Oh, crud. Now what? $450 worth of car repair urgently needed

[StartinOver]

Ok, so that noise in my head is dying down a little bit and I'm starting to be able to think again. We had a meeting with an attorney on Wednesday morning. I'd already spoken with him about 4 months ago, but he did a free consult with us both anyway (point in his favor -- spent just as much time with us this time as he spent with me alone last time, and laid the scenario out nicely for my husband, who basically hands over his paycheck, and only occasionally remembers to ask me whether there's available funds in his allowance checking account before using the debit card). His charge is 1800 for a chap 7, 4000 for a chap 13 with a lien strip, 2K of it upfront the rest on the plan. (I dont' think we can lien strip, though, we're only slightly wet, not drowning underwater)

So, we have NO money saved (other than retirement assets). (I might find a nickel in the sofa cushions, if I'm lucky.) We have 33K in credit card debt haven't used 2 of the three cards since at least December, when I had them put on payment plans. I might have used the last one which remained open, one or two more months.

Our cars are 10 and 12 years old. So his truck craps out Wednesday night on the way home. It was in the shop Thursday afternoon and the mechanic followed the old rules which were "fix it" and tell us how much later, from back in the days of using credit cards. Oops. It came to $450, a couple ignition coils. He's a good man, he just forgot we don't do that anymore. So he's letting us pick it up tonight, even though we can't pay it until hubby's next paycheck on Tuesday. Oh, and the fuel oil dealer did an auto fillup another $465 invoice there.

The question is... the money isn't really there on Tuesday, either -something else will go unpaid or I really will eat nothing but peanut butter the rest of the month. One credit card is still open and I've been paying the minimum on it after it had a 4 month 'interest only' on it from Christmas to April.

The 6 month lookback for means indicates that we need to file sooner than later. That lowest point was 6 months ago, and each month later we file we get closer to 76200 annual which is slightly above the median because hubby has a salary now and full time instead of part time.

What happens if I put $450 charge on that credit card? It's not like it's a luxury, or dining out, even. Would it be a mistake, because we already think we need to file?

Also, can someone point me to some guidelines to help me make a budget? I don't even really know what categories are being gone without for a while now, and I don't want to forget to plan for normal expenses. I think when I do that, it will be painfully obvious that I have to let the house go. I am heartbroken about losing our well maintained cape on a small lake, and I keep trying to come up with a way to keep it. Like taking in a border for one of the empty bedrooms. But a good solid budget category list with the "allowed" or recommended amounts will probably slap me upside the head just hard enough to make me see sense.

[keepmine]

Why are you paying on debts that will be discharged in bk anyway? Use that money for normal living expenses.
You're right-this is no luxury purchase so the charge on the cc for an auto repair will be no issue.


A good place to start with budget items is, schedule J. Your ongoing expenses. Start with the obvious. Food, shelter, transportation, insurance, utilities, phoneetc. and build from there. Also, look at your bank statment and check register. That'll show were you're spending money.

[newbie2]

If I'm not mistaken you are not paying your credit card debt, correct?

I think this car repair was a wake up call, sad to say. If you can't get the car fixed on the budget you currently have (and income) without a credit card, then I think the house needs to go. But I'm sitting here and not in your shoes..

Good luck to you whatever you decide.

[StartinOver]

Why are we still paying on debts that will be discharged? Umm.. because we have only just figured out that this is inevitable?

I had a consult a while back but it was not yet clear to me that there simply is no hope. We are on a payment plan with 2 of the cards. One of them is pulling $56 draft each month - I guess that's like post dated checks - they gave me a list of dates and they send a letter 1 week ahead of doing it. The largest balance one is supposed to be paid 500 a month. I'm 1325 behind on that one, so I guess I'm not paying it according to the terms but it did get a partial payment within 60 days. And the last one is "current" because it's the Sam's card and I paid it's minimum $227 last month, so it's the only card that is not closed.

