Man! I'm confused?? BK or No BK

[tiredtiredtired]

Greeting folks. Thanks for being there!

I'm not really comfortable with not being responsible for my debts, nor am I crazy about being a chump, so my question is should I or shouldn't I?

I spoke to a lawyer briefly the other day and I am considering a Ch7 or 13, but I really don't trust this process. I don't want to make yet another mistaake with my future and with my credit.

I'm 47, I make 45K

owe $1600 to the IRS

owe $1600 on a judgement (they now want to garnish my wages after missing one payment because of expenses for moving)

owe about 48K to CC's through a DMP

Between payment of rent, food, utilities and DMP I live on literally nothing

Is BK a good move at this juncture of am I setting myself up for troubles ahead? What type of BK would be applicable?

[princessoflaw]

I am waiting for someone to reply to your post because I posted the same issue previously. I am 52yrs old. I have always been independent and responsible but have found myself deep in debt because of my grand childs autism and her medical issues and problems. I am helping out my daughter anyway I can, but we all are about to go under because we had no idea how much money it takes to care for a disabled child who needs 24hr care. After using savings, living from pay check to pay check and borrowing from everyplace we can, we are all lost.

[elyse449]

But I wanted to ask Princessoflaw if her grandchilds parents had considered requesting SSI or some other financial means of helping to care for their disabled child?

Ok...Having had to file for BK myself, here are my 2 cents on the topic...for whatever they're worth, lol.

If you have exhausted your efforts to resolve your financial situation and if you're sure you can learn from this and plan better...than it may be a worthy decision. Bankruptcy does not equate failure as a person. It doesn't mean your some chump. It just means you need some help. So, take a little heart knowing this.

With regards to their garnishing your wages...please understand this; They can not garnish a dang thing until they WIN in a lawsuit against you and have received permission from the courts to garnish. Kay? Even then, they can only take a certain percentage of your wages. Even with a judgment, I do believe they have to return to court and request garnishment.

You said it all when you said; "Between payment of rent, food, utilities and DMP I live on literally nothing."

There isn't much to work with, unless you take on another job. IF you had some extra funds, that'd be different.

Here are some options-please let them roll around in your head...

1. Work with your creditors to settle out debts. See if there's a way to settle those cc's for lesser amounts, lesser interest, removed fees, etc. Take on ONE credit card at a time. Someone named "Scott Bilker" is an author of a book called, "Talk Your Way Out Of Credit Card Debt." He has made some positive head way with lowering interest rates and what not...anyway, it's said that he saved 43,147.68 via 52 phone calls that took 403 min. You basically get on the phone and ask. Call back and ask again if you must. Find someone willing to work WITH you. Pull out ALL your credit card debt and evaluate them each carefully. Are there any you can keep? Are you in any position to even pay ONE? Sometimes trying to attack too many debts at once CAN be intimidating, but keep it in perspective. These credit card people are people just like you, but they aren't emotionally involved like we are.

2. Money re-routing. Find ways to save money and re-route it to where it needs to go...cancel cell service, cancel the paper/mag subscriptions, avoid eating out, cut out ALL extra's that you don't actually NEED-you'd be surprised how much STUPID money, we all spend-LATTE's for starters, lol. Re-route THOSE funds, to your debts in the form of payments.

3. Extra work: Is there a way to work a 2nd job?

4. Regarding IRS: Request form 9465 (request for installment). Have you got series "500" notices? IE-Form 501: Reminder of Unpaid Tax, Form 503: Urgent-payment Required, or the dreaded Form 504: Final Notice?n Is your file with the ACS section of IRS yet? If so, get in touch with them and be honest about your situation. Let them know what you can afford to pay. Credit card payments I don't think count, but still-talk with them. When you call, be prepared to be put on hold--but DO NOT give up. Make sure when you call that you have the tax returns in question on hand, form 433A (this lists income/expenses-getting this form may require a separate phone call) and clearly state your reason for calling-IE "to set up a repayment plan..." Be honest, personable and polite. Installment payment agreements will be revoked though if you miss a payment, fail to file future tax return, fail to pay taxes that come after the IA was done, a change better/worse in your situation. I got all this per; "Idiots Guide To Beating Debt" as I am learning along with you. Also, after getting a 500 notice, apparently you can write back and request more time to pay. But the most you can ask for is 60 days at a time but "that can buy you almost a year..."

