential treatment)
Everything went smooth and life is so much better...
life is so great it should be illegal.

I used Google Voice....worked great. Just B4 figuring it out we had relatives staying with us for a few days. Had to turn the phones off so they didn't know I wasn't answering the phone.
I understand about not wanting parents to know...my mom doesn't know about what I did...Don't know if she would be devastated and disappointed in me or pat me on the back. Don't want to find out. Good luck to you.

[Tater]

hi syd,

Welcome to the forum! My husband I recently also made the decision to file for bankruptcy after years of trying to keep it together. A couple of months ago, I stopped paying the cc's because I had to have heat in the house. That is when we first started thinking about filing bankruptcy and are interviewing attorneys. I know the feeling of being a failure because we always tried to pay our bills on time. It's been a fairly emotional week for me but I am slowly finding some mental peace because I know bankruptcy is a better alternative for us. It has to beat the way we have been living and struggling for years. We've had to face some hard personal realizations but those are life lessons.

As far as telling family and friends, that's a personal choice. We don't owe any family members so we won't have to list them as creditors. I did break down and tell my mom over the weekend. She could tell something has been bothering me and I finally lost it. I thought I would get the third degree but she was very supportive. Google voice has helped us with some of the calls but some continue to call the home numbers. I answer a few and it's usually the automated system and no one comes on the line. I always plan to tell them we are doing the best we can. The calls can be annoying at times but I know that won't last forever either.

[ess]

I talked to my attorney in Nov 2010 and he said to stop paying my bills that I was wasting my money. I had a hard time dealing with that and kept paying them until Jan 2011. I would get 50 to 60 calls a day once I stopped but I kept the ringer turned off on the phone so it didn't bother me at all. Caller ID is a wonderful thing. People I wanted to talk to called me on my cell phone anyway so it didn't matter. In Dec 2011 just before Christmas I got a notice that Cap One was going to sue me in small claims court, I'm sure the attorney planned it that way to make my holiday miserable but it didn't work. I waited two weeks and then called the attorney's office that was going to sue me and told them of my intention to file BK. They asked who my attorney was and I told them as soon as I hired him I'd let them know. They said to call them with the docket number when I got one, yea sure don't hold your breath. I finally filed on March 16th had the 341 meeting on April 24 and am now waiting for my discharge. So it was over a year for me of not paying before I filed. Most banks don't turn over the debt to collectors for at least 3mos and then it gets bounced around from collector to collector before they decide what they want to do with it.

[syd74]

Thank you all for the support and encouragement! It's funny because I was just reading on another thread about a person who agonized over not paying that first CC bill. I totally see myself in this! My husband is a different story! :-)

I'm so paranoid that something is going to go wrong. For one thing, I am self-employed. I work from home and get paid by two of my clients by direct deposit, but the rest send checks. My income completely varies. I'm worried that the trustee will not trust the numbers on the bank statements or something. Has anyone else dealt with being an independent contractor proving income like this?

I'm also wondering about how we can spend any extra cash we accrue after we stop paying on cards during the six months prior to filing. Is there a link I can go to that will help with this? Obviously we need to have the bank account pretty empty when we file.

If my credit union is not named as a creditor (they have our car lien but we are current and keeping the car), is there any fear that they might take action when we file?

Thanks again for all your advice and hugs!

[keepsmiling]

We are also self employed, haven't filed yet tho... and I do wonder about the same things. I assume they will go by our tax returns and bank statements.
There have been a few other self employed here, hopefully they will chime in as to their experience.

As to all that "extra cash" ... ours was really non existent, as we were borrowing from Peter to pay Paul for so long... it was an illusion to begin with. Chances are you have gon without normal expenditures for a while,while your struggled to pay cc's, and can now start living like regular people lol, eating something besides ramen noodles and not getting regular checkups etc. But if you do find yourself with more than you can exempt, stock up on food, buy a freezer to hold it, fix your vehicles (new tires, etc) get new glasses, go to the dentist... and if that STILL doesn't cut it, consider changing/adding to your health insurance, get term life if you don't have any. OR think about buying a newer car if you need one.
I'm sure others will chime in with more ideas.

Of course you and I know that when you are self employed it is impossible to tell what the next month will bring,which adds to the scariness of the big picture. But if it looks like you will have too big of an income one month, perhaps you can go on a mini vacation (as in, solicit business less) the following month and not work too hard at bringing in more, so as to even the months out. You should only have to worry lol.

[lindadale]

When it comes to filing bankruptcy timing is everything. I would ask a bankruptcy attorney if the car would be protected by bankruptcy exemption laws. Many times, a wild-card exemption might cover the value of the car. All of this of course depends on what kind of vehicle it is and how much is it worth at the time of filing bankruptcy. As soon as you decide to file for bankruptcy for sure, I would stop using the credit cards and stop paying on them shortly after. Why keep throwing money on debts that are going to be discharged in the bankruptcy filing? It sounds like you're heading in the right direction. Now it's time to find a bankruptcy attorney that you like. Good luck to you.