Advice (have seen lawyers; need opinions)

[Wantmypeace]

I'm really torn. We've talked to a few lawyers, and this is what we've found to be our options:

1) Pay off $5,000 in debt over the next two or three months to get us under the cap for ch 13, and then file ch 13 (risking judgments/garnishments in the meantime, since we'd not be paying any unsecured debt payments); or

2) Take a leave of absence for 6 months, lower our income substantially, and file ch 7 (risking judgments/garnishments AND losing our cars since we'd not be able to make more than the mortgage payments in the meantime); or

3) Try to pay creditors off one by one, over the next two to three years (risking judgments/garnishments in the meantime, since we'd only be paying one unsecured creditor at a time).

(There may be other options I'm missing here, and I'm very open to ANY advice!)

Income: 12,000/mo Secured Debt: 445,000 Unsecured Debt: 70,000 Student Loan Debt (unsecured, but non-dischargable): 272,000

We spent hours going through our expenses, looking back over the past 6 months of our spending. (I'm meticulous with Quicken, so expenses HAVE been tracked well.) We created a budget which we both feel is reasonable and realistic, and it leaves $1500.00/mo to pay toward our unsecured debt (...not including student loans; they are accounted for in the regular budget along with all of our secured debt.)

We mapped out that if we pay the debts off one by one, we can pay them off within three years. (I teach summer school, which gives us an extra $5,000.00 to lump toward the debt each summer.) I realize that fees and penalties will pile up, and we'll probably get some judgments, too, if we take this route. However, this route would give us enough cash flow to save up for two or three months at a time to pay a "settlement" for less on some of the debts as we go along, as well.

So, I guess I'm asking for advice and ideas related to these options. My credit is gone no matter what, and my goal is to (for the first time ever) live on a budget without credit AND get out of debt.

So, please, any ideas or advice on which road you would take and why???

[LuciluS]

O that's tough! I'm just going to throw some thoughts out here.

Don't know age, but do know mine There is NO Way DH and I would have been able to pay off our credit card debt before we died. The late fees & penalties will eat you up.

We met and hired our Attorney last Sept. I had an itemized list of our Income Vs. Expenses. He quickly glanced at it & said I can file your case as a Chapter 7. I didn't know the difference between a Chapter 7, 11, 13 or 20.
He said quit paying ALL credit cards Except for 1 as I had a Balance Transfer in Aug. of $3,500. He said make 3 min. monthly pymts & add about $25 to each payment.

Then hubby found this forum & I realized some monies I was receiving were considered Income. Because of the stock market, I received my last check Feb. 2009. So we will be filing 9/30/09 (small town, BK Atty. files all last business day of the month) using Mar - Aug. income. I receive SSD which is not included in the Means Test, but is for disposable income.

Yes, I've talked to the Credit Card Companies twice because I told them we would be filing in Dec. or Jan & we didn't. So they called back again. Had legitimate excuse - Skin Cancer.

I think the majority have been turned over to Collection Agencies. Attorney said don't answer the phone if we don't know who is calling. Yes, have received many letters. Attorney said ignore them. I just file them. Still get Statements from all of them. Again just file them.

So, remember I hadn't paid them let's just say 10/08 as it was late in 9/08 before we met with Atty. Have not received anything certified or in person.

Soo, I'm definitely sure waiting 3 more months would be workable IF you want to be under the scrutiny of a Trustee for 5 years.

Well, OK. IF I were in your shoes and you can make it without your income for 6 months, I would stick it out for 6 more months and GO for the Chapter.
Get it filed, your 341 hearing completed & wait on your discharge. Unsecureds get Nothing!

Those guys over in the Collection Forum really know their stuff & if you weren't able to pay your Attorney addtl monies for say a lawsuit, garnishment or whatever, I know they would be willing to guide you through the process.

Gee, I found out in some states to respond to a CC lawsuit is like $20-$40. Our Attorney said he would file something if we get served before we get filed for an addt'l $60 per case.

This is ONLY MY OPINION!

Luci