Remember-this too shall pass and you have MANY options. Bk is something to consider, but only if ALL of your other options have been exhausted. Bk's are tough on your credit and can sit on those CR's for up to 10 yrs. So, think carefully before deciding this one. In the end, remember-the creditors will survive, they make PLENTY of money off those high interest rates they charge...just try to do what you can and remember, you're a good person-you just need some help with this.

Elyse

[tiredtiredtired]

Thanks very much for your knowledgable and compassionate reply Elyse449.

Sorting through information on this topic can be as confusing as the initial question as to file BK or not. I am trolling around the internet as much as possible to find out what I can.

I had a default judgment against me that was a result of a convoluted process of changed venues by the plaintiffs lawyer that caught my motion to dispute judgement off guard. It now costs me $1600.00 with legal fees and interest (which I didn't know accrued and to which there was no mention made!)

The lawyer now want's to garnish my wages at 25% until it paid.

I owe the Feds about $1600-1800.00, which I think can be rolled over into the BK. BTW, how will a BK effect my taxes?

I owe about $46000.00 to various CC's which I am paying on a DMP, but because I have a balance due to Discover, I got a letter from my DMP that Discover may drop me from the plan. Additionally I'm finding it hard to make that DMP payment some months.

Meanwhile, my hair is getting long, My shoes are wearing out and my clothes are getting old (I work in a professional office environment). Other times my fridge is empty for a week or more and I have responsibility with my finacee of feeding and clothing her two kids. They're good kids though, but they want to do things other kids do, which costs money.

I don't know. I don't want to foul my future up (I would like to purchase a home one day) but I'm pretty much always broke. ???

Thanks for you help.

[elyse449]

I can certainly sympathize with your plight. And your most welcome. I hope some of my thoughts or ideas help.

At the point I had to file BK here is where life was for me and believe me, I hate saying this "out loud" but if it'll help someone else...it's worth it;

I'd moved in w/ my then fiancee (he had two sons, I had two daughters). His ex wife was REFUSING to pay any child support (even though it was set at a mere 50.00 per month!), his ex wife was taking him to court wanting custody (after she divorced him and got him to agree to take all their marital debt mind you-court costs SO much darned money!), she'd charged up CC's, passed bad checks and gave other stolen checks to her friends to do the same, he was honorably discharged from the Army due to health reasons, I was laid off from my job, our management of our household funds definitely was DELAYED (to put it nicely)...etc, etc. We had TWO homes foreclosed on and TWO cars repo'd....than a light bulb went off (too bad we had to go through ALL that for this to happen of course!) but I realized that if I didn't change things, this vicious stressful cycle was always going to be over our heads and let me tell ya hon, it was NOT helping our relationship.

What I should've realized was, firstly-my fiancee's kids are HIS responsibility, not mine. While I love them and want what's best for them, in the end they are the responsibility of him and his first wife. So, the main thing was pushing for COLLECTED c/s from his ex and the expectation that my fiancee definitely needed to help. For nearly two years I supported those kids.

Anyway..at this point, they barely get 17.00 a week from her, but hey it's something (although mostly a drop in the bucket considering how they eat now that they're 14 and 16! LOL) and we're in the middle of seeking more via the courts, but that will take some time-I understand this. My now husband works a good job that provides for good pay. Secondly, you can't do it all. It sounds like you have a lot on your plate with just managing things for you--Time to re-examine things and take a realistic approach BEFORE you go through what I did.

