Close to BK filing. Need advice, please.

[bkanonymous08]

Hello, I am new here. I am here because I am very close to filing BK and I need all the help I can get. This is my first time ever to go through this process. It scares the life out of me. So here's my story.

I have approximately 60K in credit card debts. The debts were incurred several years ago, after my banks (major banks) offered me loan in tens of thousands at very low interest rates. Some even offered me at 0% for one entire year. The banks told me because I was their long time customer (+10 years at the time of the offers) and I maintained an excellent records (paid off my balance every month and never late).

The offers seemed really good to me so I took them in order to fund my not-for-profit project. I did take into considerations that the banks might raise the interest rates later. So, I did express my concerns with the banks. The banks told me not to worry and that the rate might go up but with my records, it wouldn't go up much. I took their assurance with some reservation. And I thought that with my records and my tenure with the banks, the rates would probably go up to about 10%. My budget (my retirement funds, my savings) would easily handle that.

The banks then used "high balances" as their excuses to raise my interest rates very high. One very well-known bank raised my rate to almost 30%, even I have been their customer since 1988 and was never late on making payments!!!

I called the banks and tried to get lower rates but my request fell on deaf ears. So I have kept biting the bullet and making my monthly payments for the last few years.

My savings is depleted. I am not working. Last month I was even forced to take a cash advance on my card to pay my rent.

I don't own a home. My car is almost 20 years old. My stereo equipments are also that old. I have books and music CDs that I collected over 20 years (1985 - 2005). Practically I have nothing I can sell to make the payments.

I read in the forum about chapter 7 and chapter 13. It looks like chapter 7 is suitable to my case. I am concerned about the cash advance I took recently to make my payments. Is that considered a fraud?

That's it for now. I do need all the help I can get.

Thank you for your time.

[Brookamy]

Sorry for your situation. I'm pretty new here myself. I believe that if you have a cash advance over a certain amount, I think $600, you have have to wait at least 90 days until you file for BK.

There are a lot of people here with tons of knowledge who will be able to help you out.

[No Gravy]

Hello, I am new here. I am here because I am very close to filing BK and I need all the help I can get. This is my first time ever to go through this process. It scares the life out of me. So here's my story.

Welcome!

I did take into considerations that the banks might raise the interest rates later.

You were one up on me, then. I was totally blindsided when a few banks raised my interest to 29-36%, one even 38% (!! how can that be legal?), with never a missed payment, and not high enough utilization to justify it (in my mind, anyway).

The banks then used "high balances" as their excuses to raise my interest rates very high. One very well-known bank raised my rate to almost 30%, even I have been their customer since 1988 and was never late on making payments!!!

Yeah, I hear ya. When I called into one company to ask what was going on, why my interest rate was suddenly 36%, the rep explained it wasn't just me, that they were doing this across the board to all accounts.

My savings is depleted. I am not working. Last month I was even forced to take a cash advance on my card to pay my rent.

I don't own a home. My car is almost 20 years old. My stereo equipments are also that old. I have books and music CDs that I collected over 20 years (1985 - 2005). Practically I have nothing I can sell to make the payments.

I read in the forum about chapter 7 and chapter 13. It looks like chapter 7 is suitable to my case. I am concerned about the cash advance I took recently to make my payments. Is that considered a fraud?

I did something similar, you're not alone. First off, the best advice you can get would be from a bankruptcy attorney. Almost all of them give a free first meeting, in which you can ask questions and pick their brain.

There's a "70/90" rule, and a look back period. It's 90 days look back for purchases of luxury items, where they could prove fraud by a person charging all sorts of stuff and then filing. Doesn't sound like that applies, but it's something to be aware of.

Then there's 70 days look back for cash advances, specifically cash advances over the $750 threshold. If you used the cash advance to pay rent, I'm guessing this might apply.

What most people do is simply wait it out. Wait to file until the time is long passed, and I believe the longer the better. Many suggest waiting 6 months to file from the last time you used a credit card. Others suggest to continue paying the minimum on that one card (that you took a cash advance on) for a couple of months, then stop, then wait as long as you can before filing. That's what I'm doing.

Thing is, each case is different and each state has slightly different rules. And each person's situation is different, too. If you have nothing they can take, and aren't working (so there's no wages to garnish), you may be what's commonly called "judgment proof."

From what I know, it typically takes credit card companies 6 months before there's even a hint of seeking a judgment against you.

The biggest problem I see in your situation is that you're a renter, and without paying your rent, they will evict you.

It goes without saying (but I will, anyway): read all you can here, you'll see others in your same situation. Many post how they got through specific hardships, bankruptcy and other financially related. You'll find a lot of information and good suggestions here.

Explore all your options. Number 1 priority is to have a roof over your head. Good luck to you!

[AngelinaCat]

Hi bkanonymouse08:

Welcome to the Forum. My very first recommendation is to go to Nolopress.com and purchase their book on C7 Bankruptcy. It is written in understandable English and will help answer a lot of questions. They offer a downloadable online version and a print version that is about 1/2 the cost in a retail bookstore. If you buy the downloadable version, the down side to that is if you want to study it away from the computer, you will have to print it out.

