My story - Long Read - Advise Please

[keepmine]

In many districts, trustees will not allow 401K repayments to be used as an expense.
Secondly, when you file for bk, the $600 a month you are paying towards those credit cards will not be used as an expense. Bottom line, you have a lot more dispoable income than you think for bk purposes.
My personal opinion-if you can pay this off in 5 years without filing bk then do it.
Stigma aside, if you can avoid a public record of a bk on your credit report for 10 years or, never having to answer in the affirmative if a job application asks if you've ever filed bk it'll be to your advantage.

Pratically speaking, if you've made payments on that ring for 6 months or more and, can put off filing for a year or more since the purchase you shouldn't have to worry about an objection.

[hereforinfo]

As many of you have said, I DO mathematically have the means to pay back my CC debt, but over a long period of time. I guess I was just looking for options.

A) I could pay all of the CC debt back, and live prudently for many years. After 5 years or so: I would be debt-free, have a net worth of $0, and no BK on my credit report. (which is what I have been doing for the last 5-6 mos)

or B) I could file BK, and wipe my CC debt clean. After the same 5 years or so: I would be debt-free, have a net worth of $30K plus the interest, and a BK on my credit report.

That's not true. With your income and expenses you most likely will not qualify for a chapter 7. You would be in a chapter 13, in which all of your disposable income after allowable expenses would have to be paid to the trustee each month to pay your creditors. Bankruptcy is not for people like you who just don't want the inconvenience of paying off the debt. You obviously want to clean the slate so you can eventually start racking up more debt, since you think bankruptcy is no big deal.

If you file bankruptcy your corporate card will be canceled, even if you don't list them. Is it an amex? If so, it will be closed within days of filing. Amex is very strict about that and will probably never approve you as long as that bankruptcy is on your credit report. You won't be able to get any credit cards with a high enough limit for business travel for a long time. Then there's the issue of the ring. Even if the bank doesn't put up a fight, the trustee may not like the fact that you transferred a $10k asset to your significant other within months of filing and he just might want to seize it to pay your creditors.

[AboveMyMeans]

That's not true. With your income and expenses you most likely will not qualify for a chapter 7. You would be in a chapter 13, in which all of your disposable income after allowable expenses would have to be paid to the trustee each month to pay your creditors. Bankruptcy is not for people like you who just don't want the inconvenience of paying off the debt. .

Thanks for your advice. I am certain that with the help of an attorney and creative accounting I could eventually qualify for Chapter 7.

You obviously want to clean the slate so you can eventually start racking up more debt, since you think bankruptcy is no big deal.

Incorrect. I have $50k of available credit, if I wanted to "rack up more debt" I could do so. Please keep the off-track subjective comments to a minimum. I'm looking for a constructive conversation.

You are not getting my point. Should I waste my efforts paying tens-of-thousands of dollars to these big banks that have themselves been financially irresponsible to be in the position they are in today. If the "mark of BK" is something I can live with, then why not start fresh now and begin accumulating wealth.

If you file bankruptcy your corporate card will be canceled, even if you don't list them. Is it an amex? If so, it will be closed within days of filing. Amex is very strict about that and will probably never approve you as long as that bankruptcy is on your credit report. You won't be able to get any credit cards with a high enough limit for business travel for a long time.

I understand this issue, and addressed it in an earlier response, by being added as an authorized user on a family member, or my fiances account. I'm reimbursed bi-weekly, so the use of this credit should never carry a balance.

Then there's the issue of the ring. Even if the bank doesn't put up a fight, the trustee may not like the fact that you transferred a $10k asset to your significant other within months of filing and he just might want to seize it to pay your creditors.

I understand that specific engagement ring-financiers offer astronomical rates, around 25%. This is because unlike a car or house, a ring is nearly impossible to reposses or foreclose upon. I also understand that this is the retail value of the ring, of which the wholesale price is much lower. And then there is the immediate depreciation. So that $10k asset is really much lower, and purchased nearly a year ago, I'm not sure would be a priority of the Trustee.

[Ifonly]

"creative accounting?" You're denying that you're attempting any kind of fraud or that you simply wish to only work the system to your benefit but you say "creative accounting"?

You've ignored some of the money-saving ideas that I and other posters have given you that were made genuinely to help you. You choose instead to have a back and forth with a poster who is never going to see it your way and vice versa (nor should he).

I don't think you genuinely want advice or help, you just want someone to say "sure, it's OK to file, go for it!"

The vast majority of us who have filed did so as a last resort. We're not going to tell you it's OK when you obviously have other options.

[AboveMyMeans]

"creative accounting?" You're denying that you're attempting any kind of fraud or that you simply wish to only work the system to your benefit but you say "creative accounting"?

You've ignored some of the money-saving ideas that I and other posters have given you that were made genuinely to help you. You choose instead to have a back and forth with a poster who is never going to see it your way and vice versa (nor should he).

I don't think you genuinely want advice or help, you just want someone to say "sure, it's OK to file, go for it!"

The vast majority of us who have filed did so as a last resort. We're not going to tell you it's OK when you obviously have other options.

I absolutely appreciate your advice, Ifonly, as well as the others who have chimed in. I have definitely NOT ignored it. Thank you.

[hereforinfo]

Thanks for your advice. I am certain that with the help of an attorney and creative accounting I could eventually qualify for Chapter 7.

I understand that specific engagement ring-financiers offer astronomical rates, around 25%. This is because unlike a car or house, a ring is nearly impossible to reposses or foreclose upon. I also understand that this is the retail value of the ring, of which the wholesale price is much lower. And en there is the immediate depreciation. So that $10k asset is really much lower, and purchased nearly a year ago, I'm not sure would be a priority of the Trustee.