You just have to get yourself to a point where you're managing your life and your finances in such a way that there are LIMITS. I.E. This is what I can do...this is what I can not do. If I had it to do over again? I would've waited on moving in w/ my then fiancee. I would've let him handle his OWN issues he was having while I handled mine. After all, why agree to be with someone who is incapable of making sound decisions, taking care of business, etc? Relationships are about two people, right? Also, I would not have had that dumb assumption that it's my job to hire attorneys, pay someone else's bills, financially support two OTHER peoples kids...it TOOK from me, much more than it ever GAVE. That much I will say. Meanwhile, that energy could've been better used on MY children and my situation. NOT to sound selfish because if you knew me personally you'd know that I am far from selfish. If it wasn't for my mom, I'd still only own ONE pair of jeans! LOL--I'd just rather do for others, that's just my nature and from the sound of it-it's yours to. And that's great, but it can be to our detriment to behave this way and to not control it. But you know what they say about hindsight...

Ok-here are my thoughts on what ya said;

..."The lawyer now want's to garnish my wages at 25% until it paid."

Were there NO bills sent with regards to this debt? Are you disputing his request for garnishment?

You said; "I owe the Feds about $1600-1800.00, which I think can be rolled over into the BK. BTW, how will a BK effect my taxes?"

Are you referring to future taxes? Well, make sure you're declaring the right amt of dependants on your W-2's. If it were me, I'd declare 0 or maybe 1. If your fiancee is living with you (and either-not working or earns less than you?) with her kids, than maybe you could declare them at the end of the year and not owe taxes in the future? Than again, I'm NOT a tax advisor and you may want to speak with someone over at H&R Block.

You said; "I owe about $46000.00 to various CC's which I am paying on a DMP, but because I have a balance due to Discover, I got a letter from my DMP that Discover may drop me from the plan. Additionally I'm finding it hard to make that DMP payment some months.."

Yes, I hear it's pretty common for folks entering into DMP's to fall short financially. I hear that often times the plan implemented is just too much for people to maintain. Then again, I wonder if that's purposeful on the part of the DM company? If it were me, I'd try to pay off some of those creditors ASAP. What are you individual balances? Do you know?

You said; "Meanwhile, my hair is getting long, My shoes are wearing out and my clothes are getting old (I work in a professional office environment). Other times my fridge is empty for a week or more and I have responsibility with my finacee of feeding and clothing her two kids. They're good kids though, but they want to do things other kids do, which costs money.I don't know. I don't want to foul my future up (I would like to purchase a home one day) but I'm pretty much always broke."

Well, your focusing too much on this IMHO. Does your fiancee work? Does she receive c/s? If not, how come? Why do you feel your fiancee's kids are YOUR responsibility to feed and clothe? Do you think caring about yourself less will help? The one thing I also realized in this is if I show my kids that I don't take care of myself, I can't expect them to learn to take care of themselves. We need to mirror the positive behaviors, ya know? You have a big heart and that is to be commended...but if it's going to lead you to financial ruin and possibly put your life into turmoil, than what's the point? Sometimes we help people TOO much.

Set some goals, set some limits and most importantly-stick to them.

By the way, in my budget I've worked out I do factor food in as a bill. Maybe that's something you should consider. Also, consider visiting the library and checking out some books on budgets and other financial matters...it'll open your eyes to MANY things, I promise.

(((HUGS))) It'll get better, but it's going to take some work and some changes as far as your outlook. Remember, a BK can only help you if you're determined to change what got you here to begin with--otherwise, you're looking at a lifetime in financial hell.

Elyse

[tiredtiredtired]

Thanks again Elyse,

My fiancee does work and contributes, on most occasions 50%. It's not that I feel compelled to take care of her kids, it's more that we have a household and family and everyone needs to contribute.

My problem goes back ten years or more, where many things, divorce, 1.5 years of unemployment/underemployment (ever hear of overqualified?). I spent a year and a half after 9/11 trying to find a job in my field (graphic design) where employers were only hiring entry-level "bodies" to fill their needs. It's easier to pay some kid 25,000 to pump something out than it is to pay a skilled professional twice that.

