My Current Situation

[treehugger1]

I'm still avoiding a BK 13. For historical reference, I am a high wage earner with no assets. I would have been in a 100% payment plan if I filed 14 months ago. I didn't file, and my wages didn't drop as far as I thought they would. I decided to deal with CA's and creditors on my own. To date:

BOFA/MBNA $9800 being paid at a 5-year contract at approximately 1.85% interest. $160 per month payments.

Citi $9300 attempting to pay $100 per month at 0%. Account is reviewed every 6 months.

CAP1 $11000 currently in hardship. CAP1 was hard to work with, but I think they can see I need to have some relief. $325 per month payment. Future unsure.

Credit Union A: $7600 at 2% for five years. $137 monthly payments.

Credit Union B: $5400 at 2% for five years. $91 monthly payments.

3 other credit cards: $2200 payoff agreements within 12 months. various payments.

Other unsecured: $10000 paying at approximately $300 per month. These will be paid off within 5 years at 1% - 5% interest rates. Average 5 year payments of $235.

Approximately $2500 in collection accounts rotting, but I can these folks to talk at my level of affordability.

My payments on these accounts come to approximately $300 per month less than my chapter 13 payments would have been. Oregon has a very high trustee percentage of 10%! Plus I would have to pay an attorney approximately $1800.00.

I'm not out of the woods yet, and it is possible there is a BK in my future depending upon what my salary does in the future.

Student Loans $77K but current at $580 per month payments.

My credit is certainly shot for many years.

My point relates only to those high-wage earners that have no assets. Folks will work with you. It takes a lot of research on this board and others, but it is possible. The bottom line is that my BK 13 payments would have been considerably more than I am currently paying and I am able to pay on my student loans. My estimated total savings over NOT filing the five-year BK 13 will be approximately $15K - $18K, and the trustee does not rule my life.

I hope this might help others in my situation make a decision before leaping to a 13 BK. One shoe does not fit all. Do some due diligence before you leap.

[B12]

Good work. If I had the income, I would have done the same.

[CindyLou]

treehugger, great work, but I think an important thing here it to make sure that folks understand that you have done these nogitiations yourself and not through a debt negotiation service!!

I think one fo the reasons they may have been very flexible and worked with you is because you do have a very high income to support the payback. I don't think they are always very open to work with everyone, unfortunately.
Also, even if many folks were able to get the creditors to work out those deals they could not afford to pay those high payments and would end up in default anyway.

Thank you for sharing our positive situation and hopefully it will encourage others to try and work with creditors first before jumping into BK, but I just wanted to be sure the understood that this was not a result of a debt negotiation company.

Congrats!

[treehugger1]

I think the important thing to realize is that whether you are 7 or 13 material, you can and might try negotiating; if for no other reason than to buy more time if needed. As I stated, there is nothing that implies I won't file a 13 in the future. However, every deme one can pay toward their creditors when they know a 100% payback plan is inevitable, is a dime toward a quicker conclusion to a BK 13.

In terms of a 7 and quitting my job, I'll admit I've thought of this. The downside, is that when you are in yoru 50's and making substantial payments into retirement plans (all of which is protected in BK), you might consider riding the train until the final wreck, LOL.

I know I'm not the only person in this situation in this country. As several studies have pointed out, there are far more judgments (many unpaid) than there are BK filings. This suggests some folks are attempting other methods of resolution than filing BK.

I realize my situation is different than others, but you never know who may turn to this board for assistance.

it is ture that I have done all the negotiating on my own. The only tough folks have been CAP1. CAP1 will eventually work with a CCCS but they claim that the best they can even offer a credit counseling service handling your debt is 15.9% interest.

[SinkingFast]

I think you've done a great job, Tree, in buying yourself time.

I hear ya about the time in life.

Before Hubby was laid off, he was wearing the "Golden Handcuffs" too.

[chpxiii]

I think the important thing to realize is that whether you are 7 or 13 material, you can and might try negotiating...

I tried. It didn't work for me.


Good luck to you!

PS: Alicia, it's so not worth it.

[jp2861]

Although your high sense of loyalty to your creditors may seem honorable, the fact still remains that the guidelines are in place. Anyone that doesn't use the guidelines to their advantage, in order to put themself in a better financial situation, is a fool. The first thing folks need to do is seperate feelings from the equation, and look at this whole BK thing as a business decision.

[treehugger1]

You are exactly correct. Once I sat down and added my total attorney fee of $3500 to my trustee fees of $7000. Then, added my student loan interest growth of 8.25% on $77K for five years of forced deferrment, to the tune of $37453.00, BK would cost me $48000.00!!!! What I don't have is an automatic stay, but I'm not protecting assets, nor do I mind dealing with creditors or CA's as long as they play by the rules. So far, my decision not to file has been a business decision. If the local trustee would consider student loan debt as a priority unsecured and include it in my plan, I would RUN down to file. Until congress addresses this and all trustees and BK judges have to play by the same rules, I'll continue my current tactics. In addition, I can continue to pump money into my protected retirement and tax-deferred plans.

[MomIcantFindmy]

Treehugger, that was so informative and gave me something to discuss with creditors when they call. We are in the same boat. High income and high student loans. We are waiting to see what a chap 13 plan would cost us. Did you have a car payment to factor into the equasion also?

Everyone has differences in finances, ability to stomach CA's calls, feelings about debt, etc. The best solution for one person does not equal the best solution for another. I, for one, am glad for the many opportunities for debt solutions. I am also glad people are willing to share all their experiences here. I have learned so much.

Bravo to all who face problems head on, whatever your solution......you become better for it.

[jane taylor]

There are days when I wished we hadn't had to file a 13 as we have had to give up our home anyway.

We didn't really have a choice, tho and I know that now we are back on the right track.

Trying to get out of a financial mess is never easy no matter what you do. It takes time, a plan, courage, and LOTS of prayer.

jane

[treehugger1]

MomIcant,

I have two car payments. Unfortunately, secured creditors were not willing to work with me to reduce payments or interest.

There are certainly going to be wrinkles in my "plan." But, I have to remember I would be on close to a 100% payback plan + attorney fees + trustee percentage. I am paying down my debt! If a BK 13 rears its ugly head, I should have a lower total amount to payoff in a chapter 13 down the road. I am exercising as much fiscal responsibility as possible, but the bottom line is that based on all the attorneys I spoke with and their best estimates of what I would have paid per month, I'm several hundred dollars ahead every month. In addition, the student loan issue is very firghtening. I'm in my 50's and I could easily see going through a BK 13 and still be paying on the damned things until I die. I think I have a fighting chance to be debt free (including the student loans) in the next 7 years.

Or, should I decide to retire and live under the "means test" amount for 6 - 9 months, I would qualify for a BK 7. For now, I'm surviving and have more cash available than a year ago. Keep in mind that I was and am ready to file should the crap hit the fan. This really empowered me. in addition, there are so many knowledgeable folks here on this board, all of whom helped me understand the process and potential good and evil of a 13.

My credit is shot but what the heck. I did continue to pay on and stay current on two credit cards that have low interest rates and I keep paid down to a minimum. If it is your deisre to work with creditors, be aware that they will monitor your credit reports and they won't take kindly to you paying large chuncks to someone else. The two cards I kept current have less than $75/month payments, and i don't believe the other creditors care all that much when they are all getting $90 - $325 per month. Still, don't try to negotiate reduced interest and temporary/permanent plans and pay other creditors large sums.

[B12]

How old are the student loans? There is I think a 25 year time period when they are forgiven.