Is bankruptcy my only option?

[lotsahats]

Is bankruptcy my only option?

My husband works. I stay home with the kids. The underwater credit cards are solely in my name, which means that, when I file for bankruptcy, I will be able to do so separately from my husband.

I'm considering filing for Chapter 7, for the peace of mind that having my slate wiped clean will bring. We've been trying to pay off our 14K credit card debt for three years, and are no closer now, than we were when we got owned by the economy three years ago. The thought of being free of debt is so alluring, it makes my head spin.

But, here's the crux: it's only the minimum credit card payments that are doing us in. If you leave them out of our budget, then we have more than we need.

What if I didn't file? What if I just didn't do anything? What if I simply stopped making the payments? They couldn't garnish my husband's wages, could they, since the cards aren't in his name? And, since I'm not working, I have no wages to garnish.

We have a joint bank account, but that is easily remedied by taking my name off of it (but continuing to allow me to be an authorized user). Our only asset is our jointly owned car, but the value on it is so low, that it's protected by our state's personal property exemption. And, we have no plans of ever buying a home, as renting has always been our personal preference.

Would the fact that I have nothing keep a creditor from dragging me to court, or would they still try? Am I being fool-hearty? Should I just go ahead and file Chapter 7?

What are your thoughts?

[magua2]

Do you live in a community property state? If so, your debts are your husband's debts and he would be fair game for collection proceedings.

[ttg1]

Would the fact that I have nothing keep a creditor from dragging me to court, or would they still try?

This is one of the most common mistakes that people make. Your ability to pay has nothing, zero, zip, nada to do with whether or not you get sued. If there is a business based upon hope it is the collections business. There is always someone out there who is willing to take the risk to sue in the hope that you will pay. If the original creditor wont, they will sell the debt to someone who will.

[lotsahats]

Do you live in a community property state?

Nope.

This is one of the most common mistakes that people make. Your ability to pay has nothing, zero, zip, nada to do with whether or not you get sued. If there is a business based upon hope it is the collections business. There is always someone out there who is willing to take the risk to sue in the hope that you will pay. If the original creditor wont, they will sell the debt to someone who will.

I see. But, regardless of whether or not they actually drag me to court, it doesn't change the fact that they'd be trying to squeeze blood from a turnip. Wouldn't a judge take that into consideration, even if I lost a suit?

Stop me if I'm off base. I'm just assessing my options.

[Freddy03]

Nope.



I see. But, regardless of whether or not they actually drag me to court, it doesn't change the fact that they'd be trying to squeeze blood from a turnip. Wouldn't a judge take that into consideration, even if I lost a suit?

Stop me if I'm off base. I'm just assessing my options.

No because you may not have anything now but who knows what you will have in the future. Here in FL judgments are good for up to 20 years.

[lotsahats]

No because you may not have anything now but who knows what you will have in the future. Here in FL judgments are good for up to 20 years.

I see. So, it sounds as though bankruptcy is the best way to go.

Thanks everybody!

[magua2]

I see. So, it sounds as though bankruptcy is the best way to go.

I don't agree with that. If you are willing to live with collection agents calling and willing to go through the court process making your creditors rack up their attorney's fees, all for a worthless judgment at the end of the line, then you don't have to file. I've been living like this for two years. One of these days my kids are going to wonder why so many "salesmen" call and then go on the blocked call list. The problem though, is that you can't accumulate any assets, can't ever receive an income and they might be able to put a lien on your house if they get a judgment.

[dman]

You have two options, either file bankruptcy or see if you can wait out the SOL for your debts. Either way, I'd probably stop making payments on the cards.

Assuming you are eligible for a Chapter 7, if you file now then in about three months time (roughly) you will be debt free. That's a pretty big check in the pro column. Heck, make it two. In the con column we have the cost of the Chapter 7 (thousand bucks or so, consult local attorneys), having to disclose bankruptcy to anyone who asks (i.e. if you sign up for life insurance at the local office, you may/may not be embarrassed to have to disclose this), having the bankruptcy show up on your credit report for ten years (while that is a negative item...it'd be better than no bankruptcy but tons of late payments and charge-offs), and the fact that you could not file another Chapter 7 for eight years (so if the sh** hits the fan again in three years, you have to either wait it out or see about a Chapter 13).