Regardles, my main concern was as to whether this will make my financially impetant for many years to come. Circumstances have caused my financial ruin and I have no intention of getting into them again. My problem is that I HAVE been responsible in the past, with A+ credit, then boom! Broke and living paycheck to paycheck. I make about 45-50K a year, but as I mentioned, it's all accounted for by someone trying to suck that cash from my pocket.

Thanks for all your help and your kind disposition.

-T3

[LNY]

T3, I was in the same position as you (but $65,000 in CC debts). Everything was paid on time, but I had no money left over for little luxuries like food and electricity. It was like I'd pay $300+ on one maxed-out card, $280 woud go on interest, and use the $20 that was freed up to buy food. It was that bad. I tried credit counseling and that made things worse. It was to the point where I was no longer going to be able to make all those payments and collection agencies would be knocking on my door. I didn't want that. So after putting it off as long as I could (in hindsight, I wish I HADN'T put it off!), I filed BK.

Sometimes it's the only option left open to you when you're in so far over your head that there's really no other way out. Like you, circumstances (many caused by people I should not have trusted but did) put me there, not shopping sprees and living above my means. Since BK (12/00), I have "run up" debts of less than $2000... much of that spent in one fell swoop to buy a new (used) computer when mine died. I am a financially responsible person. Most people are in debt again within two years. Six years on, I'm fine... even after losing my job two years ago and having to pay rent in NY City (where a 1 BR walkup in Queens is $1650 a month plus heat & hot water).

BK didn't affect my taxes at all. But remember I filed under the old laws, I am not up on the new ones.

It's really hard at first, right after a BK. And the process itself can be a nightmare. But when it's finally said and done, you will feel a tremendous weight lifted... and you will finally be able to SAVE some money. BK7 will stay on your reports for 10 yrs. and BK13 for 7. BK7 your debts are erased, BK13 you pay something towards them. BK13 is obviously looked upon more favorably by future creditors.

If you have to do it, you have to. But the sooner you do it, the closer you will be to having all that debt--and the BK itself--begin to disappear from your life.

[tiredtiredtired]

Thanks LNY,

I'm trying to make up my mind before next week when my next DMP is due (to bounce) I appreciate your sharing your story. I am vacillating as to whether I should do this or not and my mind changes every day!

I would appreciate hearing from others who have been there! Curious...in what way was it really hard right after BK?

[LNY]

What's hard is 1) getting credit again and 2) the psychological effects, i.e. feeling like a deadbeat loser.

Your first instinct will be to live cash-only right after BK, and never get credit cards again. Don't do that. About 6 mos. post-BK, you must go into rebuilding mode. We'll help you through that, should you decide to file.

If only this place had existed when I filed BK.

[tiredtiredtired]

Thanks again Man!

Yeah I would feel bad, but it probably can't compare to how bad it feels living with debt on your mind 24/7.

I had thought that I would do cash only for a while, but yes, I have heard that building credit again is smart.

Currently I pay $1029.00 a month to a DMP. If I file BK 13 do you think that my monthly payments would be significantly lower?

-T3

[LNY]

That I don't know.

Do a little poking around in here for some hints on how they might calculate what you pay vs. what you owe and what you make. If you don't find anything, start a new thread for just that particular question.

[LadynRed]

T3, let me tell you something - bankruptcy is NOT the end of your financial life !!! I'm 50 years old, filed BK a year ago on approximately 80K worth of debt (about 55k of that was a home equity loan from a forclosure years earlier). I realized that at MY age, I'd be paying creditors until I was in my grave and I was drowning and there was no way to even THINK about saving for retirement. I actually put off filing for almost 4 years thinking I could get thru it. Well, when the CA for that old home equity loan started getting ugly, I decided to get off my duff and just bite the bullet. I filed and let me tell you.. it was a HUGE RELIEF !! I was not at all thinking of myself as a 'deadbeat loser', I did my damnedest and was getting nowhere while the amounts owed kept growing.

