Considering Chapter 7 and advice is appreciated

[MizErin]

So I've been researching different ways to deal with my 20K of debt since my whole paycheck goes to minimums and I have nothing left to buy groceries for my family of 5, with 3 small children. I was contacted by a bankruptcy law firm yesterday, and for the first time, I saw the shore in all the waves I've been wading in. I'm not sure if it is the firm just trying to gain my $1,600 for their services or if they can really, truly help me. I haven't decided if I want to file yet, so I just need opinions.

A little bit about my situation..
My family includes me, my common-law husband (not actually married), 3 small children (ages 6, 3, and 6 months). My debt is mostly credit card debt, with a small bit of medical bills for my children. I am NOT LATE on any obligation, as I pride myself on making my monthly payments in a timely fashion. Due to my pride, I have been paying minimums on all my credit cards, but am now just realizing I can't do it anymore. We live paycheck to paycheck, at best and have practically nothing in savings. The only time I have savings, is around tax refund time, and that doesn't last long. I'm just soo confused on if this is the route I want to take. I have 2 vehicles in my name (1 is mine alone, the other has both mine and my common-law husband's name on it) and I'm worried they can take 1 or both and we need them to get to out jobs. We rent, so there is no real estate involved. Another BIG think I worry about.. I just transferred my 401K from working from the state into an IRA (which I know is protected), but took about $1,500 (after taxes) to myself since my parents, sister, and me are planning a cruise in October. I have already paid my deposit (so no turning back), but I took the $1,500 to pay for the rest and to have a little spending money. I requested this last week, so I don't actually have this money yet, but I'm worried about this money and how the court is going to look at my little "vacation".

Please let me hear opinions on if Chapter 7 is even worth pursuing.. I don't know what to do!!

[justbroke]

First, relax because you have options! I see that your home state is Texas. If you have held yourself out to be married and filed taxes as married (MFJ, MFS) Texas recognizes the marriage. (At least that is what I understand. Florida, for example, does not recognize common law marriages and they have an archaic law on cohabitation still on the books!) If the common-law marriage is as I say, you will be able to leverage filing as married (as a single debtor or as joint debtors).

As for the costs to file, $1,600 is a pretty good value for a Chapter 7 filing (with no special concerns). If you think this may be the path for you, please consult with 3-4 attorneys using their "free" consultation service. Ask as many questions as you like, or that they'll tolerate! Get to understand the landscape.

Since Texas can use Federal Bankruptcy Exemptions, you should be okay even so far as the $1,500 you spent. Just be open with your attorney and be sure to mention it during consultation.

[MizErin]

First, relax because you have options! I see that your home state is Texas. If you have held yourself out to be married and filed taxes as married (MFJ, MFS) Texas recognizes the marriage. (At least that is what I understand. Florida, for example, does not recognize common law marriages and they have an archaic law on cohabitation still on the books!) If the common-law marriage is as I say, you will be able to leverage filing as married (as a single debtor or as joint debtors).

Even though I say we are common-law, we both file taxes "single". I will be filing by myself, as he has no debt. I carry the debt for the family and can no longer handle it.

Something else to mention, my husband is a veteran and we were hoping, sometime later this year, to try to buy our first house. He's gone through credit repair to get his credit where it needs to be, and will be trying to qualifying alone, which is why he cannot have any part of a bankruptcy.

[LadyInTheRed]

It is really hard for us to tell you if BK is the right decision for you, but the fact that your paycheck only covers minimum payments is a good indication that it may be. Can you make your minimum payments each month and pay living expenses (including things like insurance and vehicle registration that may not come up every month) without incurring more debt? If so, can you realisticaly cut expenses or increase income enough to start paying more than minimum payments and pay off your debt in 5 years? If the answer to either of those questions is no, that is even a better indicating that BK may be a good option.

I agree with JB that the fee you were quoted is reasonable. But, I would be weary of a lawyer who initiated contact with you. Be sure to consult with several and ask questions about their experience to make sure you get somebody who knows what they are doing. Don't use costs as your primary criteria for choosing a lawyer. The attorney fees I paid was the best investment I ever made!

After you make appointments for free consultations, do some more reading about the process and post whatever questions you have.

[MizErin]

UPDATE...

I consulted with another BK lawyer after googling lawyers in my area and contacting the first one that came up with excellent reviews. I had a phone consultation, and it seemed like a better fit for me. Her fee was a little bit more ($2K, including everything except courses needed to be taken), but I think will be better in the long run. The other lawyer that contacted me had like 4 reviews total, half of them were bad. I decided against them REAL fast!

Soo.. here it is June and I have not paid 1 of my creditors this month. Feels so liberating, yet soo scary! I just keep waiting for the phone to ring non-stop.. I also made my first $500 payment to my lawyer! Only 3 more months and I'll be able to file!! I think I have made the right step for my future!

[LadyInTheRed]

Congratulations on taking the first step towards your fresh financial start! As creditors start calling, you may find the following thread helpful: http://www.bkforum.com/forum/before-...ep-your-sanity