Stopped Paying Creditors... Now What?

[Ann]

I have decided to file bankruptcy in a few months. This week I stopped paying my creditors (except home, 2 cars) but havent paid on 2 personal loans in almost 3 months. Now, if I wait to file will that still be okay? Can I be sued before I file? I read here that Discover and American Express will sue. Can I wait a few months to file??? This is scary. Thank you for all of your input!

[Trixie007]

It really seems to vary, but does seem like very few people on this forum actually get sued. We went about a year on 10 cc's before filing, and no one sued us. We did start getting letters from "attorney's" but no one who was actually in our state. Our attorney said he could stall a lawsuit for as long as a year if he needed to, but we made it to filing with no problem.

[eddiep]

I got sued by a credit union after 6 months. They won and got a lien on our house. It was very scary at the time but the lien will be stripped in bk for $400 in legal fees. Not that bad. But you will have warning, at least 30 days from the time they file.

I was thinking earlier today about you and the situation you have with your cars. I'm not sure if anybody else has mentioned this but I figured I would throw it out there...

I know your cars are almost paid off and you are concerned about protecting the equity. One solution may be to take out a loan on the vehicle if your credit is not yet trashed. Another would be to trade this vehicle in on a more expensive car. This would help in two ways, one you will no longer have equity and two this payment would be an allowed expense which could close the gap on chapter 7 vs chapter 13. If you still have to do a chapter 13 this would be a priority debt because your loan would be secured by your car. It is not uncommon and often recommended to purchase a new vehicle prior to filing chapter 13 so you have a car that will last for the length of your plan. One obvious glitch is you would have to spend this money before you file on necessary expenses.

Obviously contact your lawyer before making any financial decisions prior to filing.

[hindsight]

It took a year from last payment till we were served. Lot's of message on answering machine. Phone volumne off
Don't talk with them

[Ann]

what or who is "crap 1 and was does "sol" mean?

[Ann]

Thank you to all that have responded to my constant questions. You have no idea how all of you perfect strangers (that I will most surely never see) have done for my mental state of mind! For the very first time in a long long time I am finally beginning to think there may be a light at the end of this horrible long tunnel! I really do not think I would be able to trade in my car. At this point my husbands credit score is too low (585) for them to approve such a loan at this time. How difficult is it to get a car loan while in chapter 13? I know you may think I'm crazy to even be thinking this but I know we will need another car before that 5 year mark is up should we go that route. Thanks again to all of you!!!

[optimistic1]

How difficult is it to get a car loan while in chapter 13? I know you may think I'm crazy to even be thinking this but I know we will need another car before that 5 year mark is up should we go that route. Thanks again to all of you!!!

It is a task surely, but a little homework has surfaced these facts.

You can use a company called www.Drivetime.com

I called their corporate office to ask what their policy is regarding someone in need of a vehicle while in a open chapter 13. They said it is no problem at all, they will develop a letter with all the terms for the trustee or attorney.

You can also try this company, I have no knowledge if their claims on this link are true, but it is worth a bookmark.

http://www.722redemption.com/debtor_wrp_ch13.aspx

[DeadManCrawling]

We owed 90k or so in CC debt and 380k on a mortgage when we stopped paying in January 2006.

So far, one judgement, from our smallest card, whom we owed about 1600 to.

Not a peep from the others, except incessant phone calls (at the beginning) which have now tapered off.

We stopped paying our mortgage January 09 and have not received a Notice Of Default.

One of our cards was for 48k, a couple more were in excess of 10k.

Larger amounts cannot be pursued in small claims court, which may explain why a smaller card came after us. However, all of our money and assets are held in Tenancy By The Entireties in Florida, which also can stop a creditor cold.

It all depends, and is very much like losing the lottery, in my mind.

Good luck