New here - met with lawyer today have ?'s

[basketsbears]

Hi,

My husband and I met with attorney today regarding bankruptcy. We would be chapter 13 - said we would be 100% payback - payments prob about $950month.

We just recently - last payday - stopped paying unsecured creditors. We owe about $50,000 in unsecured debt. I asked the attorney what the advantage was and he said we would be debt free in 5 years - that because we would be paying back whole amount - would basically be saving interest. We also have two cars, and a house we would reaffirm. We also have a house that we would return. To me, that is the main reason to go bankrupt route.

I am so very sad and embarassed - I had been following Dave Ramsey and have fallen off the wagon - now my husband wants BK. I had filed Ch 7 when I was divorced before (1998) and had huge amounts of debt.

I just don't know if we should go thru with it. Many of our cc's are 30% and I feel we will never get anywhere. I do feel good that we would have everything paid off in 5 years. We currently pay about $2000 month on loans (not including two cars we would keep and our residence). Our net monthly income is about $6000.

Any advice is appreciated.

Thanks!

[andy158]

I was paying $2,300/mo on medical and minimun cc payments. Did some calculating and it would take about 2.5 life times to repay the cc's at minimum payments. We were holding our own for a while. The interest jacking and double your payment jacking is what broke this camel's back. You will not escape the cc trap making the min payments and they know that and want to keep you there. Nice to know we will be totally debt free (except for the house payment) in 57 months!

[lifelesson]

I wish you luck on the whole process. You seem to have lived thru the last BK stigma and well you will do fine this time. Just keep fcus on wants and needs now. Good Luck.

[leena]

I think if I were looking at a 13 with 100% payback, I might want to look hard at exactly how much I would save in interest and all the other particulars. Not saying it cannot be a good thing, just be careful...

[bklawn]

Hi,
My husband and I met with attorney today regarding bankruptcy. We would be chapter 13 - said we would be 100% payback - payments prob about $950month.

Is that $950 DMI after paying all your expenses?

[optimistic1]

You can use a lawfirm to also settle your accounts for a lesser amount, which can save you money or it can make a larger tax bill. By using the lawfirm, you know everything is well documented, in the event that a collector attempts to sell off the forgiven debt to a junk debt buyer. You will need to sit down and run the math on the pros and cons and such.

[basketsbears]

Hi,

yes, the $950 is the disposable income which would be paid to the trustee every month.

I am just so confused - my husband is adamant about filing.

[Tbornetun]

One benefit to filing with 100% payback is that if a creditor doesn't file a claim, they don't get paid. The debt would be discharged without them receiving anything and you would pay back less.

[walkthaplank]

Realistically you would never be able to pay off this debt. If you were to do a debt settlement, you'll end up paying taxes on that added income. I think your husband is adamant because he realizes this and at least you'll have it paid off with no additional interest or penalties. Like others have said, if somebody does not file a claim they're out of luck and you pay less.

It is a tough decision, I know.

[basketsbears]

Thanks for all the responses. We did go and open a new checking and savings account at a new credit union today per our attorney's request.

[walkthaplank]

Of course if you are going to be in a 100% payback, I might not stop paying until right before your attorney files the case. Why add late fees and interest between now and then?

[rrockinggramma]

because creditors can only file on the principal balance owed. If they add anything else, the OP can object to the claim filed.

[DEBTCHAINS]

As I'm still learning, and yet to see a BK attorney.... I realized that if I do debt settlements, (with those that do) I get 1099'd, (right form?) and I have to pay taxes on what was written off. With a Ch 13, you do not?

[walkthaplank]

because creditors can only file on the principal balance owed. If they add anything else, the OP can object to the claim filed.

With credit cards, late fees and interest add to the principal with each new billing cycle do they not?

[basketsbears]

Our attorney will probably file in about two weeks (mid October) - so it probably does not make much difference whether we pay or not.

Thanks again for all the good information and support.