First meeting with my lawyer tomorrow, very confused

[emanze]

Hi there,

I'm confused and hoping you can share some of your wisdom.

I've lived paycheck to paycheck forever now. Last week, I joined the ranks of many when my job was eliminated. Now I can't pay anything, obviously.

I owe about 35k..they are in three main categories:
Credit cards and loans - $10,600
Student Loans - $12,000
Private car loan - $10,000

My question is this...

I want to file because I'm so drained from worrying about $. But friends have suggested it's insane to file over 10k which would be discharged. One even suggested I do nothing, that eventually they would be write off's!

My other option is debt relief agencies but they have been of zero help. I've gone to three now!

I'm just very confused. The car is paid for and is my only asset.

However, I do have a weekend job. That's $700 a month. I WOULD GLADLY go into ch.13 if it meant I could keep my car and creditors would agree to greatly reduced payments. $700 can't be stretched to thin.

Anyway, thanks for listening and any advice you can give.

[fooked]

I would be completely honest with your attorney and discuss the options... you mention that the car is paid off, but list a private loan of $10,000... make sure you clarify that to the attorney...

[emanze]

I would be completely honest with your attorney and discuss the options... you mention that the car is paid off, but list a private loan of $10,000... make sure you clarify that to the attorney...

That could be confusing, I see what you are saying. The loan was very informal..no paperwork, contract. He is letting me pay it back whenever I can so I'm very grateful for this loan.

Thanks for your input.

[PdxDavid]

That could be confusing, I see what you are saying. The loan was very informal..no paperwork, contract. He is letting me pay it back whenever I can so I'm very grateful for this loan.

Thanks for your input.

I think you would run in to trouble with this. The reason is if it is informal and no paperwork then it really has nothing to do with the car (in the eyes of the law). Depending on your state and the car exemptions the trustee may take it and sell it to pay off your other debt because it is an asset. It depends on the value of the car.

[backtoschool]

Right now you have 10k in dischargeable debt and a 10k asset (if the car is worth what the loan is for)

What state you live in will determine how much of the car you can exempt. If you tell us what state you live in, we can look up if there is a wildcard exemption or other exemption available to you to cover the car.

The student loan won't be dischargeable so bankruptcy is not going to help with that.

This is not that much debt for a chapter 7, but you know what you can afford. A chapter 7 stays on your records for 10 years. And you are not discharging that much debt. If you simply stopped paying on the credit cards, eventually they would get a judgement against you (over a 50% chance of this happening) and then they would garnish your wages a certain percentage (depending on what your state allows) or levy your bank account to get the judgement paid. Once you stop paying on the credit cards, at some point you will be able to settle them for a fraction of what you owe. (usually 6 months or so).

I am NOT giving you advice one way or the other, only you know what is best for you. But 10k of debt is not that much to discharge in a bankruptcy.

[emanze]

Right now you have 10k in dischargeable debt and a 10k asset (if the car is worth what the loan is for)

What state you live in will determine how much of the car you can exempt. If you tell us what state you live in, we can look up if there is a wildcard exemption or other exemption available to you to cover the car.

The student loan won't be dischargeable so bankruptcy is not going to help with that.

This is not that much debt for a chapter 7, but you know what you can afford. A chapter 7 stays on your records for 10 years. And you are not discharging that much debt. If you simply stopped paying on the credit cards, eventually they would get a judgement against you (over a 50% chance of this happening) and then they would garnish your wages a certain percentage (depending on what your state allows) or levy your bank account to get the judgement paid. Once you stop paying on the credit cards, at some point you will be able to settle them for a fraction of what you owe. (usually 6 months or so).

I am NOT giving you advice one way or the other, only you know what is best for you. But 10k of debt is not that much to discharge in a bankruptcy.

Thank you so much. I never would have imagined doing nothing (and I know you aren't giving advice, but friends keep suggesting I do the same). It feels very weird for me to do nothing. I feel guilty. But it seems like that might be the way to go. A lawyer friend suggested I write a letter to creditors telling them to stop contacting me unless they plan to sue. It's tempting.

In a perfect world, I would find a new job soon and start paying my little credit card bills off, leaving the huge one (4k and 3k) for last. Maybe, somehow, I could eventually pay everyone off or close to it.

All so uncertain and scary though. Thanks for giving me much to think on tonight.

You've given me great insight. Thank you very much.

[emanze]

I think you would run in to trouble with this. The reason is if it is informal and no paperwork then it really has nothing to do with the car (in the eyes of the law). Depending on your state and the car exemptions the trustee may take it and sell it to pay off your other debt because it is an asset. It depends on the value of the car.

Interesting. It's such a tricky thing. The car is worth about 10k. In Arizona, the exemption is up to 5k. So if they made me sell it, I could satisfy half my debt which seems like a no brainer to some people, maybe.

The reason I don't want to do this is I don't want to lose a reliable car. My weekend job is over 25 miles away and i need something I can count on.

Ugh. Thanks for your input.

[backtoschool]

Thank you so much. I never would have imagined doing nothing (and I know you aren't giving advice, but friends keep suggesting I do the same). It feels very weird for me to do nothing. I feel guilty. But it seems like that might be the way to go. A lawyer friend suggested I write a letter to creditors telling them to stop contacting me unless they plan to sue. It's tempting.

In a perfect world, I would find a new job soon and start paying my little credit card bills off, leaving the huge one (4k and 3k) for last. Maybe, somehow, I could eventually pay everyone off or close to it.

All so uncertain and scary though. Thanks for giving me much to think on tonight.

You've given me great insight. Thank you very much.

I wouldn't write a letter telling them not to contact you unless they are going to sue, that just puts ideas in their head.

You can send a letter telling them not to contact you at work or to only contact you in writing though.

[keepmine]

Your problem is not debt but, not enough income. Even if you file bk, you still can't support yourself on $700/month.
I know times are tough but, start looking for another pt job while, you're looking for a permanent job. See if you can put those student loans in forebearence and let whomever financed the car know you'll not be paying until things turn around. If, you can make the minimums on the cc's for awhile, do it. If not, contact your cc's and ask about anyhardship options they may have. Worse case, they get chargedoff and at some point you can settle this debt.
Just remember, you can't play the Chapter 7 bk card but once every 8 years. You don't want to file and 6 moths from now have a seious illiness with large medical debt and you've already filed. Concentrate on stablizing your finances now.
IMO, any lawyer who encourages you tofile under these circumstances is doing you a huge disservice.

[emanze]

And what about the option of Doing Nothing?

You guys are so great. Thank you for helping me see this in a different way. It's just all so damn scary!

After I read your advice about forebearance, I contacted my student loans. They now are both on forebearance until January of next year!! It was so easy, I can't believe it.

I'm already feeling the burden lighten. Thank you again!