If you wait it out, you may get sued and have a judgement against you. As long as you have no income or assets, that's really not a big deal. If you suddenly found yourself with income and assets, you might still have the option of filing for Chapter 7 (but will your income be an issue, are you able to exempt your assets, etc. etc.). You also have to deal with the stress. This can be alleviated somewhat; get a new GV (google voice) number, give that to all your creditors. Get a second GV number that you actually use (i.e. give that one to your friends/family, future employer, etc.). Change your current phone number(s). Make the new phone number unlisted, and DON'T give it out to anybody (have all calls go through GV and show your GV number). If a collector gets your new "real" GV number (i.e. the one given to friends/family...dangit maw why'd you give "Billy from college who just wanted to touch base" my new number?), it's easy-peasy to block them. You're on the right track about the checking account; the less that you technically own, the less that's at risk.

Anyways, both routes have their pluses and minuses. It'd be a smart decision to file bankruptcy now. It'd also be a smart decision to hold off and see if you can wait out the SOL; if something changes in the future you can still (probably) play the bankruptcy card.

[ttg1]

dman that's a nice write up. I agree with your list of the pro and cons.

I went the route that magua2 went. In hindsight, was it the best decision? I don't know. Time is our most precious commodity. I sometimes feel like I spent a year fending off the wolves at the door when I would have been better off out planting grain. "Pyhrric victory," is the term that spring to mind. I did learn a great deal about the legal system and I learned not to be nervous or intimidated by, as the poet wrote, "men and their bits of paper." But was it worth it? Ask me five years from now!

[magua2]

I went the route that magua2 went.

Do you mean you fought the entire way and never made it easy for them? But you did end up filing? Why?

[ttg1]

Do you mean you fought the entire way and never made it easy for them? But you did end up filing? Why?

A full answer to those questions would require a small novel. But in the final analysis the reality was that I thought my time was better spent trying to build a new life for myself rather than continuing to live with the debris of the past. I wanted that "new start" psychologically as much as anything. BK has helped to bring closure to a certain phase in my life and as of this moment I don't regret doing it.

[daylate]

Another thought for you to think about. if you quit making payments but and this is key, save the minimum payments, in 6 months or so you should get offers to settle the debt for 50% or less of the balance. If you could save that much then that may be a way to go. Either way if you take a hit on your credit. And there will be a tax hit for the amount you didn't pay so look at that part as paying off your debt at 28% of face(may be higher or lower depending on your income tax rate).

[lotsahats]

I actually have been kicking around the thought of settling. But, I'm sure I wouldn't be able to go as much as 50% on either card.

But, what if I save money for a few months, tell them, "this is how much I can give you, take it or leave it," and inform them that if they don't take it, then my only other option is bankruptcy, in which case, they'd get nothing. And then, if they don't take it, use it to pay for the attorney. Would that yield negative consequences?

I still keep arriving at the conclusion that bankruptcy is the best way to go.

[lotsahats]

But, what if I save money for a few months, tell them, "this is how much I can give you, take it or leave it," and inform them that if they don't take it, then my only other option is bankruptcy, in which case, they'd get nothing. And then, if they don't take it, use it to pay for the attorney. Would that yield negative consequences?

On second thought, I think if I did that, I would be begging for an AP. Best to just file Chapter 7, and get it discharged.

[sunshinepa]

Since you are undecided I wanted to tell you about a friend of mine. They both lost their jobs and could not file bk because they had done so five years ago when they lost jobs before. So they called up the credit card companys.....told them the situation and lo and behold, they lowered their payments and put them on a five year plan. They have to use cash for everything but this did work for them. I am not saying it will work for your situation but wanted to share what might be possible.

In my case, they would NOT do anything so I just filed and got em all..........best thing I ever did.

Anyway, it's a thought for you to consider trying. Good luck in whatever you decide.