Hanging on a wire

[Green]

Thanks for the forum and help. About me:

30-something, $40,000 in credit card debt (2 cards), no other debts. Never missed a payment before on anything (rents, utilities, credit cards). Perfect payment record but never had a house or car payment. Nearly zero assets - $3500 car in rough shape, an old laptop, living off credit cards and savings, nearly zero savings left. Used a few "promotional checks" against my credit cards to eat and pay gas. Only used CC's for groceries and gas and a few car repairs, a few clothing items from Goodwill, no luxuries. No house, no dependents, single, no other debts other than monthly cell phone bill ($45). Unemployed/Underemployed last few years. Sleeping on friend's couch for the moment until he moves out of state soon.

I am in dire strights for food and gas and used most of my last cash savings to pay my last credit card payments ($700). Looks like my $40,000 plus interest with an increasing APR might kill my perfect track record for never missing a payment on anything. Future income looks bleak with the economy and my employment record, especially if bankruptcy shows up on a background check.

I am trying to learn bankruptcy, I am guessing chapter 7, and I don't even have a few thousand $$ for filing and lawyer fees. Maybe pro se will be my only option. The possibility of bankruptcy might be the least of my worries soon. Any comments or questions would be very much appreciated. I have to use wireless at the library so my responses might be delayed a bit. Thank you.

[JRScott]

Okay the first thing is obviously you shouldn't have paid the 700 dollars to the credit card companies. Food/Clothing/Shelter/Fuel/Transportation should always take precedent over credit cards.

What is the prospect for a job near term?

You mention your friend is moving, do you have someone else you can stay with?

To meet your basic needs have you looked into the various church groups in your area. Almost all the major churches have some sort of help for the poor, the most developed of these programs are generally the Catholic Church run charities and the Church of Jesus Christ of Latter Day Saints welfare programs.

At this point with no job, I wouldn't even worry about filing bk. I also wouldn't worry about the credit cards in essence your judgment proof at the moment.

[Green]

Thank you for the response. I hope I am not being rude by asking so many questions.

Why does a job make a difference? Will they garnish my wages as soon as I get a paycheck? If I am "judgment proof" is that just a temporary status that will change when I get a job?

Would it make any difference between: going from perfect credit to bk, and going from perfect credit to missing a series of payments and then bk?

Do I even need to file for bk or could this possibly "take care of itself" if I just stop making payments? Is the end result the same? Bk vs just not paying my credit card payments?

[AfraidOfBK]

If you plan on missing cc payments in the long term, BK is inevitable....debt consolidation programs ruin your credit anyway and ost you money while BK costs a lot less and wipes the debt away (ch 7)....it sounds like you would qualify for ch 7 but there is no URGENT rush to file for you...hers what you have to plan for:

When you used the promotional checks did you purchase necessary items? How long ago was that ...If I understand correctly, you might ahve to wait a few months for that to fall off your history if it was a luxury purchase.

Stop paying the CCs right away. the only worry there is that the cc company will file a lawsuit to try and get $ from you...obviously you are judgement proof without assets or income so it is not likely they will do that anytime son...plus people on htis forum have gone a couple of months or even over a year without legal action by Cc companies. THIS DOES NOT MEAN do nothing.....you have to have aplan to protect yourself for the worst case scenario...

A few months of missed payments should not hurt youa nd I dont htink they can elgally garnish any future wages until taking you to court first.

ALSO - if your cc debt is on a card with an institution that you bank with, I would move banks so that they dont try anything tricky like freexing the acct or something

Try to find a quick job to make ends meet...you will need at least a couple hundred for pro se filing fee, even if you dont use a lawyer, but I'd say you have some time

This is all info Ive gained from my own personal lawyer meetings and this wonderfully informative forum...search the posts and you will learn SO much

[StartingOver08]

The most important thing to do is get a job and steady income so you have funds coming in for your food/shelter/transportation needs.

The last thing you need to do right now is keep up with payments on unsecured debt.
Conserve whatever cash you can for living expenses.

