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FIGHT CREDITORS VS. BANKRUPTCY?


kim662
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I am a single mom just trying not to lose my home. I am being sued by 2-4 credit cards that I had to stop paying due to loss of income, increase in bills, divorce, job change. The original credit limits on these are $500, $1000, $1000, and $1500. I also owe a bank $600. And have a few small outstanding things on credit report. I am being sued for 1200, 1200, and 2400 so far. Both summons I've recieved have no proof of debt attached. One had an affadavit full of BS. I am not worried about ruining my credit as it is already horrible, but wonder if anyone knows what would be the easiest and least expensive way to do this. Fight the creditors? and would definitely need an attorney, or just file bankruptcy on all of it and be done? I have very little cash flow but could probably come up with 500 in the next month to start proceedings, then could make payments to attorney. Is that how it works? Or am I not even in the ballpark?

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You need to call a couple different BK lawyers then...I can only generalize what BK does - the lawyer will know specifics and how they relate to you.

Before you file BK, there is a means test that determines if you can file BK7 or BK13. It's based on income, debts, assets, etc. Your location also has bearing on the means test. There are a couple of websites that have an online means test to give you an idea if you can do a 7 or a 13.

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To answer (in general terms) - BK7 is a liquidation of assets to pay creditors. You will have exempt property that you can keep (clothes, furniture, tools for a trade).

BK13- reorganization. You can keep everything, but have to pay your regular payments and pay the arrears for all debts too.

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Each chapter has nuances and local rules that vary from court to court- which is why you need to speak to a local attorney.

Edited by 1stStep
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My advice is a "broken record" kind. Filing BK7 brings "peace of mind". That, alone, probably makes it a best choice, especially since most people wait far too long before filing.

And, from my own experiences and that of three other folks I know, pro se is the way to go. For help, if desired, an ebook or soft copy book explaining how to file BK7 is available online. About 30ish bucks. And on the BK courts' websites are free official forms that can be downloaded. Filing "ain't rocket science...." for most people and cases.....

Peace of mind--priceless.

Michigan Bankruptcy Exemptions - MI Homestead Exemption - Michigan Bankruptcy Law :: Legal Consumer.com

The url above does a good job explaining Michigan exemptions, including homestead....

Edited by LearningasIgo
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Seriously you are not bankrupt over the amout of debt you are saying you are being sued over. If there was another two zeros on that then yeah I would say file BK. BK7 can result in loss of your house even if your payments are current! The law currently allows a lender to take a house back in bankruptcy if it is worth less than is owed...even if the debtor is paid current. So don't mess with this unless you have to.

But the amount you are describing can be handled with a budget, self discipline, and addressing the income issue. You may have to work two or even three jobs for a short time to deal with it, but that's all.

You could probably knock out the smallest credit card by simply selling some stuff and negotiating a settlement.

As for the summons, SHOW UP IN COURT. If you don't they will get whatever they ask for by default. You may still get a judgment on you but if you don't show up that is a given fact. Letting it get to the point of being sued is going to cost you, but a BK will cost you far more.

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then you have other options like motion for new trial is an automatic stay in most courts. after that you have appeal. with fee waivers and a bond on appeal which is 1 to 2% of the judgment then you get more time to get your war chess and time to learn pro per bankruptcy. The key is discovery hell(possible win), new trial motion(their costs go up think bonus round) then appeal(may have some upfront costs for clerks transcript and such).

That is a good way to trade time for time to learn what to do. They only win if you give up early.

It makes no sense not to put up a fight if you have cause. Most debt collection involves the use of tactics that are unorthodox. On information and belief, I think the actual agreements between the banks and the JDB's might possibly say that legal action will not be supported.

so fight a little and trade space for time to get ready for other actions.

Dont be afraid they base their collections practices on fear of the legal system.

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I have very little equity in the home, does that make a difference in 7 or 13? I can't lose my home, it's all I have. I have taken on a second job but it's taking so long to get caught up. Running out of time though.

Depending on what state you are in, there are options. Check the Hardest Hit where 18 states participate and help with catching up past due payments or reducing the principal and reamoritizing the loan. Google your state and Help for Hardest Hit and it will tell you. Some states gift up to $50,000.00, Good luck!

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OP: I am a single mom just trying not to lose my home.

___________________________________________

You can stay in your home without reaffirming: A mortgage holder can ostensibly foreclose BUT almost none of them will if you remain current with your payments.

And depending upon the individual states' own laws, if reaffirmation is not done during the BK7 process, and mortgage payments are kept current – even if a lender wanted to foreclose at a future date — they may legally not be able to.

Different states, different laws.

I, personally, didn't reaffirm an underwater mortgage. And not a peep from anyone.

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I know it is hard times now adays and the banks and their remoras are acting like Simon Legree but fear of the unknown is causing huge financial instability.

