7 or 13?

[Andyman]

I hope to see my attorney next week but still wanted some thoughts on my situation.
Selfemployed and draw about $1200 a month, more or less. CC debt just over $18K. Auto loan of about $10K and that's it. I live with friends and pay them about $350/month. Plus I have auto insurance of around $90/month and over normal living expenses. I'm divorced but my name is on the lan for the house and a second of which my ex got and is paying them. the divorce decree was that she got the house and I got the business. With the economy and all, my business is really struggling but I am making enough to keep the doors open and my vendors are up to date. Paying the CC's is not very hard. I can make the car payment. does it sound like I'm a candidate for a 7 or a 13? Also, my quarterly taxes are about $1300 of which I couldn't pay the first quarter but did pay the second and will most likely be able to pay the third.

Thanks for any thoughts.

Andy

[NowImDownInIt]

You're wanting to file personally right? I'm confused at what you are figuring as your income. What is your annual income? And what state do you live in?

[Andyman]

You're wanting to file personally right? I'm confused at what you are figuring as your income. What is your annual income? And what state do you live in?

My personal income? For this year it will probably be around $14K before paying taxes. And yes, I want to file for myself. The CC'd debt is killing me. I'm in Oregon. Thanks for the reply!

Andy

[NowImDownInIt]

This wouldn't be for your business debt, am I right? That is your income from the business though?

[Andyman]

This wouldn't be for your business debt, am I right? That is your income from the business though?

Yes, the CC's are personel debt. The $14K is what I pay myself from the profit of the business.

[keepmine]

Your problem is not debt but, lack of income. $18K is just not enough to file bk over in my opinion. Once disacharged, you still won't be able to support yourself on $14K. You need to take some drastic steps to improve your situation. Either get a pt job or, close the business {or operate it as a sideline} and try and get a decent paying fulltime job.
I don't see bk as really helping much in thelongrun.

[NowImDownInIt]

I'd say, strictly looking at your income (that you pay yourself) to go for the 7. How much are your minimum payments each month? I read that money for hiring an attorney was an issue for you. Anyway you could stop paying those to hire an attorney?

[Andyman]

I'd say, strictly looking at your income (that you pay yourself) to go for the 7. How much are your minimum payments each month? I read that money for hiring an attorney was an issue for you. Anyway you could stop paying those to hire an attorney?

Minimum payments are around $450 for the two. I'm gonna be late again this month and I know one of them will probably double as one already did so my payments will likely be about $600. If I could eliminate the two CC's I'd be a heck of lot better off.

[Andyman]

Your problem is not debt but, lack of income. $18K is just not enough to file bk over in my opinion. Once disacharged, you still won't be able to support yourself on $14K. You need to take some drastic steps to improve your situation. Either get a pt job or, close the business {or operate it as a sideline} and try and get a decent paying fulltime job.
I don't see bk as really helping much in thelongrun.

I couldn't get a full time job that pays what I make. some months are better than others but I really have to budget for those if I can. I'm tied into a 5 year lease on my building. (I operate a retail/craft business). Some months I can pay all my bills and other months I juggle like crazy. What with the way the housing market has been, there's been a huge drop in my business. If I didn't have the CC payments I could get by.

[NowImDownInIt]

I say, go in for consultations to attorneys in your area (usually free)... Make your decision to file and stick with it. In your case, I'd go 7. Then stop paying on your credit cards and SAVE that money for the attorney you choose, or start actually sending the money in to said attorney. Once you've paid their fee they can file and the process will begin.

[treehugger1]

Once you declare BK and get discharged, you are out of luck for the next several years.

If you file a 13 and the Trustee in Eugene or Portland decide you have enough to at least make some payment to unsecured (I don't know that this would happen), you are in a five-year plan, unless its 100% and you pay it off early.

You do have some time to make a decision. If the credit card payments are the problem, you might try giving the creditors a call and see what (if any) programs they have to help you out.

I'm also in Oregon and I can tell you from my experience that local creditors can act quite quickly, if you choose to completely ignore them. I don't know what your particular debts are for each card, but Oregon also allows small claims up to $7500. These can move fairly quickly depending upon your county.

It sounds as if you are almost judgment proof. If you look at the Oregon garnishment exemptions after subtracting out state an dlocal taxes, you may not have enough left over to be worried about wage garnishment.

The fact that you appear to own your own business might create additional problems if someone gets a judgment. Others may have more to add related to personal debt, business, and paying yourself a salary.

[Andyman]

Once you declare BK and get discharged, you are out of luck for the next several years.

If you file a 13 and the Trustee in Eugene or Portland decide you have enough to at least make some payment to unsecured (I don't know that this would happen), you are in a five-year plan, unless its 100% and you pay it off early.

You do have some time to make a decision. If the credit card payments are the problem, you might try giving the creditors a call and see what (if any) programs they have to help you out.

I'm also in Oregon and I can tell you from my experience that local creditors can act quite quickly, if you choose to completely ignore them. I don't know what your particular debts are for each card, but Oregon also allows small claims up to $7500. These can move fairly quickly depending upon your county.

It sounds as if you are almost judgment proof. If you look at the Oregon garnishment exemptions after subtracting out state an dlocal taxes, you may not have enough left over to be worried about wage garnishment.

The fact that you appear to own your own business might create additional problems if someone gets a judgment. Others may have more to add related to personal debt, business, and paying yourself a salary.

CC debts are B of A just over $8K and Chase at about $9500. I was late twice with Chase and they upped my interest rat to almos 30% and my payments are $300. I'll be late again this month or not be able to make a payment so I'm sure the B of A CC will end up with the same thing. So Cc payments will now be around $600/month and with salary that is only around $1200/month, give ot take, I don't see how I can ever get out of these debts! sucks!!

[treehugger1]

Unfortunately, once you are 30 - 60 days late, it seems both Chase and BOA will raise your interest. It is probably just some computer program that creates the new interest rate. these companies deal with millions of billings each month, so you are just another account number.

You need a plan. Where do you see yourself in 5-7 years? If being debt free is your goal, then why not look into a BK 7?

My take is that you have a few months before the creditors move toward any "legal" action. With only two cards, you will receive nowhere near the calls that others on this board have had to deal with. BK 7 will give you a fresh start, but I'm not sure that this will clean up your financial situation unless you are willing to live within your means after discharge.

Check out some initial consultations with BK atorneys to get a feel for you particular situation. You should also keep in mind that BK attorneys business is just that, bankruptcy. Reflect on any information you gather and search this board for additional information.

[fltoo]

Why are you paying quarterlies of 1300.? What is your income on your tax return, not what you take out of the business every month and is the 1200. clear after all overhead is paid? I am assuming you have no employees and you are not paying employment taxes and assuming this is income tax.

If and when your business does better, you might need a line of credit to help the business grow. There is no way I would do a BK on your debt.

Who does your taxes? With the overhead you have, you can't be claiming $14,000 a year profit from the business. Also, you don't have to pay quarterly. You can pay at the end of the year. Start knocking that debt out with the tax money you are paying.

Take a long hard look at your Profit and Loss statement if you do your taxes yourself. You can eat up $14,000 with expenses in a hearbeat.

[BigJohn]

What is the rent for your business?
What is the 'street value' of your tools, equipment, etc.?
What is the value of your inventory?
What is the value of displays, fixtures, computer, etc.?
Is your loan used fully or partially by your business?