To file, or not to File

[eng2800]

Hi all. I have a potentially complex situation, and I could really use some advice about what to do. Here are some facts.

1. unsecured CC debt of around $3K.

2. non-dischargeable federal student loans of about $18K.

3. i had a biz that failed, and I am going to be sued for one of the debts I personally gauranteed - around $14K.

4. we can no longer afford our car - if I surrender it, I think I will likely owe about $6K to the finance co. after they auction it off.

5. around $3K in OLD stuff...CC debts going back to early 90's that have long since been written off by original creditors, but bounce from collection agency to collection agency...the seven-year rule meant nothing here, because it seems like every time the account gets passed to somebody else and they report it, the 7 yr clock starts over again!

6. so, the potentially dischargeable debt is about $26,000.

7. i am not currently working - my wife is. After reasonable household expenses, we have a shortfall of about $150 per month. I do not intend to go back to work for at least 3 years because I am going back to school - career change.

SO...what to do? File chapter 7? Do nothing, since all of these debts are in my name only, and since my wife and I have no assets and a negative net worth, and I won't be working for 3 years...there is nothing to sieze, repossess or garnish!?!?...and then deal with the debts after I get a job, 3 years from now?

A complication is that my brother and I operated an online business from january - november of 2004. The biz failed, and presently owes about $30K to vendors that were not personally gauranteed. One lawyer I spoke to said to even include these biz debts on my petition...and citing that the biz is a complicating factor, is asking for almost DOUBLE his normal fee...is it a complicating factor? How much attention will the trustee pay to the biz, if any?

ARRRRGH...sorry for the book-length post. I am confused and frustrated!

[vic6string]

If you are in the hole monthly, and don't forsee an income anytime soon, I think bankruptcy may be the best option. Once late fees and overlimit fees and legal fees and stuff along those lines start hitting, you will be surprised how fast the numbers can explode. A $26,000 debt can turn into $50,000 in a matter of months. If you add to that the business debt, you can see how it can baloon. The way I have always seen it is once your credit is shot, why kill yourself trying to pay it off if you have BK to fall back on. You have no assets now, but I am sure you plan on having them someday, and as you see even when charged off, these things have a way of creeping back on you. As for the spiked legal fees, that makes sense for the extra woek, and the extra couple hundred bucks (should not be much more than a few hundred extra) is worth discharging another $30,000.

[shardena]

to file or not to file

File a chapter 7. Please note the period. You need a fresh start. A chapter 7 is the only logical option.

[teddybeardj]

how about me?

I cant add a new post for some reason...so here is my life.
Married, one child (3 year old)
Renting the basement of my parents house. Almost bought a house for $85K, even though we can't afford it.
Here are the monthly figures

Combined take home income: $1868...and then the deductions.
1. GMAC 318.55
2: Discover $295.00
3. Four other cc's $ 300.00
4. Child care for the month: $400.00
5. Sams Club: $25.00
6. Gas Cards: $25.00
7: Dell Computer: $25.00
8: Bank line of credit: $50.00
9. Store charge card: $80.00
10. Cell phone Bill: $80.00
11. Cable Bill: 40.00
12. Car Insurance $100.00
Total monthly payments: $1738.55
Amount left over: $129.45. Now, in that amount, I didn't include food, gas, clothing. I have already come down on myself for allowing this to happen, and have come to the conclusion that it will be a cold day in he** before I ever sign my name to a piece of paper that says "credit application."

So what do you think? Should we? I say we should have done this a long time ago.

[worriedbk7]

It looks like once you stop paying your cc, you have over $1K leftover. You need to find a place for that money to go. I suggest renting an apartment. The only way you are going to be able to file chpt 7 is for your expenses to exceed your income. At this point, it doesn't look like you can do that living w/your parents. GOod luck to you. Go see a bk lawyer...usually the first visit is free for a consultation.

[vic6string]

I am assuming those credit card payments are minimum payments. I can just imagine what the total payment is. I agree you should speak to a lawyer to see how you can protect your assets since, as stated above, you will be in the black once you stop paying CC bills. It shouldn't be very hard since you haven't even added living expenses to the equation. What is important right now is that you stop using the cards, and as the lawyer will tell you, stop paying them. And try to find a way to pull a little bit of cash out and putting it away (not in the bank...cookie jar money) to help you in your first few months after BK (those are the hardest since no one will give you any form of credit on anything better than loan-shark terms). Good luck.

[teddybeardj]

Yes the figures are the minimum payments. We tried the Dave Ramsey method of the smallest to largest, attacking the smallest. We were doing ok with it, but still charging on the largest. These figures don't include food, gas, clothing and God forbid, leasure. I constantly float the car payment each month to pay the rest. We eat macaroni and cheese most days (and sometimes I like it) but I am sick and tired of being sick and tired. I hope that I will never be qualified again for credit. I will be a good boy for the next few years and then I think we'll qualify for a mortgage some day if needed. I would much rather pile cash up and buy a house with cash, then its a moot point...
I've took all I can took, and I can't took no more.

[Bob_Dole]

Dont know if this will help or not but here is an article from the site that I run entitled: Why should I file for bankruptcy: advantages of your filing?

Below are just some of the benefits you will receive if you are thinking about bankruptcy. An attorney can give insight into even more benefits than what are listed below. If you are suffering from debt in any form, bankruptcy will provide several advantages that surely outweigh harassing phone calls from creditors, restless nights, and worries about your financial future.


1. Fresh startStop foreclosure on your home.
Bankruptcy will keep your home out of foreclosure. Even if your home has been foreclosed upon, filing bankruptcy can get you back your home. As you will soon find out upon your research of the positives of bankruptcy, many possessions, both real and personal are exempt from your bankruptcy estate. This certainly includes your home. If you are approaching foreclosure, bankruptcy will prevent creditors from seizing your home. Bankruptcy will allow provide for a repayment plan to allow you to comfortably make those payments you have missed without the impending threat of losing your home.


3. Stop harassing behavior from creditors.
Some creditors do not always take the right course of action when attempting to collect a debt. Often, creditors will persistently call the home of a particular debtor with demeaning and abusive behavior. Not only is this unethical it can rise to the level of unlawful. In essence, bankruptcy will put on hold the demands of many creditors and stop the harassing phone calls and other inappropriate behavior all together. Bankruptcy will force your creditors to abide by federal law and wait in line with other unsecured creditors.


4. Prevent your car or other property from being repossessed.