New Usre - Think I have to file.

[Matthew1970]

Thanks everyone for having this forum.

I am a DBA business owner. I am not incorporated, so it is basicly all me.

I am in way over my head. Without crunching the numbers it is basicly 60K in unsecured debt. Most of that is in credit cards.

I had it good for a long time selling on ebay and doing computer repairs out of a small shop near my house. Thinga were good for quite a few years. Nothing to make a TV infomercial about, but a single guy making a tad over 50K a year I was doing alright. One think I may have made a mistake on was picking to pay for a $25,000 house outright instead of paying of a credit card. I just couldn't passit up as the house is assessed at $64,000. I also bought a 4-wheeler and few other things that might not be worth that much now.

Anywho, things are not so good now. I am sitting right at 20K a year average for the last 3 years. I fell behind on a credit card one month and it all went down hill from there. I moved my shop to my house. I have even went through the hardships with a couple creditcards where they lower your payment and knock your interest down to almost 0 but they lock the card. I am on a hardship with one card right now at $150 a month but the other 2 creditcards haven't had much of a payment in a months. Those 2 cards are offering me settlements at 30 and 35 cents on the dollar, basily knocking almost 50K of debt down to 20K, but they want payment those paid off in 6 months. I would love to be able to do that, but there is no way I can come up with those kinda funds. I am thinking Chapter 13 might be my only choice here. One thing that might throw a wrench in the machine is I was using a personal creditcard for business inventory expensesThe only reason I did it was the sky miles were better. That card is claiming they will say I bought a bunch of luxury items and a bunkrupcy would never accept that one. I have record of basicly everything I bought with that card as having being sold with the exception of a couple things that should be sold in the next week or so. I do have one creditor (a guitar manufacturer I was buying inventory from) that is about 2 weeks from taking me to court.

Here are my assets.
House assessed at $64,500 but only purchased for $25K
I have a 2003 Silverado that is worth around $10,000 that I only owe $200. I am holding off on the last $200 waiting to hear what the lawyer will say. The kicker on that is it had a major wreck and could never be sold for that.
I have a 2002 Polaris ATV probably valued at $2k.

I never thought I would be in this mess. But I think I am out of choices here. I may not qualify for Chapter7 but may have to go with Chapter 13. My questions are these:

How much will I be looking roughly in payments in a Chapter 13 if I filing 60,000 in unsecured debt? Am I just paying off the whole debt in 3 or 5 years or is it lowered any?
Is there a better option with a debt consolidation company? My cards were already ready to settle at 30 cenrts on the dollar but a debt consolidation company may not get me those deals.
I will be taking with a lawyer Thursday. Can I still be taken to court if I retain a lawyer for the purpose of filing Bankrupsy?

*EDIT* BTW, I am well aware that a bankruptsy will hurt my credit for 7 years, but I think I will be ok. I already own a home and have no interest in another car payment. I will just save up for my next vehicle.

Matt

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As much as I hate to say this, welcome to the forum. I hate to see newcomers because it means that you've reached that point in your financial life where bankruptcy becomes one of your remaining options.

Now, with that out of the way, the way I see your situation is basically this. You have no assets to speak of...I'm guessin that in today's economy, the $25,000 house may be assessed at $64,000, but worth only $25,000, but since you paid cash for it, its all equity. The truck and ATV are a wash.

To protect your house, which I'm guessing you want to do, you may have to file bankruptcy. If any of your creditors obtain a judgment against you, your house becomes fair game.

The payments you make into a Ch. 13 will depend on a variety of factors, including how much income you make, your qualified expenses and your assets. That's something a lawyer can help you with and if he/she is a good lawyer, you may be able to eke out a very small payment.

This also leads into your second question....all of that information in the above paragraph will also determine how much your unsecured creditors will get out of this bankruptcy. Some (like mine) are getting o% because all of my "disposable income" is going to secured creditors, the attorney and the trustee. Others are paying anywhere from O to 100%....but the good thing about Ch. 13 is that those amounts owed are frozen in time....the won't accrue interest or late fees, making it much easier to actually pay off.

Now, a caveat, Ch. 13 is a committment...for the next 3 to 5 years (depending on your "median income") and if your circumstances change within that time period, you Ch. 13 plan will change as well. For example, down the road, if you happen to get a lucrative job paying double what you make now, your plan can change, because the trustee may want you to pay more of you newly acquired disposable income to the credtiors. Moreover, any big purchases, a car, or a house, are not entirely out of the question, but very, very difficult to obtain. Lastly, recognize that the 3 to 5 year committment is, more or less, set in stone. You cannot come back in the middle of the term and buy out your Ch. 13, unless you pay all creditors in full. Its a committment.

So, with all that, if you can manage the payments of debt consolidation company, or negotiate lower payments and interest, I would go that route if you can....Ch. 13 should truly be a last ditch effort to save yourself.

As to you last question, a creditor can still bring you to court up unitl the day that your case is filed.

[Matthew1970]

The truck and ATV are a wash.

Does that mean they will want to take those ?

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Well, the vehicle is nearly paid off and it sounds like it has value, albeit little value. In theory, I believe the trustee could liguidate that if its worth more than the applicable exemptions (I think the federal automobile exemption is about $3,500, plus a $925 wildcard exemption), but in all likelihood it won't happen.

The ATV is still being paid I assume and its "worth" is offset by the amount you owe on it. You may have to reaffirm the debt and keep paying on it, but I doubt you'd lose it.

In my situation, we had two cars, a fairly new one and a leased one, and a motorcycle....and I kept all of those (of course, I owed money on them) and paid them outside of the plan.

[Matthew1970]

That's good. I don't want to lose my truck. The ATV they can have, I don't owe anything on it, it was one of the toys I bought when times were good. I was actually trying to sell it anyways.