Overwhelmed - Please Advise

[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.

[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.

[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!

[youngnbroke]

Nevermind!! Got my answer in another thread

[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!

[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.

[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!

[SNC]

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

[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.

[dmu]

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.

Hi Kirby. I don't know if you can settle for 10% but I would imagine anything is possible. What I do know is that you'd be responsible for paying income taxes on the amount that you did not have to pay. So if you settled for 10% of your debt, you'd be issued 1099's that totaled $72k from your four creditors. Instead of owing your unsecured creditors.....you'd now owe the IRS the applicable incomes taxes on the $72k that you did not have to pay. Everyone has to make a decision for him/herself but that's not a trade I'd be willing to make.

[Pandora]

Hi Kirby. I don't know if you can settle for 10% but I would imagine anything is possible. What I do know is that you'd be responsible for paying income taxes on the amount that you did not have to pay. So if you settled for 10% of your debt, you'd be issued 1099's that totaled $72k from your four creditors. Instead of owing your unsecured creditors.....you'd now owe the IRS the applicable incomes taxes on the $72k that you did not have to pay. Everyone has to make a decision for him/herself but that's not a trade I'd be willing to make.

this is correct, they would 1099 you the difference. As far as settling the debt, I guess it would depend on what the amount would be. For me personally, I'd try to settle if it was 10K or less before I filed BK - but for anything over 10K...nope, I'd file BK first and write it all off, so to speak, however each situation is different. Unless it was a 2nd mortgage, in that case, I'd try to settle that first for pennies on the dollar as the mortgage forgiveness act can come into play along with a few other areas, and the debt shouldnt be 1099'd on a 2nd mortgage. Although, that is very hard to get done now a days; we tried - and failed, which is why we're in BK now.

[Kirby]

BK-Discharged Debt Subject to Taxation?

Hi Kirby. I don't know if you can settle for 10% but I would imagine anything is possible. What I do know is that you'd be responsible for paying income taxes on the amount that you did not have to pay. So if you settled for 10% of your debt, you'd be issued 1099's that totaled $72k from your four creditors. Instead of owing your unsecured creditors.....you'd now owe the IRS the applicable incomes taxes on the $72k that you did not have to pay. Everyone has to make a decision for him/herself but that's not a trade I'd be willing to make.

Can I please get a confirmation that a BK-discharged debt is *not* subject to IRS taxation? Thanks.

[ssmdem]

Can I please get a confirmation that a BK-discharged debt is *not* subject to IRS taxation? Thanks.

Nope - that's why bankrupcty in most cases is the better option. You are discharged from the debt and cannot be taxed on the amount.

[Kirby]

Nope - that's why bankrupcty in most cases is the better option. You are discharged from the debt and cannot be taxed on the amount.

Whew. Thanks! (Because how screwy would that be!)

[SNC]

Met with my lawyer today for the first time in person! I am so confident in my decision to file for bankruptcy now... thanks to my lawyer's advice and to all of you on this site... this site has helped me greatly talk through my reservations over filing. now i'm just ready to get this show on the road and be done with it!!! Thank you again everyone!!!!!!! I feel like a million bricks have been lifted off of my shoulders. anyone else feel relief once they decided they were going to definitely file?