Being "judgement proof" does not mean that the cc co's will not attempt collections or judgements against you - its just that you can not pay any judgements that may be obtained.

BK can solve the debt problem - but not the income problem you are currently experiencing. It makes more sense in the long run to get your income situation worked out, then file BK to discharge the debt. The credit score should be the last thing on your mind right now. It will take a hit, but will recover once the debt is discharged.

[Green]

Thanks...

I don't think I have made any luxury purchases - just grocery store food, gas, $45 phone bill, laundry, and some clothing/items from Goodwill. Thanks for the confirmation about debt consolidators - they do seem like a rip off.

Do you think that I should go bk? It's hard for me right now to guage myself and my situation. Looks like it would take me 10 years or more to pay off the cc's, especially with my increasing APR interest rates. I don't see a way to keep up my payments and good credit history unless I win the lottery this week.

So I guess I need to plan out now what action I am going to take. Bk chapter 7 is my best guess. I have been selling what few items that I own to try to pay off my bills in good faith... computer printer, scanner, bike helmet, etc... and now I need some cash or I will be in more than financial trouble...

[SevenFilerCA]

About the selling off of things to pay off your bills in good faith . . . why don't you hold off on that unless you actually need to do that to eat, etc. If you file for bankruptcy, certain items and amounts are "exempted" in order to give you some ground to stand on for your fresh start, and items like these are likely included. It's very hard to start over with absolutely nothing. You may need your computer equipment during your job search, your bike helmet to keep you safe while pedaling to job interviews. I know it's hard to let go of the idea of paying down your debt (I actually cried when I called my credit companies to tell them I was filing), but if it is inevitable you going to go into bankruptcy, letting go of those last few hundred you try to send them will hurt you more than help. Hold onto what you can for your start fresh.

[JRScott]

Stop paying the credit cards.

I know this is a hard time, however they won't take legal action for around at least 6 months in most cases, and it can take year or more.

Now they could go and get a judgment against you. Then they'd have to depose you. At which point it would be revealed you had no assets or wages to pay the judgment. Now it is possible if they have this judgment they'll periodically check and once you do have a job they may seek garnishment then.

The reason it is best to wait until after you have a steady job is to prevent yourself from getting back in the same situation immediately following the bankruptcy. You also maximize the bankruptcy protection by waiting. In essence you could wait until you get your first or second paycheck, have things ready and file.

[queenfluff]

Green,

I didn't read through all the posts but I read your first one. Your situation is almost identical to mine. I am 39. No assets. Only cc debt. Unemployed. Used cc's for necessities. Had perfect credit - never paid late. Single but living rent and utility free with bf and mom until I can get job etc....

If you hardly have any $$ left, save them for your fees. Don't pay your cc's. Half of your minimum cc bills are finance charges anyhow. The cc companies don't care about us little guys right now so you should watch out for you right now.

For a lawyer, try to find one that maybe just started out on their own but worked maybe for a firm before and might be able to get a cheaper fee. I am using someone who is a friend of a friend of my bf's lawyer friend. My fee is only $900 (for the lawyer not including the 299 which everyone pays - you can get it waived though) which I think it pretty reasonable. That is almost what I am paying my cc's in minimums payments each month so I would rather have what $ I have left to go to that and not to the cc's who don't give a care about me.

My lawyer said that cc charges used for neccessities like food, living expenses, dr. bills - won't be of concern. Don't go buying UN-neccessities like a diamond ring or a rolex watch. Sounds like you are living humbly on the cheap and your charges shouldn't be a flag.

There is a max of money you can have left for each state that they can't touch. So you need to look into that.

Sorry If I repeated others here - I will rest of the posts later. Gotta go and sign my petition now!

[StartingOver08]

OP, don't charge on your credit cards - even living expenses.

The presumption of abuse arises if there are charges on your credit cards within 90 days of filing. Some people get lucky and have a charge or two and don't get caught - but don't play with fire. The presumption of abuse also arises if you do a balance transfer or cash advance within 70 days of filing.

Best to prepare and file with a clear mind/heart.