Starting Anew

[swanworks]

Hello, and thanks for having this forum to talk about bankruptcy! I picked up Bankruptcy papers from the courthouse the other day, and within hours I felt somesthing like relief from the thought of getting off credit card debt treadmill. I realize I blew it bigtime, charging to live and paying monthly bills. Before I file I wanted to talk with people who have been there. I have no material possessions, except a 90 jeep cherokee that needs a lot of work, actually mechanics have told me to get another car. I hope I can make it with it for a while anyway. I rent an apartment, own some books, and a bike. My VISA is nearly maxed and in a couple months the finance charge will send it over the max. allowed. My sister recently gave me 2000 to help with car repairs. Alas I'm using some of it for living costs. My questions are:

- will it really take 10 years for my credit report to be clean?

- will they take possession of my car which has little value

- what is the bankruptcy ch. 7 hearing like, I'm actually dreading that

I have always paid my bills on time. Back in the 90s I had high paying professional employment, which allowed me such a high limit on my card, 17,000. Now, I cannot afford both credit card payment and rent.

Thanks for your views!

[Viper]

- will it really take 10 years for my credit report to be clean?

It Takes 10 years for the BK entry to fall of your CR's. However you can start rebuilding your credit rating right after your discharge (and sometimes before discharge).

- will they take possession of my car which has little value

It depends on what your state exemptions are. Chances are since it's a 16 year old vehicle you'll be OK, but do be sure to check out your states exemptions.

- what is the bankruptcy ch. 7 hearing like, I'm actually dreading that

This is usually the most dreaded part of the process, but when it's over people laugh at how easy it was. Generally if you are honest, and have all your paperwork in order, it will last all of 5 minutes and then you wait for discharge and closing of your case.


-Viper

[edwards2]

Viper is right...most of us dreaded and were panic striken about the 341 and it was for a lot of us not near as ominous as we all expected. For me it was the wait post-341. 60 days seemed like a lifetime and unfortunately, for us it lasted 90 days+ because of a trustee objection. I am sorry your children have medical issues. I am glad they are doing okay. No matter what you do be completely candid about your expenses. Believe me it will pay off in the long run. We are all here to support you. Good luck..

[swanworks]

Thanks all! I am going to start reading about bk. I'm in Florida and so it looks like I may get to keep my car, it's under the 1000 value allowed here. Even so, its not currently running so it may be worth more for parts than for a drive.

Reply to Edwards2 comment, "I am sorry your children have medical issues. I am glad they are doing okay." Maybe you have me confused with someone else? I didn't mention children. My son is grown and I hope and pray his finances are in a better state than mine!

I can see that the waiting...for the hearing...for the decision...are going to be a challenge, that and using cash for everything til I'm on firmer ground. May be a good time to try the Buddhist's "mindfulness" practise and staying in the present. I'm trying to convince myself that all will be well, as I'm sure you all went through at some point in your bk experiences. Best to everyone!

[swanworks]

Is it true that credit card debt cannot be cleared away in Ch 7, this new law? This is what someone told me today. Credit card is the one debt I have and it is big, almost at maximum - 17,000. I've always paid it and my other mo. bills on time. If this is true, then what would happen. Would I be sent to jail?

[FoolAndHisMoney]

Is it true that credit card debt cannot be cleared away in Ch 7, this new law? This is what someone told me today. Credit card is the one debt I have and it is big, almost at maximum - 17,000. I've always paid it and my other mo. bills on time. If this is true, then what would happen. Would I be sent to jail?

No "someone" is wrong. The only thing that can prevent credit card debts from being "cleared away" and send you to jail is bankruptcy fraud. Start researching this forum and other resources to see if it's right for you.

[swanworks]

Thanks FoolandHisMoney, I'll read up on bankruptcy and I also made a call to Legal Services in my area to have a talk with an attorney; this should either be reduced cost or free. Since I have no material assests it should not be a complex matter, on paper anyway.

[keepmine]

I hope you don't take this as judgmental. Though this is only my 2nd day on this site, I 've posted on a number of bk sites over the years plus, I'm an unrepennat sinner in that I've filed bk myself.
Most of us have filed for healthy multiples of $17K. Mine was for $69K.
Personal opninion, I'd not file bk for that amount.
Is it possible to find a cheaper place to live or, get a PT job,etc? If you're gonna file, may as well get your money's worth. Heck, you'll spend over a grand in legal and filing fees that could be used to reduce the cc balance to something manageable.

