Overwhelmed - Please Advise

[Kirby]

Anyone try negotiating with CC companies?

you can offer to settle the credit cards for pennies on the dollar if you dont want to file BK, however you must have the $ upfront to do so. That is your only other option outside of BK.

Has anyone had any experience or even luck negotiating with CC companies directly for a balance reduction? I spoke with B of A and all they did was direct me to GreenPath, who recommended a repayment plan that just set me up for failure as I was still way over my debt-to-income ratio on their plan. Nutshell: I have $80K in CC debt. 4 different cards. If I can settle for, say, 10% I'll sell my body on the street to raise the $8K. Any/all comments welcome. Thanks.

[SNC]

thanks everyone, this has been so helpful, i don't feel as alone now in this... and dmu - good luck on your bankruptcy

[dmu]

So, from what I am hearing back from everyone, if I qualify for Chapter 7, I should go ahead and file since my credit score is already down to 555. I could re-build my credit faster if I just go ahead and file now, as opposed to setting up a payment plan with my creditors that I know I may not be able to pay every month in the future due to my unstable employment situation. As for a settlement option - that is not even really an option for me because I do not have 40-50% of my debt saved in cash to pay my creditors off.

BINGO!! Protect yourself. No one else is going to do it for you. The creditors have collected interest on you, written your debt off, and received a tax deduction for it. In return, your credit score has suffered immensely. Stop your losses at this point and start looking out for #1 (you).

If I were in your shoes, I'd file bk 7 asap. It does you no good to continue paying minimum payments that aren't making a dent in your principal and keeping you trapped in this financial pit.

I wish you well. I wish myself well as I'm seeking to file bk for similar reasons. Do yourself a favor and start looking out for yourself. Now is the time to be selfish!

[JackBondLove]

When the amount of unsecured debt is high enough, relative to the possible loss of assets and BK filing fee, it makes sense to get the debts discharged. Think of it like this - if you are paying 30% on your unsecured debt of $75K, that's like someone giving you $22.5K tax free every year! Who cares if you don't get easy credit for a while? I've got news for you - the days of easy credit, even for those with great credit scores, are over.

[SNC]

yeah, i am not sure... the law differs state to state, right? my lawyer so far didn't tell me about the income limit... he only asked what my income was over the last 6 mos.

so i am not sure what exactly the law says in MA regarding the exact qualifications for chapter 7 besides the means test (have to be under 26k in the last 6 mos). i will find out on tues at my meeting with my lawyer. but if anyone knows on here, i'd love to hear!

[youngnbroke]

Nevermind!! Got my answer in another thread

[youngnbroke]

Sorry to "butt in" but i thought that as long as you are under the median income, you can automatically qualify for chapter 7?!! Am I wrong?! Uh oh!

[SNC]

Thanks so much!! ... I am so grateful to everyone helping me with their advice... I can't tell you how helpful it is.

Cristo, I wish you the best of luck in your filing. It sounds like you did the best thing for yourself. It helps so much to hear other peoples' stories and their perspectives on bankruptcy.

Once I get through this mess, I am going to make sure to try to reach out to people on this site just like everyone is doing for me thank you.

[lmaosm]

Thanks!!! What about expenses I have periodically throughout the year, but not necessarily on a monthly basis (for example, my cat's asthma med or oil change). Can I include those in my monthly budget (for example, if i'm going to have to pay $120 for my cat's med over the entire year, I would put $10 in my monthly budget). Also, what about expected expenses? For example, I expect to be paying around $75/mo for medications once my health insurance kicks in next month and I can see a doctor to get the perscriptions. Can I include that estimated cost in my budget even though I do not technically have that expense at this very moment?

Vehicle monthly payment, gas and maintenance of the car going under vehicle.

Vehicle insurance goes under vehicle insurance.

[Pandora]

Thanks!!! What about expenses I have periodically throughout the year, but not necessarily on a monthly basis (for example, my cat's asthma med or oil change). Can I include those in my monthly budget (for example, if i'm going to have to pay $120 for my cat's med over the entire year, I would put $10 in my monthly budget). Also, what about expected expenses? For example, I expect to be paying around $75/mo for medications once my health insurance kicks in next month and I can see a doctor to get the perscriptions. Can I include that estimated cost in my budget even though I do not technically have that expense at this very moment?

yes to all of the above


and +1 to what Cristo said!

