atmempty

Debt issues, BK might to be best...help.

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Like many here I'm in a bind.  I have around 105K in debt with 10 different creditors.  Amex, Citi bank (2), discover, Lending Club, wells fargo, amazon, paypal, home depot and a local credit union.  A few are less than 3k.  I'm in Utah, single dad with my daughter 100% of the time.  Home owner, 19 year old vehicle paid off.  Not behind on anything.

I called a lawyer and found out I make too much for Ch7.  I also found out in Ch13 all my discretionary income goes toward my debt for 5 years, then the rest is dismissed.  Problem is, right now all my discretionary money except for a couple hundred dollars goes toward debt payments.  I'm  little short every month after buying food.  So if I do a Ch13, I will have everything paid off in less than 5 years based on my left over money after paying living expenses.  The only thing that saves me interest, which is a lot  Maybe around 800-1000 a month.  If I Ch13, I'll have paid everything off and still have it on my credit.

After seeing this site, I considered halting payments and try to negotiate with the cc companies.  I could have almost 15k saved in 6 months.  This site suggests that there is quite a period of time before it goes to collections.  However, I'm reading that a lot of people are going to collections after 90 days and a good amount are being sued.  I get the concept of stopping the payment and trying to settle on my own.  Maybe this is the best way and if it gets out of hand, then Ch13?  

Very frustrating. I've worked hard to never miss a payment ever.  I have a feeling I'm about 3 months away from not having enough to cover everything.  Right now, I have no hope of paying things off.  I can't hardly stay ahead of the interest.  I'm to the point where bk or settlement, I feel, is my only hope to get out from under this.  I would even be happy if I could get someone to give me a 100k loan for 6-8 years so I could pay off the debt and not be killed in interest.

Maybe thanks!

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You can still negotiate with the cc companies without stopping payments.  Many will close your account, let you pay off the debt with either a lower interest rate, or zero interest on the remainder.

A good way to make them an offer of what you can pay is to take your total net pay, minus all living expenses.  Remember you need to include a small amount for entertainment, savings, etc.  There are formulas out there, google the search.

Then lets say you had 1600.00 a month left to pay on your bills.  You take each debt and figure out what percentage you owe.  (example citibank could be 40% of the total debt you owe on all your cards. ) (add all debts together then divide by each debt to get its percentage)

Then you take your 1600.00 that you have to pay, and pay each debt according to their percentage. So if citibank was 40% of your debt, you pay them 40% of your 1600.00.  

At least they won't go into default, you may be able to manage the debt, and most card company's will work with you if you come to them with a plan. Yes they will always want more, but you have to be firm and negotiate that interest free, or lower interest.  Of coarse you will no longer be able to charge on any of them, but that might be a good thing.

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Whatever you do, do NOT go late on any of your payments.  If you have no late payments showing, you can file BK now and stop everyone from updating your credit report with derogatory info and have a 700+ credit score within 5 years.  If you go late on everything, not only will you have a BK on your report (assuming you eventually file BK), you'll also have the late payment marks equivalent to the number of creditors times the number of months you were late that will stay on your report for the full 7 years.  If you have 10 accounts and go 3 months late on all of them, that's 30 late payment marks dragging your score down for 7 years.  You will have virtually zero chance of obtaining any sort of legitimate credit for that entire 7 year period.

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I'm ok for a few more months as long as nothing big comes up. Doesn't a CH13 stick with me for 10 years?  I may not be Ch13 eligible either.  I'm co-owner of a property with my brother.  I don't live there, I never have made a payment.  It has a lot of equity.  I probably should have gotten off the title years ago.  Our parents lived in it before they passed.  He bought me out in 99, I just never got off the title or the loan.  I thought I read somewhere that won't be protected in a Ch13.  I asked if I could quit-claim it to my brother.  The guy I talked to said I could, but I'd have to wait 2 years?  I need to find out for sure.  If I don't qualify for 7 or 13, I'm not sure what my next option would be.

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A Chapter 13 stays on your report 7 years after the plan is completed. It is a Chapter 7 that stays on for 10 years. Also, a Chapter 13 uses your income to determine your payments on a plan for up to 5 years (or when all debts are paid) and any assets do not play into the scenario. Everyone is eligible for a Chapter 13 regardless of their income or assets.

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The property is protected in a Chapter 13.  It may not be protected in a Chapter 7.

In a Chapter 13 you keep your non-exempt property so long as you agree to pay its value to your creditors.  In your case, however, you claim you have no real interest in the property.  Discuss with your attny listing the property on Schedule A as "50% bare legal title with 0% equitable interest" and value it at $0.

In a Chapter 7 the Trustee could try to blackmail you (or your brother) to pay blood money to end an argument over "ownership".  The property would still be listed on A as stated above but if an argument over ownership comes up, you or your brother would have to defend it.

Your attny mentioned the two year waiting period because you are required to disclose transfers that happen within two years prior to filing.  Trustees can typically look back four years but the Statement of Financial Affairs only requires a disclosure within the two years.

Not everyone qualifies" for a Chapter 13.  Individuals who cannot produce a budget that shows they can afford the Plan payments typically do not qualify.   Individuals who owe more than a certain dollar amount do not qualify.

Des.

Edited by despritfreya
grammer

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6 hours ago, atmempty said:

Doesn't a CH13 stick with me for 10 years?

As others have said, it's only 7 years, but my point was that even with a BK on your reports, as long as you have no late payments, you realistically could have a 700+ FICO within 5 years.  You'll never achieve this with a bunch of accounts showing several late payments.

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Thanks for all the replies.  I know I don't quality for Ch7.  If I can do 13 without compromising my brother's condo, despite the large amount  of equity, that might be best.  My other option was to ask him if I can use the condo and get a second on it.  Not sure it's fair for me to ask him to secure my unsecured debt with his property.  I guess I'll sign it over to him since I should have done that anyway.  I found the form to figure out disposable income.  The national standard for housing is $235 less than I pay now.  According to this, if I did it correctly, I have $901 to put toward my debts under a Ch13.   
If I can restructure my debts and have a 700 FICO in 5 years, I should consider it.  I don't have a 700 now, despite never being late on anything.  I don't see much changing without something drastic.

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