Question Am I a good candidate for bankruptcy?

[CreditCretin]

I have been trolling these boards for a few weeks now and had a lot of my questions answered. I am still trying to decide if I should make the call and see a lawyer. Made some bad financial decisions and racked up way too much credit card debt over the past few years and it just seems like a never ending hole. I am paying all the minimums and am finding I have less and less cash available to where I am at the point where I have to charge groceries, etc. It feels like I am digging my way out of a hole with a spoon and someone is using a bulldozer to push more dirt in on top. Anyway here are my stats as embarassing as they are..

I make about 100K a year, and there are 4 people in my household. So, after reading a lot of good stuff here, I am sure I would not even come close to a Chapter 7, so a Chapter 13 would be my only option. Between my spouse and myself we have amassed just shy of 120K in unsecured credit card debt. The minimum payments alone on that are over 2400.00 a month. This will go up soon since we have about 22K with Chase in those wonderful balance transfer accounts they are raising the minimums on.... None of our payments have ever been late, yet... Come September I am not so sure.

We have one mortgage on our home, which is at about 2000 a month + 600 month in property taxes. Used to have over 20% equity in the house, that is all gone now so we basically owe what it is worth, give or take about 10K or so. No 2nd mortgage, in fact before the real estate collapse, I had hoped to take advantage of the real estate values and do a home equity and pay off all cards. Needless to say that will not be happening. Tried to take advantage of the Obama plan to refinance with 0% loan to value on the house. They said I would qualify for a 300.00 savings but my debt to income ratio is too high, and was denied. Nevermind I would have used that additional 300.00 to pay down the debt. We have two cars, both paid off, one 7 years old, the other 6, both worth about 4000 to 4500 each.

I guess my question is, am I good candidate for a Chapter 13 bankruptcy? I feel so awful about all this. At my income level, I feel like they could laugh me right out of the court (and rightly so.) I try to remind myself that people (celebrities) making millions of dollars a year have had to file. It still doesn't make me feel good. I am current on every debt we have. But just barely so. However I am still charging, out of necessity. I have heard that you have to stop ALL charging for a period of time before you can file. Not sure how I would pay for groceries, unless I stop paying bills.

Anyway, sorry for the long read... Any and all advice is appreciated. I feel like I have to call a lawyer and get advice, but keep putting it off.

[AngelinaCatHub]

Your last sentence is a good one. Now, let's look this all over. We were millionaires in land, and gave it to the State as a park and wildlife sanctuary, as we had bucks to burn anyway. An enemy who sued, and sued me (never brought anything to trial) and he cost both of us three jobs, and then medical ran out, then the big C. We got broke. We never have been sorry about our land gift as we have life estate without tax on it.

Now, you see, we made some mistakes as well as helping others to our detriment financially. So, "no good deed goes unpunished".

What you have explained is not unusual in this day and time. I believe you are a candidate for a 7 not a 13. If you have to charge to eat, you are in bigger trouble than you realize.

Only my opinion, but at this time, you must make up your mind as a business decision and put the pride aside. You are in trouble. Stop paying and charging all cards right now. cut the mag stripe off and keep just for the numbers. Use the payments for your food and expenses. Keep records of all things you purchase and go a cash budget.

Start practicing your new start now as you should let at least 90 days go by without a charge on ANY card.

If you can make the house payment and are pleased with it, do so. You will need rent somewhere. The cars are old enough that the Trustee just may abandon them. Keep little in your bank accounts but DO NOT HIDE ANY ASSETS. They will find it.

Go for it, is my vote. 'Hub

[PdxDavid]

Well Hub is quicker than I, but I will leave the post here.

If you have to charge basic necessities it would seem you are a possible candidate for Ch7. I think you have to either pass the median or the means test. If you add up all your monthly expenses and you have no or less than no disposable income then you pass the means test. Even though you may be well over the median for your state/family size.

Plug your numbers in to one of the means test sites. Links are somewhere on this site and see what it says.

Then you are going to have to speak to an attorney to be sure.

One thing to keep in mind regarding charging basic living expenses is that once you decide to file you would stop paying the CCs. You would then have real money to use for those expenses.

Good luck

[Bandit]

It feels like I am digging my way out of a hole with a spoon and someone is using a bulldozer to push more dirt in on top.

It feels like I am digging my way out of a hole with a spoon and someone is using a bulldozer to push more dirt in on top.

Am I a good candidate for bankruptcy?

I think you answered your own question in a round about way.

This was a beautiful post to me. Yet all I could see was my first Algebra teacher teaching us how important it is to keep our math problems in a perfect straight line on the paper. 1/5 of our grade would depend on the neatness of our problem solving in his class. He was an awesome teacher and I can't express how lucky I was to be his student.

