Is chapter 7 the right choice for me?

[NoMasDebt]

Hello all,

New here and I have a few questions. Before we get there, I will give some pertinent background information about my situation.

I am 27, live in Oregon, make roughly $3100 a month gross. No kids. My debts consist of Mortgage ($735 includes taxes and insurance), Truck loan ($505 a month, purchased in August '13 on 7 year term and am upside down at least $10k) a personal signature loan ($156 a month, 3 years left), 1 cc (about $1100 balance, $35 min payment), 1 store cc ($600 balance, $35 min payment), and one more cc with a balance of $75.

Basically, when I factor in my other expenses (utilities, phone, gas, insurance) I am damn near broke every month. I am sick of living paycheck to paycheck. I know what got me here (financing cars I really couldn't afford, and trading in every couple of years for something different with $0 down).

I know I am in over my head with the truck payment. If not for that, I would be able to live comfortably and still put something into savings, which currently has a balance of $0.

I do not spend frivously on anything else. I rarely eat out, and when I do it is a fast food lunch during the work week. I guess my only frivolous spending would be about $30-40 a week to play pool and have a couple beers while at the bar (I play on a league), but I have even cut that back quite a bit since last month. I only buy clothes when absolutely necessary (I literally own 3 pair of pants and a few button up shirts, and about 10 plain T-Shirts.

My only assets of any value are a motorcycle worth about $3000 that I have not been able to sell after trying several times, and a few guns totaling in value of about $2000. Beyond that, I have some crappy leather couches, a dining room table, a dresser, a fish tank, and a bed (which was purchased using the aforementioned store CC), and an older 32" flat screen TV and a PS3 I use for movies and Netflix.

As it sits, I pass the Oregon means test, but I don't know if I have too much disposable income after removing the loans and CC from the equation. I know I need to, and plan on, visiting a BK lawyer sometime soon, but figured I'd get some opinions from others first.

Oh, I almost forgot, and just to complicate things further. My mom and my 2 younger siblings live in my home. She does not pay rent or utitlities, with the exception of Cable TV, as I did not want cable when I bought my place. I bought the house 4 years ago, and she has lived here since a week or so after I moved in. I have tried to get her to move, but due to a job loss a few years ago, it just seemed impossible for her to make it on her own and I have a hard time saying no to family. Anyway, I do not know exactly what she makes, and my siblings receive some sort of SSI after their dad passed, so this complicates things for me even more. Bottom line here, would her income be considered "household income". Her contributions to the "household" consist of groceries and cable TV, and a lot of stress and irritation! I hope to have her out by March, as she usually receives a large tax refund and I am beyond done with the current situation.

So what are your thoughts? I really do not care about keeping any of my "stuff", with the exception of 1 rifle (sentimental value more than anything) and my house. If I had to give up my other crap to get a fresh start without the stresses of high long term payments, I am 100% ok with that.

[keepmine]

Well, if you can't sell the cycle for $3K, it ain't worth $3K.
I'd have a fire sale and see if you can sell the cycle and the guns for enough to pay off the personal loan and, the cc's. That'll reduce your monthly payments by $200/month. Then, I'd pickup a pt or weekend job for a year or so to build some savings and pay some extra on the vechicle loan and try and reduce the term on the loan.
Just don't think bk is right for you rigt now.

Also, it's OK to say no and be a little selfish. When that tax refund comes, tell Mom and he kids they gotta go.

[Pjmax]

I agree with Keepmine. I would also tell Mom she needs to chip in on the rent in the meantime. I know it's your mom, but if she has an income, and the kids have income, they should help out. You could try mentioning that you NEED to get a PAYING roommate or two.

[bcohen]

I also agree that bankruptcy is NOT the solution. You don't have enough dischargeable debt to make it worthwhile, and even assuming you surrender the truck and discharge the loan, then what? You'll still need a vehicle to drive to work, etc. After BK, you won't be offered much better interest rates, so expect a similar high payment.