Schedule J... That sounds like a form, so I will look up in the stickies on the forum for how to find it.

We had a little chat last night and I had a complete meltdown. During the years that my husband couldn't work (severe but undiagnosed depression, along with many physical illnesses, all of which are now under control) I worked my butt off to keep it all together and my solace was DIY projects around this house. When we bought it there was no landscaping now there are mature perrenial gardens, a patio overloaking the lake, etc. It is so painful to walk away and know that someone else will get all the benefit of my hard work.

In order to feel good about this, I might just need to do something else life-changing that I could never do with the responsiblity of property hanging around my neck. I've seen in someone's sig file on here that freedom's just another word for nothing left to lose. I suppose debt freedom (well, except for the student loans) makes me free to do the work I enjoy, without regard to whether it supports a big mortgage and debt load.

[Flamingo]

The main problem you have and have to learn to live with and witihout is that your situation righit now requires you to live on credit cards. You do not have money saved nor budgeted to get around that. Unless you change that now and resolve all this, when all this is over, in a few years you will be back again typing in BK forums wondering what happened. You are wise and proactive to realize you need a budget.

First, cut up those cards. If you are planning on filing stop paying your credit card bills. Use the money saved from not paying those bills to pay for that car repair and for an attorney. Make several free consultation appointments - take with you a complete listing of all your bills, monthly payments, paystubs, sources of income, listing of all assets and copies of your most recent federal and state tax returns. The more you hesitate the more you fall into debt because you are only a step away from robbing Peter to pay Paul or you are already doing it and not saying. That is the point of no return becuase you have no cash and have to rely on credit to survive. Hard to get out of but you need to do it.

You will eventually get beyond the denial and will come out of this fine if you get the budget in place...There are many good budget forms online or check into your local community college listings as many give free or very cheap finance courses or can direct you to something that may be offerred free by your state. In this foreclosure economy, many states are offerring all sorts of free stuff to those in financial hard times. All it takes is a few phone calls.

Best of luck to you!

[blessed]

Like the others said, if you know you're going to file you need to stop paying all unsecured debt, period. Those payments can be used on necessities instead. Once we found out that bk was an option we stopped all payments including the auto payments and suddenly had all kinds of extra money to make a car repair or buy groceries. IF you stop paying the CCs and are still short I'm not sure bk will help you. In the past 4 months we've saved over $800 and finally have a small emergency fund simply because we aren't making CC payments.

You keep talking about losing a house? What are the payments, are you underwater with it? Are you sure you wouldn't pay more renting than your current mortgage? It was smarter for us to stay than surrender but I know that's not always the case.

[StartinOver]

Home value (last market analysis) 265K to 272K. House next door (our home is bigger/better, but her land is twice as big) has been listed since last year, started at 265K and is now down to 250K and apparently not moving.

First mortgage was 220K, is now 210K current, with 26 years to go at 6.25

Current payment is 1816/mo PITI and I expect it go up as soon as the escrow dept gets its act together. New homeowners policy was higher and now it needs flood insurance too.

HELOC 62K. It's interest only for first 15 years, and has 12 more before it amortizes. Payment running 150/mo.

Total right now is coming to exacly 31% of our gross income. We were OK until I took a 28% cut in pay, which I took because I couldn't find another job that paid the 63K I'd been making.

We have recently increased and very high commuting costs - my job was 14 miles away when I took the cut in pay to keep it. This January, it moved and I drive 76 miles a day in my 97 RAV4 and hubby drives back roads to his job 18 miles away in an 8 cyl truck.

I WANT to keep my house both because I love it, and because I want to recoup value when the market turns back around, but it doesn't seem like this is going to work in the short term very well, which is why I was asking about budgeting guidelines upthread.

This is a 3 bedroom house, with a full basement. There's only two of us, and a couple small pets. We could get along just fine in much smaller digs. And the way I'm feeling now, if I have to lose the house, I don't even care about the furnishings. They are all very nice, good condition, but if fitting into a much less expensive life can be made to work, I will adapt and start over. And make my life about doing not about having.

