I need your help...

[sirius]

Hi all, great site here. I've done a lot of reading, but still need some advice and answers. I'm still a bit undecided if I will file. I've had one meeting with a lawyer who I was happy with and came with recommendations.

I will try to be concise with my questions. If anyone is willing to talk on the phone. Please PM me. I only ask because time could be a factor and sometimes some questions get overlooked on forums.

My situation:

I have balances on 3 cards. One about 13,000 the other 2 have about a thousand on each and are with the same bank. I have a car with about 2300 owed. The lawyer said I should be able to exempt it, but as I pay more equity it will be harder to and it will be close to going over the exemption in about 6 months. He said maybe, since the value drops with time as well.

All accounts are in good standing right now.

I have no income and I'm filing for disability. I have been surviving with famlily help and some cash. Family won't be able to help much anymore. They can help with the car payment though.

Questions:

-I need to keep the car. That's my main concern. What happens if you are only slightly over the exemption amount of the vehicle? They get to take it? It seems like they should only be entitled to the amount over the exemption. Also, say I stopped paying and 2300 was owed. They take the car, sell it and get all the money? Seems like they should just get what was owed and I should get something back. I know that's probably not what happens, but these 2 aspects don't seem fair.

-I need to keep my cash as this is all I'll have. If I file I need to do this in a way that benefits me as much as possible. If I file I won't have to pay my cards anymore, but then my cash is at risk. So I feel like a catch 22 where either way I have almost nothing. My cash has been out of the bank for a couple years, so I don't see how anyone can account for it, but the lawyer was very conservative in this aspect. Saying to spend it or hand it over.

-How safe is it to use my cards for some bigger purchases, but staying under the 550.00 limit and then stop paying? Are you fine if you are under the amount and then let 90 days pass or does this still look bad? Like I say I'm trying to maximise and if I charge a few bigger expenses and then I'm able to keep that expense from hurting my cash it would be a big help. For some people it's not quite the same, but for me, living with family and not having rent, etc..., but no income having an extra thousand dollars could mean months of me continuing to survive.

-Legal Aid: I called them to see if I could get free service. They said no, unless I have pay at risk or I'm being sued. How bad would it be to let my cards go unpaid until I get sued so I can qualify? Also, if I did that, but maintained my car payment is that a preferrential payment? What if my family was now making that payment for me? The lawyer said continue the car payment if I want to keep it, but he didn't mention a problem with preferrential payment. That's something I just saw mentioned here and don't know anything about.

Thanks so much for reading and for any help. I'm even nervous posting here about specifics. Is there any risk of a trustee looking at something like this?

[dingdong]

If you have no income and are filing for Disability, check to see if disablity income is exempt from garnishment in your state.

You might want to wait to play the BK card.


Check your states SOL for CC debt and see how long they have to sue you.

You may not get sued for the low balance cards.

The 13,000.00 maybe. If they know you have no income/no assets, what are they going to get? If your dis income is exempt from garnishment , then informing the CC company that a judgement might not do them any good may prevent a lawsuit if you have no assets, if they wait long enough and your state has a short SOL ( some states have 3 years but it can be up to 7) you might make it w/o filing.



Check your BK exemptions and see what is covered cash wise.


Sound like you would be basically filing on 15,000 worth of debt.

IF they offered you 4000.00 to settle, could you settle, and save the BK card for later?

Perhaps you will be offered a settlement on the 13, 000.00?

The more specifics you post, the more appropriate help you will be able to receive.


Of course your lawyer is probably your best resource.

[sirius]

If you have no income and are filing for Disability, check to see if disablity income is exempt from garnishment in your state.

It's exempt. I'm in Ohio.

You might want to wait to play the BK card.

Check your states SOL for CC debt and see how long they have to sue you.

You may not get sued for the low balance cards.

The 13,000.00 maybe. If they know you have no income/no assets, what are they going to get? If your dis income is exempt from garnishment , then informing the CC company that a judgement might not do them any good may prevent a lawsuit if you have no assets, if they wait long enough and your state has a short SOL ( some states have 3 years but it can be up to 7) you might make it w/o filing.

I don't know what SOL stands for and how do I find that info?

My car is an asset no? Especially if you are saying not to file then it's not exempt.

What are the advantages to not filing? Credit is completely ruined then, no?

Check your BK exemptions and see what is covered cash wise.

400 buck, plus a 1075 wildcard.

Sound like you would be basically filing on 15,000 worth of debt.

IF they offered you 4000.00 to settle, could you settle, and save the BK card for later?