I suggest you ask your sister and mom to pay you a reasonable amount each month based on what they are receiving from the government. For example, if they each gave you $250 a month that would be a very good deal for them, and it would give you some much-needed income. Ultimately, if they won't pay anything, they've got to go. Let them get an apartment together with their disability money.

[NoMasDebt]

I've had many conversations with my mom regarding the living situation. They all ultimately lead to nothing but more frustration on my part.

Anyway, that is not really relevant at the moment. I get what you guys are saying about selling stuff and a second job, etc. The 2 issues with that are , A) Best case scenario I sell everything I own worth anything (bike, guns) I'm up about $4k. Personal loan balance is sitting at $5k, CC's total $1700-1800. So, that still leaves me needing more money to eliminate the largest unsecured monthly payment.

Issue B) I really can't commit to a second job because of my current job. I often end up having to work late, go in early, and am always on call.

Issue C) I am job hunting at the moment as my current job is putting me in crazy amounts of stress, even when I am not there. Everything I am looking at in a position I am qualified for is probably going to mean a 300 - 400 dollar a month pay cut.

[NoMasDebt]

I also agree that bankruptcy is NOT the solution. You don't have enough dischargeable debt to make it worthwhile, and even assuming you surrender the truck and discharge the loan, then what? .

Why do you think it would not be worthwhile? In total, I'm $43K+ in debt, not including my mortgage. As far as losing the truck and a vehicle afterwards, I will by a $1000-$1500 vehicle off craigslist to get from point A to B.

[Pjmax]

The truck is 2 months old and worth $10,000 less than what you paid? How did that happen? We've all done some dumb things, not judging, just asking. The experts will have to chime in, but if you just bought the truck, there may be some difficulty or at least a few months waiting time to discharge the loan on the truck.

Have you tried having a conversation with your employer? If you are required to be available that much, so you are unable to consider a second job, they aren't paying you enough. Try telling them you need a part-time 2nd job and ask if they can accommodate you.

I feel for you, but bankruptcy should really be a last resort, and I would try other ways of reducing expenses, increasing income, before you resort to that.

[bcohen]

Why do you think it would not be worthwhile? In total, I'm $43K+ in debt, not including my mortgage. As far as losing the truck and a vehicle afterwards, I will by a $1000-$1500 vehicle off craigslist to get from point A to B.

Your problem isn't so much an insurmountable debt load, as it is insufficient income. With a cheap mortgage on your house, you should be putting the extra space to work for you, i.e. getting some paying roommates. If Mom and Sis won't pay even a small amount such as $250 a month, then it's time to show 'em the door. Tell them bluntly--but firmly--that as much as you love them, and as much as you'd love to help, you desperately need the money from renting out those rooms, and unfortunately you cannot afford to let them live there for free anymore. Don't let them "guilt" you into being taken advantage of.

[NoMasDebt]

The truck is 2 months old and worth $10,000 less than what you paid? How did that happen? We've all done some dumb things, not judging, just asking. The experts will have to chime in, but if you just bought the truck, there may be some difficulty or at least a few months waiting time to discharge the loan on the truck.

Have you tried having a conversation with your employer? If you are required to be available that much, so you are unable to consider a second job, they aren't paying you enough. Try telling them you need a part-time 2nd job and ask if they can accommodate you.

I feel for you, but bankruptcy should really be a last resort, and I would try other ways of reducing expenses, increasing income, before you resort to that.

Trading upside down loans with $0 down 4 times in 5.5 years led to my current situation. I know, I know, pure stupidity. The CC debt was 90% day to day living expenses I didn't have money for at the time.

I have never had a conversation with my employer about availability. I knew what I was signing up for. It is what it is basically and there is not much I can do about it.

I know BK is a last resort, but I feel like I am at that point to save my sanity. It's really quite ironic, I have since the age of 16 done everything possible to maintain financial stability and good credit, and have let that good credit lead me to the situation I'm in.

So let me get some other opinions, based strictly on numbers.

