Should I file or not? Help me decide.

[AlSmith2011]

Hello everyone, I am new here and read a lot of the threads. This is a great place with a lot of helpful information. I am wondering if you can help me decide on whether to file or not considering the following circumstances(I did my best trying to keep it as short as possible, yet enough detail for you to be able to help me):

My story: Four years ago I was a newly wed, I had perfect credit, just bought a house, two cars, credit cards with limits in check, working a good job. One month after we purchased our home, my ex-wife left me and left the country leaving me with all the debt. Couldn't sell the house, or car, refinance or anything because everything was in both names and she refused to sign off on anything. I also went through a nasty depression, lost my job, and after a year struggling to keep everything together I had decided to let everything go, move in with parents, and file for bankruptcy. One year later I'm still debating whether to do it or not though I have already completed Chapter 7 papers once myself.

My consequences and current situation:
-My home went into foreclosure last year and auctioned off January 2010.(no balance after foreclosure)
-I lost my car in December 2009.($~5000 balance after repossession)
-Last credit card payment was also in late 2009.
-Last year I ended up in the hospital and racked up $4000 on an emergency visit.

I stopped paying everything as of December 2009 and I have roughly 24,000 in credit card and hospital bills, including interest and repo balance, and I work a part time job making roughly ~1,000 month desperately trying to find better work. I have considered paying everything back in payments, but considering my situation which is not improving, the health of my parents which is deteriorating, I do not realistically see myself paying back 24,000. Whatever extra money I may be able to make in the near future I'm going to need just to become self-sufficient again and basically survive as right now I'm heavily dependent on my family. The hospital bills in 2010 was the last time I had any NEW delinquencies though I am sure some of those have not hit as collections on my credit and expect them to appear this year.

Reasons for filing:
So for all intents and purposes, everything I do have is in collections. My reason for filing for bankruptcy(Chapter 7) would be to basically get rid of the debt that is in collections, avoid the risk of being sued, having wages garnished and begin re-establishing credit. I have nothing to salvage as I have already lost everything.

My dilemma:

A) It takes 7 years, lets say from today, assuming the final collection has hit, for everything to be wiped off my credit. But at that point I can actually obtain perfect credit and I would never have to answer yes to an employment application that asks if I have ever filed for bankruptcy. If I go this route however I know that I have to pray that for at least 3 years since the hospital bills in June 2010(2 more years), and 3 years since last credit payment in December of 2009(1.5 years to go) no one will sue me or take a judgment out against me. I understand they can still collect forever but if I ever decide to settle I can do it post-7 years mark.

B) I can file for Chapter 7, eliminate all debt as well as the risk of being sued and begin re-establishing credit soon after. I have already contacted all my creditors and told them that I would be filing for Chapter 7 and though I have not retained an attorney as I plan on doing it myself, it seems it pretty much stopped all collection calls. I will have to wait 10 years from either the date of filing or discharge(not sure) before putting everything behind me, but I can re-establish credit sooner. If I attempt to buy another house after bankruptcy however I am certain the extra interest I would be paying would probably double the amount of debt I currently owe over a 30 year mortgage.

My question:
Would you file and take the 10 year bankruptcy sting over $24,000 or lay low and ride it all out for 7 years and settle your debts after they can no longer affect your credit with whoever still chases?

[IamOld]

Welcome! One quick point - in NC (most of the time) they cannot garnish your wages - as long as you stay in NC...

[AlSmith2011]

Thank you for that. But they can still file judgments before SOL runs out which would be the same as a bankruptcy: 10 years. Right?

[IamOld]

Right AL - and judgments - depending on your state law, can be renewed and are WORSE (I believe) than a BK - judgments are THERE - BK once it's done it's done. From what you write above it sounds like you would have no issues with a Ch 7 Bk and just get this part of your life behind you - sounds like you've been through the ringer and then some.

First and foremost - best wishes and best of good luck, and I know that other folks will chime in too!!!

[AlSmith2011]

Thank you and I hope they do. It basically comes down to: no credit to clean credit in 7 years and maybe paying some creditors, or so-so credit in 2-3 to clean credit in 10, but with the BK sting following you around forever on job applications.

[IamOld]

They will!! AlSmith- not all jobs a) ask about it, and b) even if you say yes, they may not care. Unless you may be in the financial industry...

[lillymarlene]

Hi Al, Welcome. Maybe I don't know, you sound fairly young, but I say file and put it behind you. I myself should have filed years ago. I carried old debt from a divorce and financing my college education with credit cards for over 25 years. Then the old debt later just got added on to the new debt. Then when the Great Recession hit my credit card banks started playing games: capping limits to my balance, tripling payments, shortening cycles, charging 29.9% interest, closing accounts, etc.

I think you should get out of this debt trap while you can. Probably the easiest way would be to file bk and make a clean break of it. Well, good luck in whatever you decide.

[jacko]

That is the worst thing he can do. Why would you file BK on $24,000 debt? He has no full time employment and health benefits. He is collection proof. What happens after a discharge and lands in the hospital the day after?

Hi Al, Welcome. Maybe I don't know, you sound fairly young, but I say file and put it behind you. I myself should have filed years ago. I carried old debt from a divorce and financing my college education with credit cards for over 25 years. Then the old debt later just got added on to the new debt. Then when the Great Recession hit my credit card banks started playing games: capping limits to my balance, tripling payments, shortening cycles, charging 29.9% interest, closing accounts, etc.

I think you should get out of this debt trap while you can. Probably the easiest way would be to file bk and make a clean break of it. Well, good luck in whatever you decide.

[AlSmith2011]

Could you explain? What would happen? I figured since I already owe medical bills it's worse if I don't file to eliminate that debt. Does including medical bills in BK mean hospitals won't admit you?

