Filiing Chapter 7 soon

[Piecukonis]

I am just curious if we would qualify. We pass the means test and have about $30,000 in credit card and medical debt. We are a family of 5 and I am a stay at home, homeschooling mom. My husband makes a decent income of about $60,000 per year. Our expenses are right about where the federal national standards are at with our house size but we struggle because all of our credit cards are maxed and if we try to make all of the minimum payments, nothing is happening and our minimums combined are more than our mortgage!! The thing is, we are not behind on ANYTHING. We have 100% record of paying on time but only pay the minimum and make a lot of sacrifices in terms of clothing, food, etc. The bad thing is we have about $50,000 in student loans that are entering re-payment and that will throw us over the edge. We will no longer be able to pay the credit cards. We want to keep our house which we just bought 2 years ago and live in a fully exempt state....KS...and we have 1 family car which is only worth a couple thousand.

Can we file even though all our bills, including all the credit cards, are paid current? The 99% credit utilization is what is killing us and we could never at this rate get out from under them. Or will they say that because we technically can, for the moment, pay our credit card minimums even though we are living paycheck to paycheck that we won't qualify to have them discharged?

[LadyInTheRed]

You do not have to be late on your bills to file BK. The status of your debt payments has nothing to do with your eligibility for discharge. However, as soon as you decide for sure that you will file, it is a good idea to stop making all payments on dischargeable unsecured debt. Making those payments when you know you will file BK is throwing money away.

[Piecukonis]

Ok. Thank you. I was worried that they would say that since we are technically working the minimums into our budget that we are not going to qualify. I know for sure that once these student loans go into repayment, some coming now, that we will have to make the choice....student loans or credit cards. We can't pay both so we definitely have to move forward with getting the credit cards and medical debts discharged. I am just overwhelmed because the student loans sound like they are impossible to pay off. My plan is to throw everything we possibly can after discharge but the horror stories of capitalization and variable interest and all of that make it sound like they will never get paid off.

[Piecukonis]

That's another thing. We can't file for about 10 months. My husband gets a small bonus in August...we won't know how much it is exactly but it is usually about 1200-1500 which we plan to use to pay the filing/attorney fees. I am so worried about what would happen if we stopped paying those bills now, this far out. We have been having to use what little we pay on the minimums to turn around and get our gas, diapers, groceries so they keep staying pretty maxed out. If I stopped paying them, and just started paying our student loans under an income based plan, then we could afford our household and food items as well as get some car repairs done on my clunker. I am worried about garnishments on my husband or bank levies before August though. Any ideas on how long it takes most bills to do that? All of them are literally unsecured debts ranging from $500 to $4150 for the biggest one. No luxury purchases at all. I do have my mortgage but will be continuing to pay that because I am not losing my house.

[LadyInTheRed]

It is impossible to know if you can get to August before getting sued. If you stop making payments, can you save enough to pay attorney fees earlier than that?

[Piecukonis]

We should be able to. I may just continue paying up until about the 4-6 month before filing. Even just knowing that we are going to file is a relief in and of itself.