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BK - The first step underway


kbb911
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Well, after several months of stress and crunching numbers I have decided the only way out of 45k of unsecured debt is the "dreadful" BK -- I'll be filing alone I live with my wife and the kids are grown up and out of the house. My son is in Iraq. We both have decent, secure jobs with good incomes and all the necessities are paid up- I will stop paying all my other debt this month. I simply ran out of money due to a major cutback in both of my FT and PT time job. Not to mention the ever increasing interst on the CC cards and the recent raising of the minimums. I inquired to one of the debt mgmt companies {elimi-debt} and they could NOT respond to me when I asked if they could guarantee I won't be sued down the road if I used them. I then spoke to a large Credit Counseling agency and they couldn't do much of anything. I have approx 1650 monthly in unsecured debt and the best the could do was 9% interest at 1400 a month. I laughed at the guy on the phone. What a joke. I then consulted a BK attorney today. I felt comfortable with him. He had me take the required pre-BK course and counseling right in his office. He pulled a credit report and we worked up everything right there. Don't get me wrong, I'm not happy at all about filing BK, but like folks have said here, its not the end of the world. We didn't get into how I got here, but how I was to get a fresh start. I left there feeling much better. But let me tell you. If anybody thinks for one minuet that its your fault by getting into much debt, its far from it. The scams, and predatory lending is fierce out there. Its all about competition. It will be nice once the predators start calling begging for their 29% interest credit card payments and I have to refer them to my attorney. I'm scheduled to file the end of this month. I make enough to go with a Ch 13 but we are going to crunch more numbers during the means test to try and get me a BK 7. Nothing was said about LOOSING ANYTHING. I will keep my truck lease, I can reaffirm my RV loan and keep my apartment. This will set the stage for me to finally start saving money. I don't like being in this situation but I have no choice. If some of you are on the fence with filing a BK, by all means talk to a attorney. You will be amazed if he or she starts talking to you about the "credit industry" and their government sanctioned practice's. I'm not looking back after this month. Whatever it turns out to be, a Ch 13 or a 7- I had a lot of help getting in this position but in no way do I feel ashamed at taking advantage of a law that is made to protect us. Sorry for the long post. I'll keep you posted. K in NY :)++

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I'm about to head in that same direction. There just comes a point when you add everything up and nearly pass out. HOW DO the numbers accumulate so quickly? Its a very intimidating process but right now I feel as if I'm riding the wave and alot of people are in the same boat. There's comfort in numbers right? Best of luck!

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Listen...some of us have been there and yes, we understand the embarrasment, the overwhelming feeling of dread...but when you can't see any other way out, and in order to start fresh and give yourself a second chance you have to look down the road to the end result...be thankful when all is said and done and your BK is discharged and the burden is off your shoulders...just start anew and NEVER fall again to what got you there in the first place!!

GOOD LUCK TO YOU!!

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  • 2 weeks later...

Well folks I went to another meeting with my attorney and things didn't go to well. The means test is just that --MEAN. I passed it for a CH 13 however when we started doing my wife's income, it blew the means test out of the water. I'm in for paying my debt back BUT I wasn't ready for what my attorney had to reveal after the "IRS" means test. I have a decent job but my wife's income increased my disposable income. I worked with my attorney for 2 hrs crunching numbers and the best he could do was $1000 a month to pay the trustee for 60 months ! Ouch. It can be done but barely. As long as we eat beans every night, don't buy gas or watch TV -Well, a little exaggerated but what the heck ? I owe approx 45k in unsecured debt. The last I checked-- 1,000 x 60 Mos = 60k !! What happens to the 15k between 45k and 60k? My attorney jokingly said -- I'd be better off separated. My wife and I have been married 29 years, that 't ain't gonna happen. Both of our incomes fluctuate bi-weekly but never goes down. We work in jobs where we can get forced OT. there goes our pay checks -- up--up--up at times. The new BK laws aren't for middle wage earners. The OT that helped me pay the increasing interest rates and minimums dried up for me, but my wifes has increased big time. My attorney is working hard on this but he is swamped with new BK cases. He said come back next week to see if he can tweak the numbers but I don't hold much hope. The collection calls are starting and Dell Financial, one of my smallest balances hung up on me when I told them I was filing. This the only one that called my work for $124. Humm..it was their 24% interest that contributed to this situation. Go figure. I'm wondering if anyone had a similar situation with a BK 13. I really have no alternatives except for some good hearted sole lending me the money. xangelx I thought a 13 was the safety net if one couldn't qualify for a 7. Ha ha . Thank you IRS. None of the card companies will negotiate and the debt "fixers" are out of the question. Looks like I have to live life like a mole for the next 5 years but it just doesn't seem right. The IRS tables don't reflect the real world. Sorry for the long post. I'll keep you all posted :-(

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Yes, the new BK law is definitely mean-spirited all the way around.

