help

[savanasue]

Hi,
newbie here. I am in deep cc debt and am considering personal BK. I am a student and work two pt jobs. I am broke. I earn maybe 200. per week. I rent an apt. I figure i am eligible for ch. 7.
I am deathly afraid if i file, the court will take my vehicle. It is 12 yrs old and not worth much , but worth alot to me becasue i need it to go to work and school and there is no way i could afforf to replace it if they took it. Can they take my car? Another question is i heard they make you close yoyr bak accts? How can they do that/ Where am i supposed to put my pay checks? And what about pay checks, are u alowed to keep them? How am i supposed to pay my liivng expeses?
Another thing, i am a student and receive student loan money. SWill the courts take that? My student loans is how i pay my rent pretty much. I am scared if i file BK, they will take my car, close my bank accts and take my student loans. any advice is appreciated.

[backtoschool]

Hi Savanasue,

You are allowed to exempt a certain amount of personal property in a bankruptcy case. The amount you are allowed to exempt depends on the state you live in. If we know what state you are from we can help you figure out what exemptions you are allowed. Most likely a 12 year old car will fall within the exemptions.

You do not have to close your bank accounts when you file bankruptcy, in fact its just the opposite that is the case. Bankruptcy stops all creditors from taking any action, so your bank account actually becomes safe because creditor's can't touch it once you file.

Most states allow most, if not all, of your salary to be exempt. You will be way under the median salary for any state that you are in, so your salary is not going to be a problem.

Student loan money that is sitting in your bank account has to be figured into your bankruptcy exemptions. Most allow you some wildcard and personal exemptions to cover some cash.

Student loan money that you have not received at the time you file is not an issue.

[AngelinaCat]

Hi Savanasue:

Welcome to the forum. First, some questions:

1. How old are you? If you are in your late teens or early to mid twenties, be aware that a BK will be on your Credit record for probably ten years. That is a long time for a young person just starting out.

2. You are renting an apartment: can you find a roommate or two to help with expenses? (Not the best option I know; I've been there. You give up a lot of your privacy and freedoms to some extent.) Can you move back home as an option?

3. You have been bitten by the 'Plastic Money' bug. You need to cut up, or at least put the credit cards into a plastic bag with water and throw into the freezer. Stop using the cards.

4. You have student loans and are using student loan money. This is ANOTHER trap. CH7 BK will not take the money from your loans, BUT, and this is a HUGE BUT, Student loans are NOT dischargeable. You can discharge all the cc debt you have, say 20K ($20,000.00). That is a fairly small debt. HOWEVER if you are wracking up say $170,000.00 of student loans, you will STILL be on the hook for that after you are discharged.

5. No one is going to be interested in your 12 year old vehicle, and it will not be taken. However, you must keep it maintained in order for you to be able to use it.

You need to sit down with your parents, significant other-if any, and figure out ways to get on a budget, cut your expenses, and live within your means. Do NOT try to get a loan from any of your family or friends. If you do, you will lose them as family and friends--I've been there and done that too.

This is probably enough to digest for one evening. I really do wish you well.

Mama 'Cat

[AngelinaCat]

You do not have to close your bank accounts when you file bankruptcy, in fact its just the opposite that is the case. Bankruptcy stops all creditors from taking any action, so your bank account actually becomes safe because creditor's can't touch it once you file.

Hi backtoschool: with all due respect, I must disagree here. If Savansue has her ccs with the same banking institution that she has her checking and savings accounts, that institution can seize any money in her accounts to pay the credit cards once they fall delinquent. This is called 'Cross-collateralization'.

For this reason, many posters here advise moving the checking/savings account to some other institution, as soon as possible, after they realize they are going to become delinquent in paying the credit cards, or any other loan for that matter.

Once she files BK, then she is protected to some extent. But once a bank or credit union is notified of the 'Suggestion of Bankruptcy', they are perfectly entitled to close the accounts if they so desire. This is especially true of credit unions.

[savanasue]

Hi,
Thanks for the info so far. I live in FL and I am actually uhhmm 40 something lol. I know i cannot discharge student loan debt and i am not worried about that at this point as I am still a student. My problem wiht he cc was not buying unnecessary "things: but i needed some cash advances,to pay rent , car repairand other neseasary things as i dont earn enough from my employment, had some medical charges, etc etc. Little of it was used to buy unnecessary things.
I dont have any cc's with my current bank and credit union. If my bank and credit union find about my BK, they may close my accts? Why?

[backtoschool]

Hi backtoschool: with all due respect, I must disagree here. If Savansue has her ccs with the same banking institution that she has her checking and savings accounts, that institution can seize any money in her accounts to pay the credit cards once they fall delinquent. This is called 'Cross-collateralization'.

For this reason, many posters here advise moving the checking/savings account to some other institution, as soon as possible, after they realize they are going to become delinquent in paying the credit cards, or any other loan for that matter.

Once she files BK, then she is protected to some extent. But once a bank or credit union is notified of the 'Suggestion of Bankruptcy', they are perfectly entitled to close the accounts if they so desire. This is especially true of credit unions.

Yes of course you are right. I meant her accounts were safe from levies by creditors after she filed. I was not referring to cross-collateral agreements. Sorry for the confusion.

