redblazerx

Is Bankruptcy best for me??

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I have a thread going in the collection board as well, MODS please delete it if you feel the need to do so....

My wife and I have been married for 5 years, bought a house and started living the dream. We were making good money and then it hit, I lost my job working in the automotive field. I took a job paying wayyy less that I was making and had to keep my house and my wifes car payments current so I quit paying on all of the cards.

I have tried to negotiate a settlement with first the CC companies, that failed and they went to collections and I tried to negotiate with them, that also is not working. Last date of activity on most of the accounts is April 2011.

Neither my wife or I have health insurance right now (cost to much) and we are not putting any money into savings.

We have 3 cars, her car in which is listed below, my daily driver and my classic mustang ( that I want to keep )

Im just wondering if bankruptcy is in my best interest to get this done with.

My Debts are as followed: ( monthly

House: 762.00

Wifes car: 374.00

Power Bill: 80.00 est.

Loan: 216.00

cable: 65.00

groceries: 240.00

Internet: 25.00

Water: 20.00

Cell phones: 175.00 (includes parents)

Medical bills: 20.00

Misc: 100.00 (pocket money)

Home security: 35.00

My Credit cards are as follows: ( when I stopped paying )

BOA: 10500.00 est.

BOA: 6000.00 est

Chase: 2700.00

Other: 5000.00 (guessing high)

I have failed at trying to negotiate with the JDB's and quite frankly tired of hearing the phone ring all day.

Edited by redblazerx

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Based on the unsecured debt you list, I would not pull the BK trigger. You would definately loose the Mustang if you did. That's a luxury. Worse the trustee would probably sell it for a quarter it's going value just to unload it and that would hurt all the more. In a chapter 7 you stand a chance of losing you house too (even if paid current) due to a provision in the law that lets mortgage holders lift the stay and foreclose on homes worth less than what is owed. And contrary to popular belief, lenders do not have to agree to reaffirmations in chapter 7. They can say no and take the collateral back. Ford and Mitsubishi both are known to do this.

You have too little unsecured debt for a chapter 11 to be worthwhile as you'd end up paying nearly all of it back over a 5 year repayment plan anyways.

No. I think in your case you are best off by taking care of your immediate needs and paying your secured debts (which is what would happen in bankruptcy anyways if you wanted to keep those things and the lenders agreed to reaffirm).

If things are tight, start looking at expenses and ways to reduce them. Dump Cable tv if you haven't already. Dump contract cellphones and get pre-paids like virgin mobile which give unlimited text and data with a pack of minutes per month (I pay $25 for 300 minutes on an Android smartphone and rarely go over by using email and text as much as possible). Look at your food bill and see how to cut that using meal planning aids such as e-mealz.com so you don't over-buy on food and waste gas on multiple store trips.

See what you have left over. Start scraping together a $500-$1000 cash emergency fund and keep it parked in a safe place like a firesafe in your house. DO NOT use it unless you have a true emergency like a car breaking down. DO NOT keep this in a bank account if creditors are threatening to sue you. Keep the mustang in your garage just in case some wise-@$$ collector tries to take matters into their own hands.

Now start figuring a pro-rata plan to pay off those debts. Start witht he smallest even if it is not the one withthe highest interest rate. This will get you to a sucess faster. Yes you will pay a little more in the long run, but this isn't about the dollars any more. It's about succeeding at getting out of the hole you are in. You need fast successes to stay encouraged. And most "penalties and interest" stop once the debt is sold by the original creditor to the collection market... so eventually the amount owed will stabilize.

Witht he pro-rata plan you list all your income for the month on a pad and start subtracting your expenses. When you get to the bottom put what is left into your emergency fund. PAY NO UNSECURED DEBT UNITL YOU HAVE THIS CUSHION. With your cushion in place start paying down your debt as you can one creditor at a time.

Cutting the other phone lines for new numbers on pre-paids will give you some peace from harassing collector phone calls, but they may eventually find a way to call. If so, just tell the ones not getting paid "you're below the line." When they stutter and try to understand what you mean just say "we draw up a list of things to pay for every month and when the money runs out we draw a line and anyone under that line does not get paid. This month you are below the line." That usually causes some sputtering and can be kinda funny to play with cause there really isn't anything they or you can do. You've bluntly told them there just is no money to pay them. If they ask about how to get above the line tell them "you're nicer next time you call...buh-bye."

If they threaten to sue...so what. It's a threat. If you have no cash they rarely follow through. Keep a file on each collector calling you with all their letters and notes on phone calls. If they break the law, take it to a lawyer that specializes in this sort of thing and hammer them for a settlement. I use Attorneys for Consumers and they have been effective in the few times I have needed their services recently. One collector ended up paying $2000 for a breach of law over a disputed $25 fee from a vendor. If you score cash this way, use it to pay down what you owe.

It will take a good deal of effort, but you will get out from under it eventually - and keeping most of your stuff in the process. That won't happen if you go through a BK.