Now I have no worries, I'm not stressing to get credit cards, but that's my choice. I have a long credit history that was mostly excellent until just a couple of years ago, so I'm actually not in horrible shape credit-wise. I live on cash, and that's just fine with me .

People who file BK can recover a LOT faster than you will EVER recover with that DMP. In addition, there is NO way the DMP can protect you from lawsuits. With careful rebuilding and repair post-bk, you can qualify for an FHA mortgage at decent rates in 2 years.

The taxes may or may not be dischargable. If they came due 3 or more years ago, they most like are dischargable. The judgment will be null and void.

I suggest you speak to a lawyer or 2 or 3 to find out what your options are.

[LNY]

Excellent advice

In terms of thinking of yourself as a deadbeat loser, I meant that some people put that kind of stigma on those who file BK, and it can be difficult to get past that, thinking of yourself that way for having filed. I certainly didn't mean to imply that filing BK means you're a deadbeat who doesn't pay your bills. On the contrary. Every single one of my bills was paid up to date, up until the day I filed. At my 341, they were asking everyone "when did you last pay your bills?" Most people answered "a year ago," or "6 months ago," etc. Me: "Uh... last month..."

I also put it off, trying stopgap measures like DMPs that hurt more than helped. But yeah, the balances kept growing and growing, even with the cards cut up... because they were maxed and I could only afford the min. payments, and interest ate up every payment.

Like I said, I wish I'd done it sooner.

[LadynRed]

I meant that some people put that kind of stigma on those who file BK, and it can be difficult to get past that, thinking of yourself that way for having filed.

I know, people who have not been in the position to have to file BK have NO CLUE and shouldn't be looking down their noses at anyone - it could be THEM in no time flat. It only takes one job loss or one major illness to land you in debt hell. Very, very few people have enough in savings to sustain them thru long term unemployment and most households are carrying an AVERAGE fo 8-12K in credit card debt !!! Many are carrying more.. and multiple mortgages.

The "stigma" of BK isn't as bad as it used to be, but it's still there. The thing you must do is to think of it only as BUSINESS, YOUR business, the business of your family, detach the emotional issues are much as you can.

[jq26]

The "stigma" of BK isn't as bad as it used to be, but it's still there.

The thing about it is, no one has to know if you don't want them to. It's a public record, but who really digs? 30 months after my filing, only two people know about it (none of my family members even know). It's your business.

[LNY]

It can come up if you try to rent an apartment, or open a bank account, or apply for a job (or get a company credit card). It will come up in any kind of background check. And most people who see a BK on your file will probably think of you as a deadbeat. NOT THAT YOU ARE. But that stigma still exists.

But you know what? So does the stigma of not paying your bills, and getting bogged down in late fees, and having collection agencies after you, and having negative piled upon negative on your credit reports because you're in over your head.

If your situation is so bad that there is no way (save winning the lottery or inheriting a fortune) that you could ever hope to pay it all, BK is the best option available to you. Because 5 years from now, you'll probably STILL be desperately paying down all those same debts and new ones... or you can be halfway through the BK7 reporting period AND be well on your way to full credit recovery.

[tiredtiredtired]

Thank you all for your help, compassion, and expertise. I have an appointment with an attorney tomorrow morning, and though I'm a little nervous, I also feel a little relieved that I have made this decision. I know my intentions were good, but once you are drowning it's very hard to recover. My G'friend and I have two kids to think about as well and my fridge was empty all week. Think I made all I could with a head of cabbage and a couple bags of beans (insert joke here!). I still don't know how I will be able to make it to my lawyer tomorrow because I have no cash to commute! I'll get there!!

Thank you all again. I'll keep the forum aprised, and hopefully this experience will allow me to contribute too!

-T3

[LNY]

In your case, I think it's a good decision, T3. I still wish I hadn't put it off as long as I did. It's a hard decision to make, especially if you've always prided yourself on being financially responsible. But hey... life happens.

I wish you all the best. Please let us know how it goes, and remember we're here for not only information, but moral support as well.