[backtoschool]

Hi,
Thanks for the info so far. I live in FL and I am actually uhhmm 40 something lol. I know i cannot discharge student loan debt and i am not worried about that at this point as I am still a student. My problem wiht he cc was not buying unnecessary "things: but i needed some cash advances,to pay rent , car repairand other neseasary things as i dont earn enough from my employment, had some medical charges, etc etc. Little of it was used to buy unnecessary things.
I dont have any cc's with my current bank and credit union. If my bank and credit union find about my BK, they may close my accts? Why?

Any cash advances, especially over $500 taken less than six months before filing would be a red flag for the trustee.

Banks and credit unions can close your account for any reason, but if you are not bk'ing any credit with them, most likely they will not do so.

[savanasue]

The last cash advance i had was in late Sept. of last yr. I actually havent used any of my CC's since that time. I have not been able to pay on them since around december.

[AngelinaCat]

Hi Savanasue: Your reply helps put things into perspective. Now, I can reasonably advise going Ch7. You can include your medical bills in BK. If your 12 year old car is not being reliable and you have to do repairs all the time, then it might be wise to consider a newer used model, that is a cash only sale so you have no financing.

We bought at auction, for the city I used to work for, an ex-police car. My 'HUb put a couple hundred dollars of tune-up, alternator and other small stuff, and it is running fine.

A problem can occur with the cash advances. I understand your need, but as there is the 'look-back' period of at least 6 months of your financial history--and can be as long as 1-2 years, depending on the circumstances--you need to keep really good receipts and accounting of your transactions.

Most people, both here on the forum, and others I have encountered, say to stop all use of credit cards for at least 6 months prior to filing. This is to keep the creditors from thinking that you were running up the charges, and then filing BK to avoid paying them. The six month buffer helps to keep Creditors from filing an objection to your discharge of their debt.

The standard advice also is, that once you decide you will file BK, stop paying on those cards for six months, in order to save money for your attorney.

I am not advising one way or the other. I am throwing those items out there for you to consider.

You may wish to purchase the online down-loadable version of the Ch7 Nolopress.com book. It costs about $17.00 dollars, and there are some places here on the forum where you can get a coupon.

Please read through several of these boards, particularly the ones dealing with Ch7, Filing Pro Se, and Student Loans. You may see 'mirror images' of yourself throughout.

Good luck to you,
Mama 'Cat

[backtoschool]

The last cash advance i had was in late Sept. of last yr. I actually havent used any of my CC's since that time. I have not been able to pay on them since around december.

Cash advances taken back in Sept should not be a red flag, unless they were for huge amounts. But by the time you file, it will have been a year since you took the advance, so as long as you can comfortably say you used the money for living expenses and to pay bills, then it will not be an issue.

[AngelinaCat]

The last cash advance i had was in late Sept. of last yr. I actually havent used any of my CC's since that time. I have not been able to pay on them since around december.

Then you are already okay with one of the statements I said in my earlier post. That will help.

[LuciluS]

Hi Ya Savanasue!

You be in a Pickle huh? LOL! Know how ya feel. Would you mind giving us tad bit more information, so we can help you please?

What is:
Total Debt of Credit Cards: How many Credit Cards:
Monthly
Income:
Rent:
Gas for Vehicle
Utilities:
(include your cable or satellite bill)
Phone:
CellPhone:
Renter's Ins:
Auto Ins:
Health Ins:
Any Other Expenses:

What is your total Student Loan Debt. Are you making monthly payments on any or all of it? If so, how much are the monthly payments.

Answering these questions will help us to make suggestions for your future.

O & Welcome!

Luci

[savanasue]

Hi,
I have not used any of my cc's for about a year.
My rent is 675. per month. I use my student loans to cover most of it.
i have a pre paid cell phone.
my water and cable are included in my rent
car ins. 85. per month
rent insurance 21.00 p month
medical insurance 40.00 p month
electric bill...anywhere frome 55 to 70 per month
And of course there is food, gasoline, other things that crop up.
I am not paying on my studuent loans as yet.
My income is not very much. I have a pt job i work about 12-18 hrs per week at 10 dollars per hour. Then my other job i work maybe 10 hrs per week at 7.25 per hour so you can see i dont have much income.

I have about 5 cc's in arears. Am thinking about 30 K.

[savanasue]

Also what is meant by you can exempt $1000. of a vehicles equity 1000.00 personal property? Does it mean i could only keep 1000.00 wotrh of my posessions and keep my car if itis just worth 1000.00. Anything over that amount would be sold??

[AngelinaCat]

Also what is meant by you can exempt $1000. of a vehicles equity 1000.00 personal property? Does it mean i could only keep 1000.00 wotrh of my posessions and keep my car if itis just worth 1000.00. Anything over that amount would be sold??

You really need to get the Nolopress book.

In Florida, you are allowed an exemption of up to $1000.00 for a vehicle. If you had a residential home, you would be allowed that as being 'homesteaded'. But since you rent, that option is out.

Here is a link to an online listing. But as always, do not believe anything until you have talked with a competent attorney. Talk with several in their free consultations before deciding on one.

http://www.thebankruptcysite.org/exemptions/florida.html

In googling this, I have found contradictory listings as to whether Federal exemptions can be used with the State's. My Nolo book says NO, but the law changes constantly.

Also, understand that this debt burden did not come about instantly. You will NOT solve it instantly in one night's worth of posting. It is time now to calm down and go to bed. You have found a support group here. Now go to bed and relax.