What options do I really have?

[marzipan13]

I went through Ch7 in 2007. I built up my credit again and was in the mid-700s until late 2012... when my husband and I separated, eventually divorced. I also went out on disability for 10 months from my job around the same time and was earning only 60% of my income. I was stuck with having to support myself over the last 1 1/2 yrs. I wasn't able to make my CC payments, loan payments, and had car repo'd earlier this year. I've been trying to get caught up on some of my debts, but it is overwhelming! I've been able to get a few accounts current again after 90-120 days past due, but the rest are really bad and I don't have the money to "catch up" with them. I also have a bunch of medical bills that have gone into collections or soon will be.

I was considering bk again. I took the means test for Delaware and I qualify for Ch 7. But I'd have to wait until May 2015 (8 years since last ch7 filing) before I can file again - that's 9 months. I thought maybe I'd file Ch13 and have it converted into Ch7 since they'd see I don't have enough income for Ch 13. My concern is that there is one creditor will take me to court ASAP if I stop making payments, and quickly move forward with garnishment. If I just make that montly payment for 6 months, then when he starts to get a judgment it'll just in time for me to file ch7 again next May.

Maybe I should just forget about trying to keep anything current as my credit is already messed up. If I can get from 500 to 740 in 5 years, then I can do it again. But how can I get from 500-740 if I have all these bad debts on my credit report? Is it even possible to get back to higher credit score without paying everything off?

[TXskyblue]

How do you know that one particular credit will sue you immediately if you stop making payments?

I was able to go 7 months without paying any of my credit cards, waiting to file a chapter 7, and no one sued me. What I did was answer the phone sometimes, explain that I was going through financial difficulties, and then not give any specifics. Some creditors assumed that meant I lost my job. No income means nothing to sue for. It bought me time.

Your credit score is the last of your worries. I wouldn't concern myself with it at all at this point. What's done is done.

Perhaps you can stop paying your credit cards, but continue paying that one creditor that you know will sue you. The worst that can happen is that when you file your chapter 7, the trustee may avoid the payments. All that means is that the creditor you paid may have to pay those payments you made back to the estate (the trustee) and they would divvy up the money to your other creditors. Nothing would happen to you.

How long does it take for a civil case to be heard? I wonder if you can delay the proceedings, ask for continuance, that sort of thing. It seems to me that you may be able to buy yourself some time, but I have no experience with this.

I don't know about filing a 13 then converting to a 7. I'm sure others will be able to give insight into this.

[LadyInTheRed]

How do you know that one particular credit will sue you immediately if you stop making payments?

That was my first question too.

Even if the one creditor gets a judgment before you can file BK, you will be able to discharge that debt. The judgment is really only a concern if you have assets that the judgment creditor can put a lien on. If that is a concern, you can answer the lawsuit and delay as long as possible. If the creditor gets a judgment before you can file a Chap 7, you can immediately file a Chap 13, before the creditor has the chance to perfect any lien.

If you know you are going to file BK, stop wasting your money paying dischargeable debt.

I agree with TXskyblue that your credit score should be your last concern. That said, your credit score will eventually recover, but not as quickly as after your first BK. Each negative entry will drop off your credit report after 7 years. A Chap 7 will drop off 10 years after the filing date. For about 2 years, you will have two BKs on your credit report, so I am pretty sure you expect your score to stay pretty low for a while. It's probably best if you use that time to get used to living without credit anyway.

[Drazil65]

I agree with TXskyblue that your credit score should be your last concern. That said, your credit score will eventually recover, but not as quickly as after your first BK. Each negative entry will drop off your credit report after 7 years. A Chap 7 will drop off 10 years after the filing date. For about 2 years, you will have two BKs on your credit report, so I am pretty sure you expect your score to stay pretty low for a while. It's probably best if you use that time to get used to living without credit anyway.

Take this to heart and learn to live without credit, you have many more things to think about right now and your credit score is not one of them! You may need to get a second job, a room mate etc, you need more income whether you file or not, period!!! Good Luck!

[marzipan13]

How do you know that one particular credit will sue you immediately if you stop making payments?

When I had been late on payments with this creditor last year, he started the judgment against me after 3 months of non-payment. It's a local credit union and I live in Delaware (3 counties) so it was easy for him to just drive over to the court and file. I caught up on payments at that time and he dropped the case against me. But any time that I've been late since then, he threatens again to file and I know he's not bluffing. So, the most he lets me be late is 2-3 weeks then I have to pay. I wouldn't know how to delay the proceeding if he did take me to court. He is very persistent, so I'm sure he'd go right into a garnishment.

Just before I did my bk in 2007, one creditor had gotten a judgment against me and garnished my bank account! Luckily, I got the notice in the mail before the bank did and I withdrew my money, opened a new account at another bank, and had paycheck direct deposit switched over. I think I'll switch banks, only pay every other month to him and only pay with MO or cash, do this for 6 months - just to be safe so that he doesn't get the judgment.

Thanks for the advice. I'm really depressed that I'm back in the same situation I was 7 years ago!

[bcohen]

You're looking at this all wrong. Changing bank accounts will not prevent a judgment creditor from locating the money and seizing it! When you apply for a bank account, an inquiry is made on your ChexSystems report, and sometimes on other credit reports as well. This inquiry remains visible for 2 years, which means that a judgment creditor or collection attorney can pull your credit reports and ChexSystems reports, and attempt to serve garnishment papers to any bank which has such an inquiry on any of those reports.

If you are planning to default on any debt--and paying "every other month" or less than the amount which the creditor requests is still default--then you probably should just save your money and quit paying all of them. As long as you stop using a bank account, don't own any real estate, and don't have wages to garnish, then you really have nothing to fear from a judgment. Once you are eligible to file for Chapter 7 again, the debt will be discharged, and the judgment will no longer be valid.