If you didn't mind me asking, how did you come up with CreditCretin?

[Bandit]

We were millionaires in land, and gave it to the State as a park and wildlife sanctuary, as we had bucks to burn anyway.

This was real good too.

[justplaintired]

I agree if you are charging basic living expenses, your are in over your head. We were doing the same and it was causing me so much stress I couldn't hardly sleep at night. The big step of talking to an attorney actually was the hugest relief. We are in a C7 so even though your talking a C13, I do believe you need to find an attorney and get some good legal advice.

Good luck!

[AngelinaCatHub]

I agree if you are charging basic living expenses, your are in over your head. We were doing the same and it was causing me so much stress I couldn't hardly sleep at night. The big step of talking to an attorney actually was the hugest relief. We are in a C7 so even though your talking a C13, I do believe you need to find an attorney and get some good legal advice.

Good luck!

Agree 100%. I disagree with the thought of a 13 if the OP can get by with a 7. The "New Start" will feel so good, but the 13 drags the pain out for 3 to 5. Sounds like a prison sentence doesn't it?

JPT, you are on your way, and I'm an interested observer. You have no idea of what relief you may experience. In my opinion, one of our reasons for feeling so well, is that we discount all credit scores (have never checked mine since bk, was 820), and will never use a credit card again. We do have a debit card, but once out of money, locked.

It gives me bad 'vibes' when I read of so many who are worried about their credit score or recovery of it. Cash is King and credit is slavery. 'Hub

[justplaintired]

Agree 100%. I disagree with the thought of a 13 if the OP can get by with a 7. The "New Start" will feel so good, but the 13 drags the pain out for 3 to 5. Sounds like a prison sentence doesn't it?

JPT, you are on your way, and I'm an interested observer. You have no idea of what relief you may experience. In my opinion, one of our reasons for feeling so well, is that we discount all credit scores (have never checked mine since bk, was 820), and will never use a credit card again. We do have a debit card, but once out of money, locked.

It gives me bad 'vibes' when I read of so many who are worried about their credit score or recovery of it. Cash is King and credit is slavery. 'Hub

I totally agree. My credit score was important to me to the point I would have rather paid the cc bill to keep that good score then anything else. It was such a vicious cycle I about drove myself nuts trying to keep things going. Now I couldn't possibly care less about that score. Credit might be good for some, but not for all. We too only have a debit card and I like it that way, like you stated once the monies gone, it's gone. I have a strong feeling some will be back here someday, they haven't figured it out yet. I personally will never own another cc. I hate them, they are nothing but trouble for me. Maybe others can chance having another one, personally, I know myself pretty well, and having another cc would just be a step back into hell.

Thanks Hub, I was on here awhile back ago and followed your post then, then I took some time away, I am back in school now, medical billing and coding, that is taking alot of my time, and also am fortunate to be working more hours. Regardless when this is over, this site and this forum have been the biggest help to me thru this process. Attorneys should tell all their clients to go to this site they will learn so much and be so prepared.

[CreditCretin]

Thanks for the support and the information. Thanks to this site, I have taken a look at the means test. Based on some numbers I plug in, it looks like I would have about 800.00 of disposable income per month. Of course I probably missed some exemptions and other data, that a laywer could better advise me on. For example here in Illinois the housing allowance is around 1500 I think, however, our mortgage is 2000. Discounting our credit debt that cost is not out of line with my income.

If I stopped paying all credit cards I would have over 2500.00 in cash per month to use for living expenses, legal expenses, etc. That is why I am not sure if I would qualify for a C7, but this is another good reason to talk to a lawyer, I am sure he/she would be better suited to make that determination for me. A C7 would be great, a fresh start sounds incredibly good right now, although I am thinking a C13 would be ok, if I have no other choice. At least there would be a light at the end of the tunnel. Right now it feels like matter what I do, outside of a bankruptcy, there will never been an end..

As for my name.. Well I feel really awful, and foolish to have allowed all this to happen. FinancialFool was too long, so CreditCretin seemed to fit. I can see now, that just because you are in this situation, doen't make you a fool... What is foolish are these credit card companies. With all this debt I have, by wife and I still have three credit cards with no balances on them and 60K of available credit on all three.

[eddiep]

I noticed that you made a balance transfer account with Chase. You will want to talk to a lawyer before you stop paying on that one.

Your financial story is so similar to mine. We were at the point that we had to use the cards so we could continue to pay them. But then last Sept hubby lost his job, and was out of work for three months without unemployment. Once we missed that first payment there was no way out. We have gone for 7 months without a cc payment and we filed yesterday, 341 on 8/13 but we are under median so we are looking at a ch7.

