How soon will CC companies come after us?

[basketsbears]

Hi,

We decidedto go the debt management route about 18 months ago. It is a 60 month plan at $870 month. We have about $160 in unsecured payments outside that plan. We are planning on filing this summer sometime. My question is, how quick usually do the CC companies start coming after people when they stop paying into their debt management plan? Our credit union pays any fees to the debt management company.

We are hoping for Ch7 will pro. Be a 13. I believe our payments will be much lower than we have now. I've used the nolo means test calculator. Is it pretty accurate?

[Pandora]

If you know you're going to be filing - then stop paying the Debt Man. company and any other unsecureds; you're simply throwing your money away at this point IMO. That being said, I think you mean that your credit union cuts the payment (directly via chk or through electronic transfer) out of your account/money - not that they are actually paying your bills, right?

[basketsbears]

Right. The debr management company called Green Path/Accel takes $435 out every other week. Any fees charged by green path is paid for by the CU.

If we file this summer would we be sued by then?

[Pandora]

I doubt you'd be sued that fast, however no one can be 100% positive on anything. Is there a reason why your attorney told you to continue to pay up until you file for BK? Is anything in your payment to the DMC considered a secure item (i.e., car) ? When you signed up for it - did it include paying all of your debts inside the plan in full during the course of time allocated? These are all things you need to know and weigh against filing BK. Upon reading your past posts, it appears your main reason of filing is to get rid of a rental property, however realize that you will have to include every debt you owe in your BK paperwork. If you are currently paying the $870 a month towards unsecured debts, then you need to ensure your attorney can decipher if it would be considered a preferential payment since its over $600.

If you file for BK and you want to keep your cars, be sure to see if the 910 rule applies, that way if you're upside down on your vehicle, you may be able to cram it down to current value as well as lower the interest rate.

[basketsbears]

I doubt you'd be sued that fast, however no one can be 100% positive on anything. Is there a reason why your attorney told you to continue to pay up until you file for BK? Is anything in your payment to the DMC considered a secure item (i.e., car) ? When you signed up for it - did it include paying all of your debts inside the plan in full during the course of time allocated? These are all things you need to know and weigh against filing BK. Upon reading your past posts, it appears your main reason of filing is to get rid of a rental property, however realize that you will have to include every debt you owe in your BK paperwork. If you are currently paying the $870 a month towards unsecured debts, then you need to ensure your attorney can decipher if it would be considered a preferential payment since its over $600.

If you file for BK and you want to keep your cars, be sure to see if the 910 rule applies, that way if you're upside down on your vehicle, you may be able to cram it down to current value as well as lower the interest rate.

Thanks Pandora!

The DMP includes 18 creditors. The agreement will expire 10/2011, but they had said they would renew until it is paid off. It should be paid off 10/2014. We don't WANT to file BK, just don't know how to get out of filing with the rental property. We have two other unsecured creditors outside the plan totalling about $160month payment. Our car payments are out of the plan, will be 910 days end of Dec 2011.

We have not retained an attorney. The attorney we did see said to keep paying as we wouldn't be filing until June at the earliest. He also said that since my husband's income is protected, even if BOA foreclosures (we have been trying to work with them, but keep getting run around), so they could not garnish his income, and since the home is not in my name and in a different county, they cannot do anything to our present home. So, at times, we think, maybe it is better to 'do nothing'? The biggest advice the attorney gave us was to get a bank account where we did not owe any money. That is how a couple of years ago (we saw an attorney 18 months ago) we found out about the DMP company we are at.

Actually, maybe we should do "nothing", or have my husband file on his own (if we would need to). We will be debt free of everything except our house & student loans (that I am using now while I'm in school) Oct/Nov 2014. If we did a 60 month Ch 13, even though we would save $ probably, it seems like we would be under someone's "plan" until at least 2016 sometime.

Any other options we can do with foreclosure????

[Pandora]

I'll try to answer what I can, but I'm sure others are more experienced in this area than I am. FWIW...

You're paying $870 a month to unsecured creditors IN the plan, $160 outside your plan, as well as 2 secured car payments, plus mortgage and rental. Right off the bat you're paying unsecured creditors $1030 a month - thats more than enough to put you in a CH. 13 plan over a Ch. 7.

While your husbands income is protected, something you need to check on is if your funds are co-mingled, can they levy the joint account and take your monies vs. his. (I'm not certain but I know others have posted re: co-mingled funds & benefits). Best suggestion is to have your husbands VA benefits go directly into their own account.

To do "nothing" will result in some sort of judgment being awarded somewhere down the line if you are both on loans (credit cards, cars, mortgage, etc) and again, possible garnishment/levy. This is something that you need to discuss with an attorney who is well versed in a case like yours. I dont know if your current home can have a lien placed against it or not due to foreclosure of the other home, guess it all depends on what your state allows (judicial vs. non-judicial foreclosure (or both) & deficiency / anti-deficiency laws). I believe anti-deficiency laws only protect the main residence, not 2nd homes.

Here is a great site that can help you with many questions regarding BK as well as what is included in the Means Test as far as income:

http://methnerlaw.com/2010/04/22/what-counts-as-income-for-the-means-test/

Hopefully Despritfreya or HHM will weigh in for you (resident attorneys )

[basketsbears]

Thank you so much Pandora!