Part of the 'extra' money between 45 and 60K goes to the Trustee. Lawyers fees are also figured in sometimes. You also have to realize that while you have 45K in unsecured debt, not ALL of your creditors will file a proof of claim - no proof of claim = no payments to them.

The IRS numbers are quite absurd for some areas, but they are not carved in stone and you can appeal the numbers. If you ACTUALLY spend more than the IRS number allows, and there's no alternatives, then you may be able prevail.

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I filed chapter 13 in 2000. Before the tough BK reform laws went into effect.

Thought I could afford 1500.00 a month for 3 years, but I was wrong and the BK was dismissed. I considered a CH 7 but he nice thing about it is that most of the creditors never bothered me afterward except for some JDB's and random collection attempts, but all of that is all outside the sol now. I thought my CR score would go up after the BK fell off, but it actually went down????

Good luck in your endeavor it will be tough for awhile but when all is said and done it is a big relief.

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What did your schedules show for disposable income?

We're still working numbers and I go back to my lawyer wednesday. I'm not so sure the trustee will be so forgiving with the teeth of the new laws in effect. 2000 was a long time ago in their eyes. For example, My truck payment is 515, and the IRS allows 457 a month. We pay 890 for rent, IRS allows 727. The IRS is punishing me and I'm sure that is what the trustee will use and wipe his hands clean with those IRS tables. I will ask my lawyer about appealing. I can affors $1000 a month to pay back my unsecured debt, but I can't afford the $1400 cccscny quoted me AND I certainly can't afford the current amount 0f $1600 with never having the propect of getting debt free. I know I have to face the music, and I'm ready to pay my debt back but the IRS and the courts are living in the world of OZ. I can't even have a savings account or get some side work without being scrutinized. To me, thats not "starting fresh" its a prison sentence for 5 years and if I falter for whatever reason, I'm back to the wolves. Thanks for replying

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Rent is one of those items that is pretty easily challenged in the IRS tables. They are ridiculously low in most areas. Most people looking at bankruptcy can ill-afford the expense of moving, and the Trustee's know this. The truck payment is what it is.. it's not going to change and they won't usually try to force you to get rid of it to get in under the IRS guidelines. My point here is that ACTUAL expense ARE considered and the IRS numbers are not necessarily carved in stone. You need to be sure your lawyer is willing to fight this for you -that IS what you're paying him for.

As I said before, there is absolutely NO guarantee that ALL of your unsecured creditors will file a proof of claim, so your payment to unsecured could wind up being much less than what you're looking at now calculating the TOTAL of all unsecured. Your plan could change considerably between now and confirmation.

While the law says the Trustees are to audit Ch 13's, and the plan gets adjusted depending on changes in your income, but an awful lot of people never change their plans even though their income rises. Yes, the law says that ALL of your disposable income goes into the plan, but your lawyer still must find a way to build in some wiggle room for emergencies.

Ch 13 IS tough, it's meant to be a lifestyle modification and 70% of all Ch13's filed fail because people cannot live within those modifications. If people lived within their means to begin with, it wouldn't be as hard - but we're used to excess so the necessary 'adjustments' are harder to swallow. The new law was crafted by the credit card and banking industry.. so it's no surprise that is was as nasty as it could be - their goal was to STOP people from filing at all !

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Thanks a million ladynred. Your in-site helps. I could see that my lawyer was just as frustrated with the whole thing. He's been in the BK business 20+ years. He said a lot of attorneys are backing away from taking on new BK cases, its just not worth it. Its tough not paying the bills but these credit card companies are out of control and I don't see enough being done to stop them. The collection calls are 7 days a week. I refuse to talk to a machine or 3rd world country slave. What a joke. They won't negotiate realistically and I refuse to beg so this is what I'm faced with. Why do they bother. I have the money, just not at their terms. What a corrupt system. Never again will I get in this situation. They can all kiss my #$% ! Much more needs to be done educating. There was nothing in school about managing money. This should be mandatory before graduating. Neither of my kids had any money mgnt courses either. I'm 49 and I refuse to retire broke so I guess I'm doing this at the right time. My wife and I both work in public safety so we have secure jobs and benefits but its sad knowing for the next 5 years I'll see little if any of my raises. Its money I was going to put aside to start the emergency fund I was never able to start due to the ever increasing credit card interest rates. round and round we go. Maybe everyone should start filing BK thats in trouble, maybe then they'll wake up. I'll keep ya posted. Thanks again

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