Average NET monthly income - $2200
Mortgage - 750
Utilities - 240
Phone - $75
insurance - $110 (includes life policy)
Fuel to travel to work - $200
CC's - $70
Personal loan - $156
Truck payment - $505

That's $2100 of my $2200 bring home income. Makes doing anything other going to work and coming home kind of difficult (not looking for sympathy here, just stating a fact)

If you remove the truck loan, personal loan, and CC payments, my monthly expenses are about $1370 a month. Based on this alone, would I even be able to qualify for a chapter 7 and have the debts discharged?

[keepmine]

You've far more expenses than those you list.

http://www.legalconsumer.com/bankruptcy/means-test/index.php

[NoMasDebt]

You've far more expenses than those you list.

I've visited that page. I am confused about the actual v.s. allowed expenses in regards to an individual case. The allowed expenses are much higher than what I actually spend monthly, so if I were to pursue chapter 7 and a trustee is looking at this, what is (s)he going to think?

[AngelinaCat]

Why do you think it would not be worthwhile? In total, I'm $43K+ in debt, not including my mortgage.

Because at age 27, you are a youngster, and with VERY careful planning and budgeting, you can work you way out of this debt.

As I told another poster who is age 28, filing a BK is a 'Nuclear Option' for when you have truly insurmountable debt from medical, legal, other problems, or a combination of all of those. Once you pull that lever, you will NOT be able to file again for 8 full years past your filing date, assuming you qualify for a CH7. Otherwise, it will be a Chapter 13--which will force you into a budget that someone else (the trustee) will monitor.

Since you have some family members living with you that are NOT helping to pay their own way, you need to toughen up and ask/demand some assistance.

Yes, I know you feel like you can't be mean to the 'family', but they have you pegged for a softie. You MUST toughen up and tell them that they need to contribute, or go find their own places to live.

And before you come back at me and tell me how heartless I am, and I have never dealt with this before--don't bother! I am 61 years old and watched my Mother's ***** brother try to rook me and her out of my Father's inheritance.

Also I had the care of my Mother and Aunt, both of whom went the Alzheimer's way. Dear Mother's brother (I refuse to call him an uncle) would not and did not help.

So I have been there and done that. In my opinion, you look out for yourself and your own eventual family to come. Not the leeches that are hanging off of you and sucking you dry!

[Pjmax]

They've been living with you for 4 years, have income, and only pay the cable bill. That should show you where their priorities are. I would tell them the electricity and phone will be turned off soon because you can't afford them anymore, and do it. They are costing you money you don't have. I wouldn't bet any money on them leaving after tax time.

[AngelinaCatHub]

Of course I have to agree with DW. "To thine own self be true" (St. T. Becket). What do you think this means? If you cannot or will not take care of YOUR OWN affairs, and allow other people to abuse you, what makes you think you can help THEM when things get rough? You have not seen anything yet, at the age of 27. You are not a door mat. I'll wager you feed these turkeys too. It's time to get a backbone and tell Mom and Sis to pay their "fair share". Heard that one before? How many families are you/I supporting with our taxes? Dead beats? Well you have dead beats right there in your own home.

Tough up man. Be a man. Break the news to them that you could easily get $300 a room out of Crags List. I'm not going to give you any sympathy until you do your part. All here are saying the same things but I cut to the chase. DO YOUR PART!! Cable TV? Cut it off. Phone at house? Turn it off. Hot water? Put a timer on it.

Your kin needs to share your expenses and you need not to be the door mat that they are using. That's my rant of the month. Get busy and wise them as well as you, up. 'Hub

[keepmine]

I've visited that page. I am confused about the actual v.s. allowed expenses in regards to an individual case. The allowed expenses are much higher than what I actually spend monthly, so if I were to pursue chapter 7 and a trustee is looking at this, what is (s)he going to think?

In a prevoius post, you listed fuel, phone, insurance utilities and mortgage.
You left out food. If you buy that beater, you will still need to insure it, register it and, maintain and repair it. I'd also suggest you get a short and long term disability policy.
Also, do you contribute to a 401K? Most trustees will allow you to do that up to the employer match.
You'll have an allowance for personal care like, trips to the dentist, haircuts,etc. An entertainment allowance.
I'm just saying you have far more allowable expenses than you listed.