Here on the forums people have differing opinions but I say to you I totally support any choice you make and I know everyone will help with which ever way you chose.

I offer my support.

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You can stay in your home without reaffirming: A mortgage holder can ostensibly foreclose BUT almost none of them will if you remain current with your payments.

Technically true. But (and there is always one isn't there?)...

It's not the bank you have to worrry about... it's the servicer if different than the lienholder. Servicers have their own staff of lawyers, appraisers, etc. They rack up the bills and they get first dibbs on whatever the house sells for with those fees. Hell some of them even have their own real estate agents that buy the house for $100 at the auction (if no bidders) and then sell the house for market rate. Remember the lender/lienholder only gets what the house sells for at the auction!

Servicers have no interest whatsoever in keeping people in the house. They make way too much money by foreclosing instead.

And not to put too fine a point on this... This is what happened to me just a few years ago. Servicer foreclosed even though I was current but upside down on the house in BK7 and there was nothing I could do about it. In the end the house sold at auction for $100 due to no bidders. The lender got screwed and the servicer resold the house themselves at a $170,000 profit.

Edited by Methuss
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You have to look at all your mortgage documents and may have to send the RESPA letter I have posted in a sticky elsewhere in the forums to find out if you are dealing with a servicer or not.

Even if US Bank originated your loan, they may not be the actual lienholder if they collateralized the debt and sold it like stock to a mutual fund. The lienholder then would be the fund that bought your debt, not the actual bank. The bank then becomes a servicer and the fund (and the investors in that fund) is the one that looses in a default.

Edited by Methuss
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What and who would be a servicer? Mortgage is through us bank, and it is through MSHDA. If that makes any difference.

Kim, the servicer is the entity to which you make your mortgage payment.

There are many, many servicers and you probably know all the major players: BAC, Chase, EMC, Wells Fargo etc. It is unlikely that the servicing bank actually owns the loan these days. You can find out who owns your loan by following Methuss's advice and send the RESPA letter he has on the board here.

It sounds like US Bank is your servicer based on your post.

Edited by Denita
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  • 2 weeks later...

Update: lawsuits are up to 3 now. I can't believe every card is suing me!!! I've answered them and denied everything. But I can't fight, I have very little time, no internet at home, only at work and use is filtered. Consultation with bk lawyer says to do it. He says I def will not lose my home if I get my payments current, which I am working on and hopefully will be within a month or so. attorney wants 800 down and 100 a month for 10 months flat rate for bk. no other fees. sounds like alot but its better than the multiple thousands the cc's want. so I think I'm gonna do it. Not first choice but seems easiest. My stress level and emotional health is in danger as it is. Any other thoughts or words of wisdom?

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If the case is no assets, straightforward, an attorney is unnecessay. 30 bucks will buy a very good, all inclusive, book of "how to file BK7" In my own particular BK7 venture, the entire page count was under 40 pages and a great many of those just requred my signature and date.

BK forms are available on your state's FED BK court sites, free to download.

Some things to consider:

a) BK's are discharged at a 99% clip

B) The object of BK is NOT to punish

c) In most cases, filing is not rocket science

d) BK fees to an attorney are huge, considering

that a person is bankrupt in the first place

I know three others who have filed BK7 Pro se; I don't know any who obtained an

attorney. Incidentally, I did not reaffirm an underwater mortgage with no repercussions.

Disclaimer: The above is from my own experiences and knowledge of others' experiences.

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I don't know the difference between a straightforward bk and one thats not. I own 6 vehicles, of which only 2 are running and on the road. They are all old so not worth much. The only other thing is, I am coborrower on a fourwheeler that cost about 6500 4 yrs ago and there is still a lien with about 1500 owed. This is my bf's, he bought it and has made all the pymts but I am on title so it could be on my insurance policy. Is this in jeopardy? bk lawyer said not to worry about it. but if i do this myself, is it going to be a problem? I wish I had the time, effort and know how to fight these cc's to avoid this stupid bk but I don't have it in me, I feel pretty beaten up at this point.

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bk lawyer said not to worry about it. but if i do this myself, is it going to be a problem?

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I guess my question would be if the lawyer didn't think it was a problem, then why wouldn't it be the same if filed pro se? The information and circumstances are the same, thereby the qualifications are the same with or without an attorney.

A decision to file pro se is also contingent upon the emotional and psychological makeup of an individual. But as one begins to deal with the forms, questions, etc., it becomes clearer and easier.

But, it's an individual's choice. My analysis was that I would supply the information and someone in an attorney's office would just copy that info on to forms....for two to three thousand bucks I didn't have. Instead, I purchased the soft-covered and ebook of "How to.....", which provided a good deal of confidence, though afterwards I figured I could have gotten along without it. Most of filing is just following the instructions, following the bouncing ball. A general no assets case should be doable.

But again, just my experience and that of three others. In total we saved from 6000 to 10000 bucks none of us had.:roll:

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