Worried about law suit - should I file? Help please!

[Danie]

Hi Everyone,

I'm new here and found this great forum and hope to get some advice.

I'm married and live in CA, a community property state. I have about $8,000 in CC debt but have always been able to make my payments and am working hard on paying this debt down. My husband has about $5,000 in CC debt. About a year ago I got hit with a large bill for something, about $20,000, it got turned over to collections in January and for the last few months a lawyer has been asking me to pay and is threatening to sue. I lost my job last year and am working several part-time jobs right now that pay about $2,500 a month. My husband is in school right now and is getting financial aid and a few other benefits. I'm constantly looking for a new job but no success yet. We're renting and all we own is a car worth about $13,000 and a motorcycle worth about $3,000.

What should I do? Should I file? If I file, I want to file seperately. Or should I wait until I get served? I'm so worried that I can't sleep anymore at night.

Thanks!
Danie

[drowning123]

Hi Danie, if the job prospects don't get brighter, I say file. Bankruptcy gives you your sanity back. $28,000 in debt is pretty steep when you only make $2,500 a month before taxes. The only problem is you may lose your car and motorcycle. I would say stop paying on the debt and start saving your money. Wait until you get served then file. The money you save you can use to buy a nice used car if you lose yours, which may not happen right away, so you can really save up some good money (if possible on that salary). I know you don't owe anything on the car, but it's an asset which they can take to pay off the creditors. Good luck!

[IamOld]

Drowining is quite right! Check out the exemptions for CA http://www.bkforum.com/wiki/California

If the car/motorcycle is paid off they are at risk, although the motorcycle you should be able to exempt. The car...maybe you could get a loan on it...BUT consult a few good BK atty's before you do ANYTHING! and there are many people here who will be able to steer you in the right direction.

[keepmine]

I'd not file until you get sued .Ideally, you'd want to have a job that carried health insurance benefits before filing.
Version 2 of the Ca. bk code has a very nice wildcard exemption that should cover the auto and cycle.

703.140(b)(5) - $15,000 of any property, less any claim for homestead or burial plot

[dealingsdone]

That nice car is vulnerable. Perhaps you should consider selling the car and then waiting 6 months or so. You can't have too many nice assets or they take them to pay off creditors.