We also tried one last time to refinance to consolidate our debt, thank god they turned us down, we would have lost our home.

[ecsclb1724]

Thanks for the support and the information. Thanks to this site, I have taken a look at the means test. Based on some numbers I plug in, it looks like I would have about 800.00 of disposable income per month. Of course I probably missed some exemptions and other data, that a laywer could better advise me on. For example here in Illinois the housing allowance is around 1500 I think, however, our mortgage is 2000. Discounting our credit debt that cost is not out of line with my income.

If I stopped paying all credit cards I would have over 2500.00 in cash per month to use for living expenses, legal expenses, etc. That is why I am not sure if I would qualify for a C7, but this is another good reason to talk to a lawyer, I am sure he/she would be better suited to make that determination for me. A C7 would be great, a fresh start sounds incredibly good right now, although I am thinking a C13 would be ok, if I have no other choice. At least there would be a light at the end of the tunnel. Right now it feels like matter what I do, outside of a bankruptcy, there will never been an end..

As for my name.. Well I feel really awful, and foolish to have allowed all this to happen. FinancialFool was too long, so CreditCretin seemed to fit. I can see now, that just because you are in this situation, doen't make you a fool... What is foolish are these credit card companies. With all this debt I have, by wife and I still have three credit cards with no balances on them and 60K of available credit on all three.

so you're giving yourself the full 2K then right?

[CreditCretin]

so you're giving yourself the full 2K then right?

I would get the keep the full 2K right? How about property taxes, do they allow you for that? I used a means test calculator that I found here on the BK forum and it looked like it took those amounts into effect. Also, it looks like you can take up to around 450.00 a month for each car. Are you allowed that if both cars are paid off? Or do they only allow for that if you are making payments? If so, after talking to a lawyer, I wonder if it is better to buy two newer and inexpensive cars to make it through 5 years (if in fact you have to go with a C13)

[ecsclb1724]

I would get the keep the full 2K right? How about property taxes, do they allow you for that? I used a means test calculator that I found here on the BK forum and it looked like it took those amounts into effect. Also, it looks like you can take up to around 450.00 a month for each car. Are you allowed that if both cars are paid off? Or do they only allow for that if you are making payments? If so, after talking to a lawyer, I wonder if it is better to buy two newer and inexpensive cars to make it through 5 years (if in fact you have to go with a C13)

what means test are you using?

IMO this is the easiest one to use and gives good explanations:

http://www.legalconsumer.com/bankruptcy/means-test/

Some districts allow the $450 a month ownership expense for paid cars, some don't, it will depend on yours.

Can you beef up your taxes withheld from your paycheck?

I'm sure they'd allow for property taxes too, hopefully someone can come along and advise you better but I'm thinking you can qualify for a 7.

[AngelinaCatHub]

I would get the keep the full 2K right? How about property taxes, do they allow you for that? I used a means test calculator that I found here on the BK forum and it looked like it took those amounts into effect. Also, it looks like you can take up to around 450.00 a month for each car. Are you allowed that if both cars are paid off? Or do they only allow for that if you are making payments? If so, after talking to a lawyer, I wonder if it is better to buy two newer and inexpensive cars to make it through 5 years (if in fact you have to go with a C13)

CC: I would try very hard to go the C7 route if at all releasable. Also what another poster mentioned about a cash transfer, that puts a bit of sticky into your situation as that is one of those red flags of abuse that can pop up and bite you. Let some time go and yes talk to a lawyer, the sooner the better. The line is getting longer fast. 'Hub

[CreditCretin]

The Chase card I mentioned a balance transfer on over a year ago, when I rolled 4 cards together at 2.99% for the life of the balance. Great deal, however the balance is 17,000 so I am faced with the probability that my payment will go from 340 to 870, 500.00 I definately don't have laying around now. I did transfer a balance about 2 months ago, however from a Lowes card (appliance purchase) where the special rate was about to expire to a Bank of America Card. It sounds like I may have to bide my time for 4 months before I would file. Speaking of Bank of America, I have my checking account with them. Since I have two credit cards with them as well, should I proactively be finding a new bank to do my checking with?

I think I will call the lawyer next week just to get some advice. I took the means test from above, and it does appear, once I add in my mortgage and property taxes I may be eligible for a C7. Never thought that would be possible earning 100K a year until I read here. I have been going into my credit card accounts and removing my work phone numbers from the accounts.

One last question about C7, I am sure has been answered, but can they force you to sell your house in a C7? That is the one thing I am not prepared to let go of. I would go C13 before I would go C7 if I had to give up the house. The expense of my house is not overly high for my income level in my opinion, and the cost of renting in my area (suburb of Chicago).