No_Gravy has done a very good job in summing up the situation. To me you sound like a very good candidate for a no asset C7.

Good luck to you!

[keepmine]

There is no reason to file for bk at the present time. You have no job, no home, no savings-nothing anyone can take.
Get your finances stablized before you file. You have to be able to support yourself post bk.

[AngelinaCatHub]

There is no reason to file for bk at the present time. You have no job, no home, no savings-nothing anyone can take.
Get your finances stablized before you file. You have to be able to support yourself post bk.

[No Gravy]

Hey Hub, just saw the "discharge" in the sig! Congrats!!

[bkanonymous08]

Thank you for your kind responses. Just a silly question: "Will the banks/collectors try to take my old car?". The banks/collectors have nothing to gain except causing me more distress. But with the ways the banks handled my credit card interest rates, I am not sure anymore if they have any common sense. Instead of going easy on me and still having me send them monthly payments (principal & interest), they chose to raise the rates so high that I am now forced into BK.

BTW, my car is very old...so old that my insurance company will only sell me 1-way policy. It's still running for me, though at current gas prices I don't use it that much.

[Minnymouth]

If your auto is old and of no real value, they won't bother taking a lien against it..... a waste of time and money.
Yes, its time to get back to work, get a roof over your head, the contact an attorney about your situation.
Priorities are taking care of your basic needs first...... then worry about the rest.

[lrprn]

...but you have to find a stable situation since you cannot bk rent.

Hub, a non-business filer can bk past due rent owed to a landlord. Filers do it all the time - it's considered an unsecured debt since the filer doesn't own the property. See http://www.thebklawyer.com/thebkblog...the-apartment/

Of course, the filer needs to move out of that rental before the case is filed. Otherwise if the filer stays, he/she WILL owe any rent after filing. Also as in the example link, the landlord can petition to lift the stay so the filer can be evicted immediately.

Far better to line up another apartment, move, then file.

[bkanonymous08]

I saw my lawyers last Friday since I already made an appointment and it was a free consultation.

Basically I got the same advices: chapter 7 case, wait at least 70 days from the last cash advance, nobody can put me in jail like in some other countries.

The attorney fee is what concerns me. It's $2,200 plus $300 court fee, for the total of $2,500. Is it usually this high?

In the meantime, I will try to get a job to keep the roof above my head and fill my stomach.

Thanks

ps: one of the lawyers thought I should have sued the banks for charging me such high rates 29.99% when they only had "high balance" as an excuse. I'm not sure if I can sue them.

[Phillymanhere]

Bk,

The reason you want to get a steady job and get yourself on a decent budget is because if you don't, you will inevitably incur more debt and because you've already filed, you will be stuck with it!

So the recommendation of this forum is to file after you have stabilized; you want to be on the way up a little bit at least before you file. Just think about it: if you don't have good med insurance and you get sick without a job, you will owe all that debt and have to pay it back (if you have already filed for bk).

Regarding the price, that seems a little high for a 7, but not necessarily outrageously so. Visit other lawyers and get their prices and compare their knowledge and your comfort with them to the knowledge of this guy and the comfort you have with him. That's how to decide on these matters.

Good luck.

[bkanonymous08]

Thanks Phillyman. Those are real common sense advices.

So, while I am trying to get a job and waiting out the 70-day period, I will stop all payments to the banks and also stop using their cards. The collectors will try to contact me. What should I do?

[No Gravy]

I saw my lawyers last Friday since I already made an appointment and it was a free consultation.

Basically I got the same advices: chapter 7 case, wait at least 70 days from the last cash advance, nobody can put me in jail like in some other countries.

The attorney fee is what concerns me. It's $2,200 plus $300 court fee, for the total of $2,500. Is it usually this high?

What you were quoted for fees is definitely in the range of fees I've seen charged. I was quoted $1,695 by one attorney (law firm), $1,500 by another. Rates in different states/counties may vary, also. The $300 filing fee to the courts is standard.

In the meantime, I will try to get a job to keep the roof above my head and fill my stomach.

Good luck!

ps: one of the lawyers thought I should have sued the banks for charging me such high rates 29.99% when they only had "high balance" as an excuse. I'm not sure if I can sue them.

LOL! That's the first I've heard of that. If it's true, I could sue over half of my creditors for the same thing.

[No Gravy]

Thanks Phillyman. Those are real common sense advices.

So, while I am trying to get a job and waiting out the 70-day period, I will stop all payments to the banks and also stop using their cards. The collectors will try to contact me. What should I do?

How you deal with the collection calls is a personal choice. Some people ignore the calls, some talk to the creditors, some talk to them and then ignore the repeated calls.

It's really up to you, though it also depends on if you have caller ID on your phone. Since you're looking for a job and the phone is typically how prospective employers will contact you, unplugging the phone isn't such a great option.

There's also the psychological aspect of the phone constantly ringing-ringing-ringing to take into account, and how it affects the way you feel and see yourself. Keeping your self esteem high while you're looking for work is crucial.

Take all that into account, and make the decision that best works for *you*. Chances are, if you ask 10 different people her what to do...you'll get 10 different answers. It's a lot like making cornbread