I think my wife and I are headed to BK...

[Toby34]

Well we have been paying a bill here and a bill there and are just getting no where. Tonight we sat down and added up our bills.

CC bills - $80,000
Personal Loans - $15,000
1 Car Loan that we owe $16,500
We own 1 other car that I drive, older jeep worth about $1000.

My wife brings home about $2400/month (after taxes).
I was working full time upto about 2 months ago. I have been runnign my own business at the same time and it was time that if I take it to the next level I needed to quite my day job and work full time on my business.
Right now I am bringing home about $800-1000/month.

We do not own any property, we actually are living in my parents basement. They were nice enough to set it up as a apartment for us as we tried to get on our feet with our debt.

We pay the Cable bill (for the whole house) and our cell phone bill. Those are the only two house bills we have. And we still can't meet our other bills. One CC bill has been sent to collections.

So.....does it look like Bankruptcy to you? Or should we go talk to a Consumer Credit Counsler place?

This may sound like a Joke...but, how do I tell a good lawyer from a bad one?
I've never had to talk to a lawyer before.

right now we basically have $1400 a month to pay our CC bills out of my wifes paycheck
Our car payment and car insurance come out automatically from my wife paycheck before we even see it.
The money I am able to provide for us, is usually put to Gas and Groceries.

The good thing is we are learning to live without CC. We haven't used them for over a year pretty much other then alittle Old Navy or Kohls shopping, but not more then acouple hunderd over the last year and that was probably for gifts for someone.

Thanks.

[CATCHMEIFYOUCAN]

So.....does it look like Bankruptcy to you? Or should we go talk to a Consumer Credit Counsler place?

I think BK is better because they make you take an approved CCCS class anyways ! AND it is cheaper than risking one of those classes there are not approved by the courts. When you take the class you should not have to pay anymore than $35-$50 bucks. They will tally up your debts and expenses and let you know if BK is recommended or let you know if a pay back plan is feasible without having to file BK. If you find your debt exceeds your income and it would be impossible to pay back something on a payment plan you will get a certificate which you need to present to the lawyer or (if you are filing pro-se) to the trustee. Its a requirement. Also BK gives you the automatic stay protection, which means once you file, the creditors can no longer harrass you into paying them for like 30 days while you BK is in progress. AND you have protection from the courts from being sued, garnished, judgements.

Best of Luck, CMIYC

[keepmine]

Most bk lawyers give free initial consultations. Talk with 2 or 3 and get all of your option explained.
As Catch explained, be sure the CCCS you take is one approved by the DOJ for your district. A lawyer can answer that question.

[DeadManCrawling]

Couple things to consider:

Are the payments on the vehicle loan current?

What state are you in? This will determine exemptions.

You are in way over your head, with that kind of take home income, and that kind of debt.

Your situation is very similar to my own, with the numbers slightly different.

If you could shed the unsecured debt, and lose the $1400 a month in cc payments, your situation would be drastically different. Perhaps enough to let you resume a decent lifestyle.

I would not consider the cccs services. Almost everyone I know from this board and in real life who has attempted that avenue has ended up in worse shape or, at best, the same shape, even after a few years of trying to take care of the problem.

The class CMIYC references is a required course that all filers now have to take. It does NOT require you to pay into a payment plan and try to deal with your debts, though. It is an "informational" course that can be taken online. It's like "traffic school" for debtors.

If you file, you can probably do a chapter 7, and just get on with your life.

If you decide to file, visit a few lawyers. All of them should offer free consults. Then, the moment you decide, STOP paying your credit card debts. You do not want to let the money pile up in your bank or wallet though. The trustee will take any extra money.

Like most people here, there are probably areas that you have neglected. Medical issues, clothing, etc. Just don't go overboard on any one thing.

You could pay your parents rent for staying with them. Just don't let any single thing creep over the $600 mark. That's a red flag to trustees, and they can demand and get that money back.

Post a few more details. People here are generally very helpful and many have already been through what you are going through now.

best wishes,

-dmc

[Toby34]

We are located in Maryland.

Our total monthly payments are currently at $5648 including Car Insurance and Cell phone bill. I forget what Comcast is, but it's around $150.

Obviously we can't pay that stuff.

Our car payment and insurnace are paid automatically. My wife has 2 bank accounts, a credit union that are paycheck gets automatically sent to and our car and insurance comes out of. The balance goes to our joint account that we pay the rest of the bills with. That amount is about $1600/month (remember car and car insurance already paid).