[tiredtiredtired]

I saw a BK lawyer last week and I'm going to see another on Monday. The first lawyer I saw asked about my household expenses and I guess I low-balled them, trying to be accurate as to how a church mouse lives, and it turned out I had $900.00 cash afterwards. Well as I said, I low-balled and went back home to check my records more carefully and sure enough, the expenses were off. So I did a little figuring and it looks like I may have 400-500 dollars after expenses. Of course I don't see this because my DMP is at 1029.00. But, of course, the BK procedure doesn't take your DMP payment into account (it appears to me based on what the lawyer said). So as he was telling me I had this money, I was like, uhhh it goes to the DMP--that means I have NO money.

This is frustrating. It seems I am falling through the cracks or something. I will visit the next lawyer on Monday as I said and I will bring better figures.

Any suggestions as to what else I may do? If I can't file BK, I'm up the creek.

Thanks,

T3:confused:

[bingo]

In a Chapter 13, all disposable income will go to the creditors and not the DMP.

Also, creditors must abide by the law and file a timely proof of claim to be considered. YMMV but, many times creditors slip up and don't file the claim so your debt to them is discharged in full.

Try and be better organized at this next appointment and lay the entire story out to the lawyer. He/she can help best when they know all the facts and figures.

[tiredtiredtired]

Thanks Bingo!

Yes I know that all will go to the creditor rather than the DMP in BK, but my lawyer says that the BK court will come back with my figures and say "why is he filing." That's what the Lawyer told me.

Anyway, yes I suppose I could have been better organized, but actually I was pretty well organized. What I did, stupidly--was provide figures that were "what I thought was the least I could get by on." Instead I should have been a little more realistic. For instance, I have two teen-aged kids and I said we spent about $400 a month on groceries. Well that's with having nothing in the fridge for at least a week and eating cheap food like beans and cabbage often (not necessarily together!) A truer number in the DC area would be closer to at least $600 a month. For clothing i put a paltry $25 a month. Yes, that's including no new clothing for me and my G'friend and an occasional article of clothing for the kids. Really they need lots of new clothing, as they have NONE (long story).

I'm trying again tomorrow with a new lawyer and maybe will present the new figures to the old lawyer to see what happens.

Thanks agin.

T3

[LNY]

With a family of four, you can easily claim more than $100 a week on groceries. And $25 a month on clothing comes out to the occasional t-shirt and pair of socks.

Although nobody realistically "needs" new clothes every single month (I go months and months on end without buying any at all), two teenagers can be assumed to not only be growing out of at least a few items of clothing a month, but also damaging some. Also, I'm sure the two of you buy new ties or pantyhose monthly, too.

Don't sell yourself short. Don't think in terms of eventually ending up with what you've barely been getting by on, but by what you need to live a healthy, normal life.

[tiredtiredtired]

Thanks LNY!

I have ammended my expenses to reflect a more realistic situation, I met with another BK Attorney today and he seemed to be more optimistic. I am beginning proceedings today and I am also writing the scumbag of an attorney trying to garnish my wages. Evidently the garnishment order is fraught with errors.

I feel a little weight off my shoulders, but though the next few weeks will be tough moneywise, it will be a great relief to be able to see something in my bank account after weeks end.

Does anyone have any advice for the days leading up to filing and those immediately after. If I understand correctly, the initial step (filing) will take about a month, then another two months after that. I am filing for Chapter 7

Thanks very much to everyone!!

T3

[LNY]

I'm glad to hear you are feeling a bit more optimistic!

I can't answer your questions, as my BK was filed under the old laws, in 2000. However, I'm sure there have been lots of people here who have asked the same questions about what to expect... why don't you poke around in the forum some, to get a feel for what others' experiences have been? That might point you in the right direction!

[bingo]

The first thing you do is get that CCCS out of the way. Your lawyer should have explaine that-it can be done on line.

Once the bk is filed, the protection of the automatic stay against any collection activity begins.

Then, you just wait for the 341 meeting and about 60 days after that, yiou should be discharged.