[SNC]

Thanks!!! What about expenses I have periodically throughout the year, but not necessarily on a monthly basis (for example, my cat's asthma med or oil change). Can I include those in my monthly budget (for example, if i'm going to have to pay $120 for my cat's med over the entire year, I would put $10 in my monthly budget). Also, what about expected expenses? For example, I expect to be paying around $75/mo for medications once my health insurance kicks in next month and I can see a doctor to get the perscriptions. Can I include that estimated cost in my budget even though I do not technically have that expense at this very moment?

[Cristo]

SNC,

This is my first post to this forum, but I have been lurking here for a long time. I'm getting ready to file and I had the same concerns about my credit score as you did. Forget it. BK will not make your score worse than it already is and may in fact help it because you will have 0 debt instead of $74,000.

Why I'm really posting this to you now is because you say that you are 33 and have $74,000 in cc debt and no retirement account. Making minimum payments on the cc debt will take you until you retire to pay off and you still will not have saved for your retirement. Take care of yourself!! File the BK and start saving in an IRA or 401k. I know it's scarry but filing bk does not mean you are a bad person. It means that you are getting your financial life in order and you really need to do that. We all have been there. No one will loan to you in this economy with $74,000 in outstanding debt anyway so don't worry about the credit score. The thing I learned is that once you have the first few 30 day lates on your score it's done for, you may as well file.

I kept thinking I would settle my cc debt ($85,000) with money from a retirement account so I "woudn't have a bk on my record" this was the worst thinking there could be. Having a bk on your record is not worse than having cc settlements. I feel lucky that I did not go the settlement route becasue I finally realized that even if I got a couple of cards to agree to settle there would probably be one that would hold out and sue me and then I would have to file bk anyway to avoid judgement so the previous settlement money would have been wasted.

If you start to pay ccs again and loose your job the money you will have paid them will be wasted and could have been used to tide you over during unemployment.

Good luck to you.

[Pandora]

Here is Schedule I

http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/BK_Forms_1207/B_006I_1207f.pdf

and Schedule J:

http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/BK_Forms_1207/B_006J_1207f.pdf

maybe it'll help you gather info perhaps you're forgetting

[lmaosm]

Thanks so much everyone for continuing to field all of my questions... It is helping me so much because I have been so overwhelmed and confused with this whole thing...

Pandora - According to my lawyer (who I haven't officially retained yet), he said I qualify. I am meeting with him in person on Tuesday morning (he's out of town now) and will ask him about the issue someone else brought up on this forum of the fact that I have about $700 left over at the end of each month based on my current budget (this is without paying on any credit cards and without putting any money into savings).

I guess I didn't realize that my credit score was that "trashed". And I thought that by paying minimum payments to the collection agencies that it would rise back up. But I guess from what I'm learning it is just better to file bankruptcy and start over.

That's why people file for bankruptcy. Minimum payments would take you 30 years to payoff.

Find a reputable bankruptcy attorney. One that specializes in this area 24/7/365.

Don't pinch pennies to find a good one either. Just call various firms and get quotes and make a decision on the average of those firms. But, if X firm is top dog and cost 10% higher than the average, go with X and pay the extra 10%.

Paying $2.5k to $3k (including filing fees) to dump $80k of debt is worth IMHO. Hopefully, you haven't used any of the cards in the last three to four months.

[Pandora]

No...paying the CA wont change your credit score at all - it is what it is now and will continue to be trash unless you get them discharged thru a BK or.. are able to get them reversed to "paid in full" or "settled" by the CA or Org. Creditor (which you said you dont have the money to settle). Its just a number... its not who we are ;) So dont focus too much on the FICO my friend. As others have said "S**t happens to good people"

When you're doing your budget, make sure you account for everything - car tags, inspections, maintenance, health ins., co-pays for OTC and RX meds, co-pays for doctors thru-out the year, etc. If you're under the means test but have a + amount left over at the end of the month, it can throw you into Ch. 13, so its up to your lawyer to work for you, but you also need to make sure you account for everything in that case.

Search through the forum and you'll find copious amounts of budget items people have listed in both Ch. 7 and Ch. 13. There are even schedules you can fill out somewhere... I know I saw them.... just as a trial run so you will have a better idea of what you're up against. Generally if you're under the median, thats only one part of the equation, its the schedules I & J that really will tell you what you actually have left over.