Acouple of the CC's have been set up for auto withdraws, but the others ones get paid when we can. I don't think there is one CC that is current.

My wife and I are 30, been married for a year and a half, and really want to start a family, but obviously can't in our situation right now.

DeadMan - When you say, after we file don't pay the CC's but also don't keep the money in the bank, what exactly do you mean? Just spend the money? Keep it under a mattress?
And why not let anything go over the $600 mark?

Thank you!

[BKTango]

Once you've visited a couple of bankruptcy lawyers and have decided you and your wife will be filing bankruptcy at that time, stop paying on all of your cc's. Why keep paying on them when you know you will be discharging that debt? Most lawyers will even tell you this. In Maryland the median income for a family of 2 is $65,820. So if you and your wife's income combined fall below that you qualify for a chapter7. What deadman meant about not letting the money sit in your bank account is you will have to report how much money is in your accounts at the time of filing, if it's a substantial amount the trustee could sieze that money. Basically once you have stopped paying on your credit cards don't let the money you were using to pay them pile up into a large cushion in your account. Start using that money to live off of like you would normally have to be doing. Use is for bill paying, groceries, medical/health needs, clothing, etc. Start getting used to living off of your cash and not your credit cards. The $600 thing is if you pay any one creditor over another more than $600 in a 90 day period prior to filing it's considered a preferential payment. Most people do however with their vehicles/mortgages. You will want to set up 2-3 consultations with some lawyers in your area, they are always free and they will give you some valuable information that might shed some light for you.

[DeadManCrawling]

You will want to educate yourself on the process thoroughly, though I will explain the questions as best I can. Also, read the stickies on each forum that applies to your situation.

Your situation is somewhat unique because:

You are essentially living with no expenses at the moment. You should stop paying your unsecured debts (CC and so forth) the moment you decide for certain you will be filing.

The potential quandary is that doing so will free up a fair amount of income, resulting in the possibility of being forced into a chapter 13.

However, because you probably do not want to live with your folks forever, you will someday need to pay rent and all the other household bills you currently don't have.

In the interim, though, you will have a lot of disposable income, relatively speaking.

It's a chicken and egg thing, really. If you stop paying, you may have enough money to pay apartment rent and all the associated expenses. But, if you stop paying, then file BK, you may have excess income that would have to be paid to creditors, and perhaps be forced to a chapter 13.

Chapter 13 could keep you from getting an apartment and hinder your ability to move on from your parent's residence, because the money you would WANT to use to do that would be paid into a chapter 13 plan.

The reason to not make any payments to anyone over $600.00 is you run the risk of what are called "preferential payments." That is when you have paid off one creditor, or paid more, while letting others go unpaid. It does not apply to secured debt payments. So you would want to continue paying on any assets like vehicles you wish to keep.

If you were to make a preferential payment, the trustee would demand and get the money back. For instance, if you started giving your folks a thousand a month for rent, all of a sudden, then filed for bk, the trustee would have a legal obligation to force your parents to hand over the money to the court to pay creditors.

Yours is a unique situation for all these reasons, and you need to research this intently. Visit lawyers, use the search function on this site.

best wishes,

-dmc

[DeadManCrawling]

Also, if you have loans through your credit union that you will be defaulting on or including in your BK, you need to open new accounts at another bank.

Many people here have had the credit unions close and seize their account money when they filed. This only applies if you owe the credit union money, but it is vital.

They have the power, legally, to take your money from the account, if you owe them when you file.

[tofargone]

This may be shady and I am not recomending it, but couldnt you just start paying rent to your parents in a decent amount so that you have some expenses. Worst case your money goes to a better cause then the CC's, best case your parents hold it for you and gift it back once you are free and clear.

Like I said I don't know the legality of this, but I can't see anything illegal about your parents having you pay rent to them.

The last thing you want in your situation is to go to a 13. You would be tied up for 3 years and if you did then want to move you would need to get the trustee to agree to a new plan so you could pay for it.


Just a suggestion....sort of.

[Toby34]

Ok first question....our largest CC bill is for $39K.
My wife agreed to pay them $700 a month. because it was about to go to Collections.
should we stop this?? I think we paid it 3 months.
She actually just renewed it today!!!
I really think BK is our only solution to move on with our life and start a family.

yes one personal loan is through the credit union.