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Methuss gave some great advice. However, if your income does not allow for the suggestions given in his post, you could contact a BK attorney and get a free consultation. It helps to just know your options.

FYI, SC BK exemptions have a $5000 wild card exemption. That's an amount you could use with other exemptions or to use on your Mustang. If you and your wife file jointly, the wild card exemption would double...$10,000.

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Based on the unsecured debt you list, I would not pull the BK trigger. You would definately loose the Mustang if you did. That's a luxury. Worse the trustee would probably sell it for a quarter it's going value just to unload it and that would hurt all the more. In a chapter 7 you stand a chance of losing you house too (even if paid current) due to a provision in the law that lets mortgage holders lift the stay and foreclose on homes worth less than what is owed. And contrary to popular belief, lenders do not have to agree to reaffirmations in chapter 7. They can say no and take the collateral back. Ford and Mitsubishi both are known to do this.

You have too little unsecured debt for a chapter 11 to be worthwhile as you'd end up paying nearly all of it back over a 5 year repayment plan anyways.

No. I think in your case you are best off by taking care of your immediate needs and paying your secured debts (which is what would happen in bankruptcy anyways if you wanted to keep those things and the lenders agreed to reaffirm).

If things are tight, start looking at expenses and ways to reduce them. Dump Cable tv if you haven't already. Dump contract cellphones and get pre-paids like virgin mobile which give unlimited text and data with a pack of minutes per month (I pay $25 for 300 minutes on an Android smartphone and rarely go over by using email and text as much as possible). Look at your food bill and see how to cut that using meal planning aids such as e-mealz.com so you don't over-buy on food and waste gas on multiple store trips.

See what you have left over. Start scraping together a $500-$1000 cash emergency fund and keep it parked in a safe place like a firesafe in your house. DO NOT use it unless you have a true emergency like a car breaking down. DO NOT keep this in a bank account if creditors are threatening to sue you. Keep the mustang in your garage just in case some wise-@$$ collector tries to take matters into their own hands.

Now start figuring a pro-rata plan to pay off those debts. Start witht he smallest even if it is not the one withthe highest interest rate. This will get you to a sucess faster. Yes you will pay a little more in the long run, but this isn't about the dollars any more. It's about succeeding at getting out of the hole you are in. You need fast successes to stay encouraged. And most "penalties and interest" stop once the debt is sold by the original creditor to the collection market... so eventually the amount owed will stabilize.

Witht he pro-rata plan you list all your income for the month on a pad and start subtracting your expenses. When you get to the bottom put what is left into your emergency fund. PAY NO UNSECURED DEBT UNITL YOU HAVE THIS CUSHION. With your cushion in place start paying down your debt as you can one creditor at a time.

Cutting the other phone lines for new numbers on pre-paids will give you some peace from harassing collector phone calls, but they may eventually find a way to call. If so, just tell the ones not getting paid "you're below the line." When they stutter and try to understand what you mean just say "we draw up a list of things to pay for every month and when the money runs out we draw a line and anyone under that line does not get paid. This month you are below the line." That usually causes some sputtering and can be kinda funny to play with cause there really isn't anything they or you can do. You've bluntly told them there just is no money to pay them. If they ask about how to get above the line tell them "you're nicer next time you call...buh-bye."

If they threaten to sue...so what. It's a threat. If you have no cash they rarely follow through. Keep a file on each collector calling you with all their letters and notes on phone calls. If they break the law, take it to a lawyer that specializes in this sort of thing and hammer them for a settlement. I use Attorneys for Consumers and they have been effective in the few times I have needed their services recently. One collector ended up paying $2000 for a breach of law over a disputed $25 fee from a vendor. If you score cash this way, use it to pay down what you owe.

It will take a good deal of effort, but you will get out from under it eventually - and keeping most of your stuff in the process. That won't happen if you go through a BK.

Great advice!!

ALL of the cards have gone to collections already, most of them are showing "charged off" on my CR. The ones that I have talked to have not wanted to negotiate on a settlement and I have sent them a DV letter to prove that they own the debt CMRRR.

I am just worried about being sued and loosing everything I have.

I have offered the CA up to 35% of the amount they are trying to collect but they are not biting on that and I want to make sure it pays off the debt in full. How do I do that?

I am proud of myself though, I paid off a $912.60 loan off this week so that is a step in the right direction.

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I have offered the CA up to 35% of the amount they are trying to collect but they are not biting on that and I want to make sure it pays off the debt in full. How do I do that?

If you ever have any doubts about a settlement being final, pay a little bit to a lawyer (shouldn't cost more than $100 or so) to have them prepare and send the settlement. It only takes an hour of their time total. This way a "court officer" is in the loop and can take up the matter if the other end doesn't live up to their end of the bargain. Keep all settlement documents in a file for at least ten years just in case some zombie collector pops up in the future.

Oh, and one more comment to my advice int he first post....

Bet me you finish paying it all off in LESS time than it would take in a BK-11! The longer collectors do not get paid the more they are willing to settle for whatever they can get.

Edited by Methuss

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