[StartinOver]

"if you know you're going to file you need to stop paying all unsecured debt, period"

Except for the student loans, right? We're a little behind on the largest of them, as well.

[blessed]

Correct, you can't include student loans in a chapter 7.

Hopefully someone else can give you advice about the heloc. Luckily we weren't approved for one a couple years ago so I don't know enough to help on that.

[StartinOver]

The HELOC is secured - we are not underwater enough to strip it, most likely.

[Flamingo]

(snip)...Total right now is coming to exacly 31% of our gross income. We were OK until I took a 28% cut in pay, which I took because I couldn't find another job that paid the 63K I'd been making.

We have recently increased and very high commuting costs - my job was 14 miles away when I took the cut in pay to keep it. This January, it moved and I drive 76 miles a day in my 97 RAV4 and hubby drives back roads to his job 18 miles away in an 8 cyl truck.

I WANT to keep my house both because I love it, and because I want to recoup value when the market turns back around, but it doesn't seem like this is going to work in the short term very well, which is why I was asking about budgeting guidelines upthread.

This is a 3 bedroom house, with a full basement. There's only two of us, and a couple small pets. We could get along just fine in much smaller digs. And the way I'm feeling now, if I have to lose the house, I don't even care about the furnishings. They are all very nice, good condition, but if fitting into a much less expensive life can be made to work, I will adapt and start over. And make my life about doing not about having.

A budget isn't going to help you now; previously it may have but you were living beyond your means and you know it or else you would have saved some of your income in the event a job loss or other event came up where you would need a safety cushion. Without planning in life, disasters happen as we all know. Unfortunately, when teh credit cards are no longer a lifeline it is way too late to change things. You have to stop at this point and redo your life and your lifestyle and instill budgeting as part of it; otherwise you will revert back to where you are now in a few years. Your situation is based on as you stand right now as to your income, outgo, bills, assets, etc. While it is scarey to stop paying those bills, it is stupid to continue to do so if you plan to file. Budgeting now will not help you - you are insolvent (broke) if your debts are more than your assets and you have to live on credit to pay bills and eat.

Stop paying the cards - get the scissors and cut them up as hard as it is to do. They are dificult to part with but it has to be done. Call and make that appointtment to see the attorney again to go over your entire situation. Once you get past that hurdle and all your indecision, things will fall into place. Start from there and work on a household budget and resolve to stick to it.

[StartinOver]

"A budget isn't going to help you now?" A budget is the ONLY thing that's going to help me now (well, at least in our post-bankruptcy future)! I'm not trying to budget to stay, I'm trying to budget to go - for our new start.

Re: cutting up the cards - We have not charged anything at all on credit cards since February. In February it was only netflix which is since cancelled and a purchase of a battery and inverter during the extended power failure we had, to run my husband's CPAP machine. Prior to that, the card was being used for netflix and gasoline only.)

We are going to end up walking out of this house with nothing much other than our jobs, both of which seem a little shaky to me. (He's in the food service industry and my company has a very high accounts payable in arrears. (Lucky me, I get to field collections calls for the company on my office phone and for ourselves on my cell phone - we don't have a home phone.)
.
We have generous exemptions in the state of NH, but no savings, and not a lot of time to amass any, because if we wait too long to file, we will end up in chap 13 instead of chap 7, because hubby's income was at it's lowest 6 months ago and we are now stabilized at 76200 annual. I've heard that sometimes you can go a 7 even over median, but I don't really understand.

I look around at this house and the contents. When I get myself emotionally past the difference between house and home, I will probably not even want most of the contents and will liquidate them so we can pay the student loans off faster too. Way too much of my life energy is going to sustaining all this. Its a beautiful day, I still live on a lake and I'm sitting here on the computer trying to figure out this mess? Screw it - I can mope later when it's dark out! I'm going out to play - not doing yard work, and not doing housework!