That would wipe me out and then some. I'd have to have someone help with part of it.

Would they just flat out offer that or does that happen after they sue me? I'm not fully grasping the route you are suggesting.

Perhaps you will be offered a settlement on the 13, 000.00?

How does that differ from the 4,000 dollar offer you were mentioning above?

The more specifics you post, the more appropriate help you will be able to receive.

I'd be glad to. What else should I post?

I am a bit nervous about posting here when it comes to certain things. That's why I asked if it was safe. That's probably paranoid, I know, but my lawyer was very conservative and scared me a bit.

Of course your lawyer is probably your best resource.

Yes, but I had a long meeting with him and then called him the next day with more questions and I haven't paid a dime. I don't want to be too much of a tire kicker. If I had hired him I would have no problem asking more questions. Plus, some things put them in a bad spot and like I said he's conservative.

Thanks so much for your reply. I'm trying to fully understand it.

Any help is much appreciated. If there's a guru out there that wants to talk on the phone or yahoo chat or similar that would greatly help as well. It's hard sometimes to do it all on a forum. My situation is pretty simple compared to most, but there's still a few things that are fuzzy to me that I'm sure are very basic to those familiar with these issues.

[dingdong]

I don't think you should be paranoid about posting.

No one is going to come looking for you.

But the more info you give, the better quality help you will receive.

Lets say you did get sued , received a judgement.

Your state will have laws/exemptions about what a garnishment can attach.

You can check your states laws to see if your car, or the equity in it is an exempt asset-garnishment wise.

My point about the settlement was.

If the 13,000 is your main concern. Lets say hypothetically they sue you.

I am assuming you don't own a home, as you haven't mentioned it.

You cannot have your disability income garnished, as you stated earlier.

(SOL is staute of limitations, which means if your states SOL is 3 years, if the CC company has not sued you in 3 years from you not paying on the debt, then the lawsuit is time barred, they have no legal standing to sue you. They can attempt to collect a time barred debt, but they can't sue you)

So, if they sue you, get a judgement and your assets are protected by exmptions under your state's laws, they get nothing... until you have income that is garnishable/levyable. (Judgements can last a long time and can be renewed)

Now lets say, at some point in the next 5 years, you incur a huge medical debt and you filed BK next month, you cannot file Ch 7 again until 8 years have passed, you will not be able to discharge that debt ( the future hypothetical med debt)

Since they cannot garnish any monies from the judgement from your dis income you basically won't lose anything.( If your other assets, if you have any, are exempt)


If things get worse for you, you can always file BK later and include the judgement.

Re the settlement ( hypothetical 4000.00)

If all of your debt totals 15,000, and the CC company knows you are on disability, they may offer to settle the debt. They may not. Some cc companies go as low as 20% ( I have even heard of 10%). I am not saying that they will.

If they do offer a settlement, you will get a 1099 on the balance ( so lets say11,000, which you will have to pay taxes on as a forgiven debt.

The advantage to BK, is you do not receive a 1099 for the forgiven debt.

So you will have to take into consideration the amount of taxes you will pay if you did happen to settle.


My point to this whole diatribe, is that planning your BK and the timing of it is very important.

Do you have health insurance, are you going to be covered for the foreseaable future? If not, that is something you should consider as a probable judgement proof debtor.

Do you see what I mean?

I am not trying to not encourage you to file, just to think about all the possible scenarios and whether BK is the best option for you at this exact point in your life, while you are unemployed and on disability.

[sirius]

Thanks for the extra detail. It's now much clearer although I am a bit overwhelmed as to what I should do.

Your state will have laws/exemptions about what a garnishment can attach.

You can check your states laws to see if your car, or the equity in it is an exempt asset-garnishment wise.

Ok, I found this site for exemptions:http://www.legalconsumer.com/bankrup...-Elyria-Mentor

Are there similar sites for the scenario you are speaking of?

Do you have health insurance, are you going to be covered for the foreseaable future? If not, that is something you should consider as a probable judgement proof debtor.

Judegement proof because you are saying that I would have already played the BK card? Or judgement proof because they are exempt from BK. I assume the former because you mentioned being able to get rid of medical debt.

So far, I have been able to apply for programs for low income people when it comes to medical. Also, if I get disablily I can get Medicare.

Do you see what I mean?

I am not trying to not encourage you to file, just to think about all the possible scenarios and whether BK is the best option for you at this exact point in your life, while you are unemployed and on disability.

I just want to be clear. I don't yet have disability and it is not a guarantee that I will get it. I'm pretty sure I will, but that road can be a long one.

