40K CC debt - unable to make min. payments

[Jimmy17]

Hello-

Due to job loss and injuries, I have racked up 40k in CC debt. As of now, I am unable to make my monthly payments anymore.

My income currently consists of disability checks only and now must stop making any type of payment to my creditors in order to pay for basic living expenses.

With disability, can I still qualify for Chapter 13 and make payments based upon my current income? Also, if I had to use the last of my available credit just to buy groceries, gas, etc. - am I still eligible to file BK? Lastly, if I stop paying my min. payments now and start the BK process in the next month, will it go through before my accts go to collections?

Thanks all - your board and it's members have been extremely helpful and informative.

[kenshirley]

I will assume that your disability will not last forever and it not much?
You may be well under the means test with no disposable income which might just qualify you for a Chapter 7 discharging all your debt.
Have you tried to make an appointment with an attorney yet?
We would need more facts here to make a judgement call.

[kornellred]

Welcome to the club, Jimmy - you have a lot of company. It seems as though you need to speak with a bankruptcy attorney. There are many knowledgeable people on this forum (especially the moderators) but they will need more information.
Most large bank creditors will sell bad debt to a third party collections group within a few months of default. Collection efforts will begin almost immediately. Lawsuits can commence at any time but generally it takes a good 6 months or so before this happens. Creditors can do nothing without a money judgment no matter what they might claim. You need not say a word to any of them, but avoiding them is difficult. They want their money and they will never stop asking for it without the automatic stay effected by filing for bankruptcy.
No need to worry at all - it will all work out.

[AngelinaCatHub]

"Red" and "KS" good call, but I must add that the OP stops using any credit cards immediately. We have all heard that of course, but he is new, and if he goes for 7, he needs to separate that use from the abuse.

Welcome, Jimmy to a Forum of friends. We all have been down that trail. Don't worry about suits at this time with what you have told us. They will take more time than you filling. 'Hub

[justplaintired]

Jimmy this might be a comfort to you, we quit paying cc in Jan 08, didn't file until June 09 and it was one of the cards finally suing us. So you have time. Don't panic. Collection calls aren't fun, neither are collection letters, but drowning in debt is worse.

Stop paying cards if you are serious. I do believe right now your disability is not able to be garnished, so don't worry. However you do want to put time between charges and filing. So stop charging. Find a few attorneys to meet with, consultations are generally free.

I believe at this point for you to keep throwing money out the window to creditors is not wise, save that money for an attorney and maybe with your disability you can qualify for legal aide in your state to file.

Far as a Chap 13, why are you considering 13? Is there a home you want to keep or a car? If you are current on a house payment or car payment you can most likely ride thru unless you have too much equity in either.

Good luck Jimmy and welcome to Bkforum.

[Jimmy17]

Let me first say that all of you are so great and I'm really impressed with the warmth here, truly.

The reason I am considering Ch13 is because Ch7, from what I understand, is where I would have to sell my things - I am a musician and have some guitars and amps that I can't part with along with other things in my house like my record player, (old) computer. Is there a way to file 7 and not have to sell my things?

Also, I looked up the remaining credit on my cc's and plan to use what's left for bills and food - not cc payments. This will buy me some more time to speak with a lawyer and find out more about my disability and condition.

Can someone advise me on ch7 a bit further? I've scoured the web and am still a bit confused I think.

Thank you again everyone

[liz417]

Hi Jimmy and welcome to the board. Depending on your State's Exemption laws you might be able to keep some/most of your stuff and file a ch 7. Make a few appts with local bk attorneys for a free consult to get a good idea of where you stand.
Good Luck!

[catleg]

A lot depends on which state you live in, and whether you are required to use the state-specific exemptions or the federal exemptions. For example, the federal exemptions include an exemption of $1850 for "tools of the trade" which, if you're a musician by trade, would make your instruments exempt. If you tell us your state we might be able to help a little more.

[justplaintired]

Yeah you need to look up your state's BK exemptions.

Also, if I understand you are planning on charging? Don't do that. Stop using cc. I would suggest you go ahead and talk to an attorney soon. Get some legal advice. Also if your income is low enough find out if you qualify for legal aide. Attorney's are expensive. So start figuring out what it will cost and also if you should do a 7 or 13. Most states have a wild card or tools of the trade exemption of some sort. Unless you have a rare guitar or something most likely it could be exempt. Most of the time we all put alot more value into our stuff then it really has. We were told price things for a garage sale. So that old computer might only be worth $50 if you wanted to sell it. See what I am saying. I would say if you can file a 7 and I am sure with your income you can, it gives you a fresh start, which is what I would assume you are wanting.

[Jimmy17]

I am in California. I am not a musician by trade - more of a tech. guy but, I have played/play in bands and it is my main hobby/interest.

Also, using what is left on my cards is what I need to do to survive. If they see that I have used it for necessity, I assume this would work?

I just don't know how else I'll get by right now - I need an opportunity to save.

Thanks again all.

[LuciluS]

Hi Jimmy:

Are you receiving Social Security Disability? If so, I'm sure you would qualify for a Chapter 7 which gives you a 'Fresh Start'(supposedly). That means all of your Credit Card debt and any medical bills are gone. Using an Attorney for a Chapter 7 is a lot cheaper than a Chapter 13.

In a Chapter 13, you will be required to pay back a certain % of your debts based on your income vs. your expenses which would equal your disposable income. The Attorney's fees are higher and you also be paying a % to the Trustee each month.

As for your musical stuff (sorry, but learning material things are just that - stuff), you need to look at it a business decision. Is it worth getting rid of all my debts to keep my musical stuff? I believe you will figure out your debts are much more higher.

As the others have said, you might possibly could exempt your musical stuff if you don't have a lot of personal property or a home. Please try to set up some Free Consultations with wome Attorneys as they will know more than any one of us on this board as some Courts in the US have different deciding factors as the New Bankruptcy Law passed in 2005 is not definitive in every case.

Also, the Attorney will be able to help you in deciding on when to quit using your CCs. We've gone almost a year without using them, nor paying on them.
We are planning on filing this Sept. and have been working on our BK since last Sept. when we met with our Bankruptcy Attorney.

Good Luck

[zscfan]

I also filed in California, but I really don't have that much personal "stuff." But doesn't CA have pretty generous exemptions, including $450 per item for musical instruments and a $925 wildcard exemption (on System2)?

Please DON'T take this as legal advice; I just found it on the internet, but I do know that CA is one of the more generous states.

[Jimmy17]

thanks for all the assistance friends. I'm got a great referral for a BK lawyer and will set things up with him.

I am currently on SDI which could become workman's comp due to being further injured by a therapy office (I know, it sucks).

I went from lumbar spasms to two slipped discs but, I digress..

thanks again

[Jimmy17]

Also, how does using the rest of the balance on my cc's to pay bills adversely affect my situation?

I'm trying to gage when the bills come in and use the remaining (almost) before I stop paying and they freeze the acct.

[Flowers]

hi jimmy, sorry to hear of your troubles.
Please go see a lawyer for a consult.
I did not sell my belongings except when I was trying to pay the cc's I did sell some jewelry.
We had someone else here on the forum with musical instruments. Maybe do a search. See what the esq. has to say.