Jump to content

BK or not to BK that is the ? Input please


Chancy949
 Share

Recommended Posts

My friend has 50,000 in CC debt. She is not late on any payments but only able to make minimum payments. She has a house that has 25,000 worth of equity. She is having a baby in Jan. and she doesn't see any increase in her income. She is married and both she and her husband have their own businesses (seprate from each other). She also has two cars. She sees no way out of this debt but to file. She doesn't want to file on her house or cars just the CC. Can she do that? What are her options? Her husband isn't on all of the CC's. He's not sure if this is what he wants to do. She is open to all options. Oh and her interest rates are very low on the CC's and she has perfect credit.

Thanks!

Link to comment
Share on other sites

OK bk exemptions are pretty skimpy.

http://www.bankruptcyaction.com/okexemptions.htm

I gotta tell you, based on the info you provided, she will get a Chapter 7 filing dismissed. If she's current, she's making about $1000/month minimum payments. No trustee will allow her to blow off her creditors and pocket $1000/month.

She really needs to start living below her means and stop using the cards.

Link to comment
Share on other sites

Could they sell one of the cars and use the proceeds to pay down some of the debt? It may be inconvenient to have only one car but it can be done. My parents did it for years--my mother did a lot of riding on the bus--or waiting for my father to come home before she could go somewhere.

It is definitely a sacrifice. But--if she goes into bankruptcy--one of the cars will be lost for sure. And if she can get a few thousand dollars of equity out of the car--she may be able to get rid of enough debt to see her way clear without bankruptcy. I would try every option before BK.

Link to comment
Share on other sites

giving up a car is not an option. her husband uses his for his work and they live about 15 miles outside of town. there is no public transportation. so she would have no way to get to work. She is open to other ideas besides BK. She was given different information by an atty than was given in this post. I wanted to compare notes. Also, she doesn't own her cars, the bank does. She's willing to settle with the CC's, but she's not sure if they would.

Link to comment
Share on other sites

If she has contacted an attorney, laid the situation out for them in great detail, and paid for their knowledgeable advice--then she should definitely go with what the attorney told her. If the attorney specializes in BK, they probably do this all the time, know the laws of her particular state inside and out and also know more details about her situation.

Link to comment
Share on other sites

the 25,000 in equity would be used to pay off the debt, she has considered getting a home equity loan. but it only pays half of the debt. She does not want to file on her house or cars. she just doesn't know how to handle the 50,000 in credit card debt. I don't think you all understood that she owns her own business with 15 employees. Her husband also owns a business with 5 employees. She was looking at what her OPTIONS are. She doesn't really want to file, but it would take years to pay of 50,000 in credit card debt. I'm just wanting to know what choices she has. I'm not sure why other people can file but she can't, from what i'm hearing from this board.

She has no extra money at the end of the month. Will the credit cards neg. with her now? She's not late on any payments.

Link to comment
Share on other sites

Okay...your friend definitely needs to talk this all over with one or more attorneys in her area...people that are familiar with how the BK trustees behave aroung there. But, here's a couple of comments...

1. Usually, BK 7 filings get approved for people whose monthly payments after discharge are less than or within a couple hundred or so of their income. Those monthly payments could include things that they "reaffirm" on...like the house and cars...and not include the CCs, but your friend will have to run through the calculations to see what shakes out.

2. It may be possible for them to do a Chap 13 BK...those are for people who do have income...just not enough to cover all there monthly bills. Again, an attorney would advise.

3. Some credit card companies (not all) do have "hardship" programs that allow you to negotiate for a lower payment at little or no interest for some period of time. The bad news is one the hardship period is over, they usually hit you with higher rates...and, you can't use the cards anyway.

4. Although I don't usually recommend trading non-secured debt (CCs) for secured debt, has your friend thought about refinancing the house? (Charles in the mortgage forum can help with that). This only makes sense, however, if whatever caused the CC debt in the first place goes away. In other words, cut up the cards and close the accounts.

Link to comment
Share on other sites

Re-reading you last post I see your friend has thought about refi...duh...

Anyway, talk with Charles...given the details he might point them at a loan program that works for all the cards. If not, then be careful about which ones get paid and which ones don't...AMEX for example pays close attention to credit reports and may get antsy if everyone but them is paid off.

Link to comment
Share on other sites

Have your friend interview several attorneys - most will offer free initial consultations. There's obviously no rush since she's current on everything at this point. BK's for self-employed folks generally runs more than that charged to the "average bear..." Don't go for the blue-light special on aisle 9.

I'd be very surprised if she could go Chap 7 given her circumstances. Don't know about a Chap 13. Doing a re-fi on the house makes me noivus, especially when that won't take care of ALL of the cc debt - never put your home at risk when you're on shakey ground.

Also, when filing, ALL debts must be listed on the petition - cannot exclude certain debts such as the house or car.

I'd also be surprised if her cc companies would do much for her considering that she's in good standing - often requires serious default to get their attention.

OK exemptions are $5,000, home equity each (per spouse) and $3000 equity in each car assuming each is titled in his & the other in her name. One or both spouses can file. If it's just her name on each car, then there might be a problem, but a GOOD attorney could help with those determinations.

Interestingly, if someone is on the skids and is a pretty obvious candidate for Chap 7, equity limits in the car and the home can be pretty much ignored as long as the debtor is current on house and car payments (and remains current), without reaffirming the debts. OK (as well as other states under the wing of the 10th fed circuit) allow one to "retain" such property, often to the displeasure of the secured party...

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.. For more information, please see our Privacy Policy and Terms of Use.