So, I guess there are 3 scenarios:

File BK and rebuild, but live with the fact that I can't play that card if things get worse.

Don't file and get sued and possibly live with judgements against me that would allow me to be garnished if I did get on my feet with a job in the future.

Hope for a settlement and pay the taxes on the forgiven amount.


How do I find out about a settlement. Is that something I would just do on my own by calling them?

If I have a judgement against me do they monitor my money or is just if I get a job and start paying taxes that they can take action?

Thanks so much, I'm glad I posted here...I'm learning a lot, but I feel the more I do the more I don't know what move to make.

Can you or anyone else speak to the specifics in my OP? This has been a great thread for me, but if I do file I need to know how to do it in a way that helps me the most.

[keepmine]

How much is the car worth?

[sirius]

How much is the car worth?

The lawyer said about 5500.

[keepmine]

So, subtracting the $2300 exemption, the car has about $3K in equity and declining in price every few months.
I agree with the previous poster. You're wasting your bk. Your income is exempt from garnishment and nobody is going to the trouble of trying to take and old car where they have to payoff the lein and then give you your exemption before they make a dime.
I'd not file and just ignore the collection attempts. If you get sued, bring proof of your incomes exempt status to court.

[sirius]

So, subtracting the $2300 exemption, the car has about $3K in equity and declining in price every few months.
I agree with the previous poster. You're wasting your bk. Your income is exempt from garnishment and nobody is going to the trouble of trying to take and old car where they have to payoff the lein and then give you your exemption before they make a dime.
I'd not file and just ignore the collection attempts. If you get sued, bring proof of your incomes exempt status to court.

They have to give me an exemption even if I don't file for bankruptcy? Now I'm even more confused. That's why part of my post was asking how it all works with cars.

You are saying I should continue to pay my car note though if I want to keep it?

I guess it sounds pretty scary to just stop paying. If I get a judgement against me then what happens? They can't touch anything I own or my cash or bank accounts? They only take action if I were to start working?

I assume I wouldn't be able to get any credit? At least with BK I could start to rebuild and have some options.

[sirius]

[dingdong]

I wouldn't stop paying my car loan if I am not going to file BK.

He was referring to the exemptions you are allowed by your state if you are garnished.

So, lets say you get a judgement,, your car is exempt up to 2300, you owe 5000, if they went after your car in a garnishment, they would then have to sell off your car for 5000.00, if they could get it, pay you 2300 ( your exemption amt) and then try and sell then collect 2700. Probably wouldn't happen for such a small amount considering every few months , your car loses value ( by the time they would actually get to sell it..

[dingdong]

2339.66 is the section of the code that applies, not a value

[sirius]

Thanks

and a bump for the night crowd.

Can anyone answer the OP. This thread strayed from that, which I don't mind since I learned a lot and I'm glad I found out about some options the lawyer hadn't mentioned.

It's just hard on forums sometimes. Things get kinda glossed over.

[keepmine]

Payments to secured creditors {auto loan, mortgage} are not considered preference payments.
As to credit card use. Once bk is a strong possibility, stop using the cards. Also, stop paying on the cards and use the money to support yourself. If you still can't make ends meet, bk really is a wasted option since you have to support yourself post bk.
CAsh on hand-your're supposed to account for it. Your lawyer isn't conservative-he's smart and not going to get involved in helping someone commit fraud.

[sirius]

Payments to secured creditors {auto loan, mortgage} are not considered preference payments.
As to credit card use. Once bk is a strong possibility, stop using the cards. Also, stop paying on the cards and use the money to support yourself. If you still can't make ends meet, bk really is a wasted option since you have to support yourself post bk.
CAsh on hand-your're supposed to account for it. Your lawyer isn't conservative-he's smart and not going to get involved in helping someone commit fraud.

I think he's a very smart guy and I would never expect him to advise me to lie. The mere fact that like with anything else in life there are all kinds of lawyers out there with all kinds of opinions. Some may say to spend every cent over your exemption so none is wasted. Others may say that since the money isn't in the bank there is no way they will know, unless you are careless. This represents a range of opinion on one topic that ranges from conservative to liberal. That's all I meant by the comment.

It looks like its best to wait a few months after stopping payments to apply for BK anyhow. At that point most of my cash over the expemption would probably be gone anyhow.

Thanks for answering the preferrential comment. When I googled it, it didn't sound like it applied to me, but one section mentioned unsecured debt so I didn't know if it was safe to pay for one card over another or the car over a card.