[CATCHMEIFYOUCAN]

good lawyer

YES, stop paying those creditors ! Use the money you would pay the creditors and file! As they say no sense in paying good money after bad !

www.ammermangoldberg.com/Bio/JosephGoldberg.asp

I used this lawyer 12 years ago and he is still kicking, check him out!



Best of Luck, CMIYC

[SinkingFast]

Personally,............ I wouldn't pay your parents any money. You have to disclose all monies paid to Insiders (family, friends, close business associates) within the last year prior to filing.

If you go saying you've paid your parents money, the Trustee can come back to your parents and demand the money you said you've paid. The Trustee would distribute those funds amongst your Creditors.

Find some flop dump where you can get a lease in your name. Turn on utilities and pay the rent there to establish a "residence" and monthly expenses.

[Toby34]

Ok couple more questions:
1. How shoudl we go about not paying these automatic withdraws we have set up. It is 3 for $100, 1 for $240, and 1 for $700.
--- Should we just not keep any money in that bank account?
--- Call them and tell them that we are planning on filing for bankruptcy and that we need to cancel them?

2. Will this effect my business? I don't use a CC's for my business, strictly cash as I only do my work once I'm paid. I own all my equipment nothing is leased or rented.

3. I had planned to cash in my 401K, it amounts to about $3000, to pay off acouple outstanding bills I have with my business and to pay my parents some money back that I owe them.
--- Should I still do that? Or actually CAN I still do that.

4. We are pretty convinced that BK is what we need to do, but we won't be able to see a lawyer for acouple weeks. My wife is a teacher and we would plan to go once she was out of school in 2 weeks.
Should we stop paying the CC's now, or wait till after we talk to a lawyer.

Thanks again for everyones responses. It has made it a much easier decision and it's good to hear feedback from people who have been through the same thing.

[CATCHMEIFYOUCAN]

Ok couple more questions:

1. How shoudl we go about not paying these automatic withdraws we have set up. It is 3 for $100, 1 for $240, and 1 for $700.
--- Should we just not keep any money in that bank account?
--- Call them and tell them that we are planning on filing for bankruptcy and that we need to cancel them?
You can call them to TURN OFF the automatic withdrawals IMMEDIATELY although it might some time for it to process (AND NO Do Not give them advance warning you are filing!). If you simply withdraw the money from your bank accounts, and the automatic withdrawals kick than I'm sure the bank will end up charging you a fee for not having funds available as well as creditor fees for not having the money available. Its all about timing. When I was getting ready to file, I had already set up a new bank account at a different bank, had stopped my direct deposits and automatic withdrawals. But I also had lots of time to make it all happen before any additional or surprising charges took place. The one thing you DON'T want to do is mess with the bank side of things, you could taint yourself from getting a new account at another bank.


2. Will this effect my business? I don't use a CC's for my business, strictly cash as I only do my work once I'm paid. I own all my equipment nothing is leased or rented.
I really don't know?

3. I had planned to cash in my 401K, it amounts to about $3000, to pay off acouple outstanding bills I have with my business and to pay my parents some money back that I owe them.
--- Should I still do that? Or actually CAN I still do that.
DON'T touch your 401k if you don't have too, you'll get taxed the hell out of it during your withdrawal and additional tax penalties after your withdrawal and of course the Trustee will take great interest as to what happened to your 401k money?!!! What I did, was take a LOAN from my 401k (I didn't do a full withdrawal - I couldn't as I was still employed with the company). So I was able to add the payments I had to make through my paychecks as part of my list of exemptions. The Trustee never asked what I did with the loan. Maybe he overlooked it.

4. We are pretty convinced that BK is what we need to do, but we won't be able to see a lawyer for acouple weeks. My wife is a teacher and we would plan to go once she was out of school in 2 weeks.
Should we stop paying the CC's now, or wait till after we talk to a lawyer.
Heck, I would stop paying them NOW ! Some people stop paying their cc's like forever and a day, you won't get sued THAT quickly. You'll just get bombarded with creditor phone calls and a couple rounds of "friendly reminder letters," that your acct is past due, blah blah blah. SAVE that money that you would put towards the creditors into hiring a good lawyer!

Thanks again for everyones responses. It has made it a much easier decision and it's good to hear feedback from people who have been through the same thing.

BEST OF LUCK, CATCHMEIFYOUCAN

[Toby34]

Thanks for the info!

Quick comment on the creditor calls....we are 2 or 3 months behind on a Kays Jewlers CC. They called my wifes friend who lives out of state!
How in the world did they get her number??? They called her home number, my wife doesn't even know that off the top of her head.