[StaciMM]

Keepmine-it all depends on the situation. (I am not picking on you, just trying to shed some light on how 'small debts' like $17,000 could be back breaking to some of us.)

$17,000 in debt, a year ago, would have had a minimum payment in the neighborhood of $350. With the new requirements that the minimum cover the interest charges and 1% of the balance, that minimum is probably well over $500/mo now, if the APR is in the mid 20's or higher. If $350/mo was a struggle, then $500+ per month would be impossible. If you don't pay the full minimum, then the balances goes up. Not only is interest added ($300-400 per month, depending on rate) but late fees, overlimit fees, etc. Trying to make the minimum, when you can't afford to, doesn't make things any better. It just puts off the inevitable. Not to mention the stress of trying to deal with it all. Lowering the balance by $1500 would really not make much of a difference. ($1500 is about the max to expect to pay, I think, for a basic no asset BK.)

Everyone's earning potential is different. Based on location, experience, education, etc. Not to mention a 2nd job is not always possible, due to the requirements/schedule of the 1st job and family needs. What is a lot of money to one person, may not be much to someone else. It isn't fair to set a dollar amount. Let's say there was a minimum, and it was $25,000. Does the person who owes $24,989 really have it better than the person who owes $25,121? I don't think so...

[FilingOnMyOwn]

Staci, I think well over $500 a month was an understatement. When its all said and done, Swanworks would probably need $800+ a month in disposable income to pull it off. Or in the real life sense of things, it would be like working a full time minimum wage job for 3 years with no paycheck.

[StaciMM]

For my example, I wanted to use bare basics #'s. If the person were on time, under the limit, with a rate of 24%, the minimum would have been $510. As we all know, though... sending in a payment of $509 (or less) would have put the account into default, added a late fee, etc. Then the next month, the payment would be higher, as it would include the late fee and the shortage from the month before and snowball from there. (If you get behind, you have to catch up on ALL that is due in order to stop the extra fees.) I know what you mean though-the APR is probably already higher than 24%.


I know Keepmine meant well, but just because $17,000 in debt seems like small change to someone who had $69,000 in debt, it isn't necessarily small change to the person struggling to deal with it.

[keepmine]

I know every situation is different.
Just pointing out that if you have a choice between life with a bk and life with bk we'd all choose the later.
Again, just a personal opinion but I'd try and exhaust every option before I filed on $17K.
If the OP is in default, contact the creditor about a hardship plan.
Often times, creditors will deal when you get close to chargeoff. Chase offered me a 45% settlement and Discover offered 50%. If you have a family member you could borrow from, that may be worth exploring if you have the nerve to hang in there and wait.

[SinkingFast]

I actually pulled out a CC bill where we owe about $16500. The montly minimum is,........... well I can't tell what the monthly minimum is. Because we aren't making the payments!

The interest rate is 28.5%. The CC charged a tad over $400 in interest alone last month. Then there's the late fee for not paying last month. Plus the new 1% of the balance thing would add $165 to the $400.

For a CC balance of $17000, you could easily looking at $600 for a minimum payment alone, on a higher interest rate account.

[StaciMM]

But what if your income was only 25-40% of what it is now? $17,000 to you is not the same as $17,000 to someone else. That is what I'm trying to get at.

I know every situation is different.
Just pointing out that if you have a choice between life with a bk and life with bk we'd all choose the later.
Again, just a personal opinion but I'd try and exhaust every option before I filed on $17K.
If the OP is in default, contact the creditor about a hardship plan.
Often times, creditors will deal when you get close to chargeoff. Chase offered me a 45% settlement and Discover offered 50%. If you have a family member you could borrow from, that may be worth exploring if you have the nerve to hang in there and wait.

[SinkingFast]

But what if your income was only 25-40% of what it is now? $17,000 to you is not the same as $17,000 to someone else. That is what I'm trying to get at.

I agree, Staci, $600 sounds high. Especially now that we are all Cash for everything. Let alone being cut down on income.

Our daughter had a wreck today and I'm thinking, "Ugh! We don't have a safety net."

Thank goodness!!! No one was hurt. She was rear ended. And the accident was someone else's fault. Phew!!