[IamOld]

Could you explain? What would happen? I figured since I already owe medical bills it's worse if I don't file to eliminate that debt. Does including medical bills in BK mean hospitals won't admit you?

Al, I think Jacko means this - if you have no income and no assets, there's nothing anyone could take from you...what I also think Jacko means is that if you foresee future hospital bills especially large ones, wait for those and THEN go do BK. Because if you do BK NOW if you have large bills in the near future, you'll be stuck with them.

[AlSmith2011]

I see. Well I don't foresee that in the near future, and don't really think like that. I am constantly looking for full time employment, so I don't expect to stay in this situation forever. If I do then that might be the only thing that will put me in the hospital since it is unbearable.

The only problem is even with full time employment, I don't see myself making more than $2000 a month before taxes or take home ~$1600-$1700, which is going to be exactly what is going to cost me to rent a place, pay monthly bills, food, gas and live on my own again. I can't go back into sales, which is the only domain I can earn a decent living and the only thing I have experience in, as I have come to the realization that the stress in that domain was my biggest health hazard. Unfortunately I have no choice but to live on much less for the foreseeable future, since I will be lucky to land a job paying even $12-$13 an hour with no experience until I can work my way up in a different field, or go back to school.

The amount, 24,000 may not seem a lot to some, but to someone that is making $1000-$1600 a month, that's the equivalent of $80,000-100,000 to someone that's making $5000 a month. After I pay my share of current bills I am left with literally $100 for gas and food to last me an entire month. When filling out the expenses form in the BK packet I actually had to leave out expenses just so I wouldn't go under 0. I owe $2000 in back taxes which I have not started paying them, and do not qualify for a discharge, so I can't even start making payments on those until I increase my income.

I'm having to file myself and make payments on the BK cost because for the past year I cannot even save up $1500 to pay an attorney to do it for me.

[disconapper]

Hi Al, your situation sounds similar to mine, and well, probably most here. You are underwater and close to drowning.

You stated you left out expenses in your bankruptcy packet. Don't do that, the more expenses the better for your case, assuming they are all allowable expenses. Many people are very much in the negative when it comes to expenses, going under zero is not an issue and thus only proves the point of my previous statement of being underwater.

I was laid off last year and then found another job in which took a huge paycut and began to quickly sink. I was sued by a creditor and was facing a judgment. I decided to file the bankruptcy the day I was served. I had already been contemplating it.

No one can make this decision for you, however, if you are interested in getting a fresh start, then I'd go for it and your circumstances probably warrant it.

[IamOld]

I understand Al - just make sure you follow the Nolo book, directions, advice, etc!!! I take my hat off to you for doing this by yourself. W/out income I don't see how you'd have any problems! VERY VERY best wishes to you...let us know how you're coming along!

I see. Well I don't foresee that in the near future, and don't really think like that. I am constantly looking for full time employment, so I don't expect to stay in this situation forever. If I do then that might be the only thing that will put me in the hospital since it is unbearable.

The only problem is even with full time employment, I don't see myself making more than $2000 a month before taxes or take home ~$1600-$1700, which is going to be exactly what is going to cost me to rent a place, pay monthly bills, food, gas and live on my own again. I can't go back into sales, which is the only domain I can earn a decent living and the only thing I have experience in, as I have come to the realization that the stress in that domain was my biggest health hazard. Unfortunately I have no choice but to live on much less for the foreseeable future, since I will be lucky to land a job paying even $12-$13 an hour with no experience until I can work my way up in a different field, or go back to school.

The amount, 24,000 may not seem a lot to some, but to someone that is making $1000-$1600 a month, that's the equivalent of $80,000-100,000 to someone that's making $5000 a month. After I pay my share of current bills I am left with literally $100 for gas and food to last me an entire month. When filling out the expenses form in the BK packet I actually had to leave out expenses just so I wouldn't go under 0. I owe $2000 in back taxes which I have not started paying them, and do not qualify for a discharge, so I can't even start making payments on those until I increase my income.

I'm having to file myself and make payments on the BK cost because for the past year I cannot even save up $1500 to pay an attorney to do it for me.

[AlSmith2011]

Hi Al, your situation sounds similar to mine, and well, probably most here. You are underwater and close to drowning.

You stated you left out expenses in your bankruptcy packet. Don't do that, the more expenses the better for your case, assuming they are all allowable expenses. Many people are very much in the negative when it comes to expenses, going under zero is not an issue and thus only proves the point of my previous statement of being underwater.

I was laid off last year and then found another job in which took a huge paycut and began to quickly sink. I was sued by a creditor and was facing a judgment. I decided to file the bankruptcy the day I was served. I had already been contemplating it.

No one can make this decision for you, however, if you are interested in getting a fresh start, then I'd go for it and your circumstances probably warrant it.

Well the only issue is I had 2 and a half months where I only got half my normal hours, and made half of what I usually make, which brought down my past 6 months income average a lot. Those 2 and a half months I did not pay my family rent, as they gave me a break, but if I factor in monthly rent, it will bring my expenses under 0 which is going to look weird. Then I would have to explain that they helped me out with rent for 2 months, which I believe is considered "income" and have to factor that back in to my monthly income, complicating the paperwork process.

[sunshinepa]

One other thing to consider. If you do get judgements, I believe they can be "renewed" or extended. Not sure if that's the term, but I believe they could drag out as long as a BK. So when you do want to own something down the road if and when you get on your feet, it could be up for grabs at that point in time.

Not likely to happen but it could.

I'm sure you will make the right decision for you.......for me, BK was the way to go but my debt was double yours. Good luck!