Has anyone successfully avoided bk?

[keepsmiling]

Hi, sorry if this is the wrong place to post- I am new here but have been spending many hours reading. Thanks to everyone who posts, it's very helpful.

Just missed my very first EVER payments on a couple of accounts today. It's a very nerve-wracking feeling since I have always been very proud of managing to stay current and keep a decent FICO on a pretty small income.

We have about 90K cc debt, and just over 100 K each mortgage and HELOC. We are under the median but may be close on the exemption for the house depending on appraisal. Would like to stay here so that ds can finish his senior year without disruption- would really like to avoid BK if at all possible, at least for now. I still have some savings but we have been living off of them and I really would prefer not to turn them all over to the banks, which have jacked up my rates even with my perfect payment record.

We are seeing a BK attorney tomorrow. One of the books I read suggested that you have your attorney call the cc's and try to negotiate some pennies-on-the-dollar settlement. I am going to ask her, but just wondered- does anyone here have any success stories with that? Or know of anyone who does?

I am in NJ, if that makes a difference. Thanks in advance and good luck to all of us.

[Freddy03]

Since you just recently missed payments the CC's are not going to negotiate low settlements. They usually don't accept "pennies on the dollar" settlements until they have been sold to JDB (junk debt buyers). And from experience if the balances are over $3k the OC's hold onto the accounts and send to CA (Collection Attorney) to start the collection process or file a lawsuit.

I took some bad advice from debt settlement company and stopped paying my accounts about 20 months ago (below was the outcome)

1 account - $1200 balance - settled for $400
6 accounts - $3k -5k balances - fixed payments until paid off (reduced interest)
3 accounts - $3k - $11K - wouldn't budge - all have filed lawsuits against me (3 are pending and 1 judgement)
2 accounts - $1 - $1.5K have been sold and haven't heard from them since I sent the initial debt verification letter.

I am filing for Chapter 7 next month because of the lawsuits.

Good luck

[brokejoker]

We tried to avoid bankruptcy for 2 years. We tried settlements with some creditors (after a year of nonpayment and all those late dings on our credit), but found that some would send settlement letters saying that they could come after us for the unpaid portion of the debt. We also watched the balance of our debt go from about 40K on credit cards to 100K after only two years. LOVE that compound interest, 30% interest, and late/lawyer fees!!!!

I would have to say that the SMARTEST financial move we have made is to file BK. We are staying in our house since we aren't upside down and the payment is manageable.

We had perfect credit too. No late payments, over 10 years of history, and scores well into the upper 700s. Funny how our creditors didn't give a crap about ANY of that once the first payment was late. If I had it all to do over again I wouldn't have sent a dime of my tax refunds or savings account to the creditors. I would have spent that money to take care of my family first!

[andy158]

Keepsmiling, we had nearly the same amount of cc debt as you and realized it would never get paid off in our or our children's lifetimes. Our cc debt also grew exponentially over a two year period. After two of them hit the 30% interest rate I said that is enough. Tried negotiating with no luck. Our situation was not reversable. With a credit score of 718 we bit the bullet and will now be debt free in four more years. Best move we ever made.

If you missed payments already it will begin to snowball my friend. Take it form the people on this forum who have been there and done it. Pride goes out the window. It is a matter of financial survival. Best of luck on what you decide.

[wonderingrov]

I know in my case, filing bankruptcy was the wisest course of action. I had one card since 1994 (CITI) with no late payments until February of this year. Within 30 days of missing one payment, they lowered my credit limit from nearly $20,000 to $6,700. At the time my balance on that card was around $6,600. Within 30 days of that, the interest rate jumped up to 29.9%, and the balance put me over the new limit. Then came the over-the-limit charges, further late charges, etc. etc. etc.

It matters not that you have a perfect history for 5, 10, 15 years or whatever. Miss one payment, and they will pull out all the stops to try to rake in the money.

Funny thing is, even last summer when my credit score was still in the 750's, they raised the interest rate from 6.99% to 19.5% - a move the CSR said on the phone they were doing to everyone due to 'market conditions.' Those market conditions, of course, related more to new legislation in Congress last year that was suppose to be protecting consumers than anything else......

[tobee43]

wondering...that is exactly what happened to us...never ever late in 40 years...we had racked up cc because of medical expenses but they were all between 5-7% fixed rate...some for over 20 years!!! well one day they just raised them to 30-33%! now....we have illness....job lost...and still making timely payments...but how can you when your 60 dollar payment has now turned into a 400.00.

congress warned all the banks before the law went into effect...so they scrambled to raise everyone they could...or cut lines.

it was just another mess to deal with!!

[mijd]

I tried to avoid it in any way I could. I was afraid of a judgement from my HELOC as they were only awarded 3k from the short sale of the 119k that I owed them. I kept checking the Clerk of Court website waiting for the ball to drop (judgement) after my account was sold to a debt collector. If the DC was awarded a wage garnishment, it would have been months before I could afford an attorney to file bk.
After an initial consultation with an attorney I kept paying my cc bills trying to stay afloat until after my short sale.
I can understand the guilt and depression that comes with bk and not paying bills. My older sister's attitude towards me has cooled immensely since I've filed. It will be a while before she will feel the same towards me.

[tobee43]

I can understand the guilt and depression that comes with bk and not paying bills. My older sister's attitude towards me has cooled immensely since I've filed. It will be a while before she will feel the same towards me.

i so understand what you're saying here. only a few family members knew about our BK....and i had to tell them because of the of the situations that may happened. since they all understood that it wasn't a money mismanagment problem, but a job loss and illness, they actually were very understanding. at one point one of our relatives let us stay at one of his houses just for expenses. some offered to help pay the rest of the upcoming surgery i had. it was a SHOCK to say the least.

some people just don't get it...that's why to us the less persons that knew the better, some times people LOVE to kick you while your down. we only told who we absolutely HAD to.

everyone has a different approach to their BK...we also chose to keep paying the CC...as opposed to the mortgage. but that was for two reasons. first the mortgage company said we could not be considered for loan mod if we were NOT behind....2nd....reason is the cc cards call you night and day and day and night...and since we knew that we were not be filing for another almost 2 years we kept paying them to keep them away...also because they start their law suits ....get judgements, etc...then that cost extra to have removed once you do file. we stopped paying the cc's approx 90 days before filing. so we had to deal with very few calls and gave them NO time to put judgements on anything.

don't worry about your sister...she will come around!

[andy158]

I can understand the guilt and depression that comes with bk and not paying bills. My older sister's attitude towards me has cooled immensely since I've filed. It will be a while before she will feel the same towards me.

Explain to her that bk is in no way a cop out for debt relief. Did she offer to help you out if she is better off financially than you? There are stipulations and consequences in bankruptcy and no one gets a free ride. Especially those of us in bk13. It is a financial tool pure and simple and a way of keeping a roof over your head. Look at all the major corporations that have filed in the past two years and are still in buisness! We are no different when it comes to cash flow.

I felt no remorse for filing against my creditors. For over two years we struggled and depleted all our retirement savings and personal savings. Our creditors refused to work with us on any terms and therefore got what the bk court is awarding them. I consider it a financial rebirth. But I will not be a born again debtor.........

[mijd]

Thanks to you Andy and others for your kind words. I consider all this a learning experience and will not fall into the credit hole again.