First of all, there are limits to the amount of expenses you can claim in each category and you have to have receipts to back it up. Creative accounting can only move the numbers a little if you are borderline, which you are not. You have way too much DMI for any type of creative accounting to help you qualify.

As to the value of the asset, it doesn't matter how much it has depreciated. You transferred an asset that was worth $10k within months of filing, and a trustee may consider that fraudulent. Plenty of people have had to surrender jewelry in bankruptcy. The cost of selling the jewelry is low and you obviously don't understand how trustees look for any amount over the allowable exemption to sell so they can get paid a percentage and give the rest to creditors. Even a few thousand dollars is well worth it, and we both know the resale price on that ring, purchased just 6 months ago, would be at least half what you paid if not more.

[poorold]

I'm amazed at the moral stance exhibited by some posters. It appears that they view this gentleman's circumstances as less harsh than their own and therefore he may not be worthy of availing himself of the bankruptcy option because of "moral" reasons.

bull.

If you purchase a car, you can deduct your payment up to $489 for purposes of the means test and an allowance for gas, insurance, repairs, etc. on top of that.

Go talk to an attorney.

Chapter 7 may be on your credit report for 10 years, but who cares. Because you do not own a home, under today's rules you could qualify to purchase a home 2 years following chapter 7.

Buying a new car with an extended warranty might be a good idea. Given you travel so much, you probably would put few miles on it and by the time you pay it off, it would probably still be in great condition.

With regard to your per diem, start keeping receipts and spend more than they give you. It shouldn't be that hard.

Then find an attorney who operates by the law and not by the moral principals espoused by a couple of posters here.

You will be able to file bankruptcy, it's just a question of 7 or 13.

And I do not think any of the posters here, including myself, is intending to provide legal advice--so go see an attorney.


When those who set the rules allow their friends to not live by the rules...and then attempt to manage the behaviour of the "common man" through the imposition of "moral" obligations to which they do not hold themselves or their friends accountable...well, why would you ever listen to someone who wants to subjugate you in that manner?????????

[hereforinfo]

I'm amazed at the moral stance exhibited by some posters. It appears that they view this gentleman's circumstances as less harsh than their own and therefore he may not be worthy of availing himself of the bankruptcy option because of "moral" reasons.

bull.

If you purchase a car, you can deduct your payment up to $489 for purposes of the means test and an allowance for gas, insurance, repairs, etc. on top of that.

Go talk to an attorney.

Chapter 7 may be on your credit report for 10 years, but who cares. Because you do not own a home, under today's rules you could qualify to purchase a home 2 years following chapter 7.

Buying a new car with an extended warranty might be a good idea. Given you travel so much, you probably would put few miles on it and by the time you pay it off, it would probably still be in great condition.

With regard to your per diem, start keeping receipts and spend more than they give you. It shouldn't be that hard.

Then find an attorney who operates by the law and not by the moral principals espoused by a couple of posters here.

You will be able to file bankruptcy, it's just a question of 7 or 13.

And I do not think any of the posters here, including myself, is intending to provide legal advice--so go see an attorney.


When those who set the rules allow their friends to not live by the rules...and then attempt to manage the behaviour of the "common man" through the imposition of "moral" obligations to which they do not hold themselves or their friends accountable...well, why would you ever listen to someone who wants to subjugate you in that manner?????????

I'm not in bankruptcy, not anywhere near his situation or yours. I do hold myself to the same moral obligations I am talking about here. I think what he's doing is wrong and you are giving him advice to cheat the system.

You are advising him to go out and spend $500+ per month on a car so he can get out of paying $500/month to his credit card debt (that was racked up on gambling, partying and a recent purchase of a $10k ring). He claims he can't afford to pay $500/month to his credit card bills, but he will be able to afford a $500/month car payment, plus insurance and gas, instead? Plus you advise him to spend more of his per diem, when he claims he already doesn't have any money left over. That makes no sense. He gets $1000 per diem and spends $300 of it, supposedly the rest goes toward his living expenses and bills. You are suggesting he spend at least another $700/month to cancel out the per diem, when he claims he is broke? What bills is he supposed to stop paying so he can spend that $700 on meals while out of town? Obviously not the credit cards if he swaps those payments for the car.

Let's do the math. He can't afford $500/month for credit card bills. But in your plan he can stop paying that and afford $1200 instead?

[poorold]

I'm not in bankruptcy, not anywhere near his situation or yours. I do hold myself to the same moral obligations I am talking about here. I think what he's doing is wrong and you are giving him advice to cheat the system.

Cheat the system??? He's NOT cheating the system. He's taking advantage of LEGAL solutions available to him. Just like our great bankers are taking advantage of LEGAL solutions to fix our bankrupt banking systems.

Moral obligations??? What about the MORAL obligations of the BANKERS who lent him the money in the first place??? Where were their morals when they loaned money to support a weak human being who drank and gambled???

You are advising him to go out and spend $500+ per month on a car so he can get out of paying $500/month to his credit card debt (that was racked up on gambling, partying and a recent purchase of a $10k ring).

I am advising him of nothing. I am pointing out that the LAW allows him a vehicle payment of $489 per month plus gas, insurance, maintenance, etc. Why shouldn't he take advantage of what the LAW allows him??? If YOU have a problem with the LAW, call your Congessman.



Plus you advise him to spend more of his per diem, when he claims he already doesn't have any money left over. That makes no sense... What bills is he supposed to stop paying so he can spend that $700 on meals while out of town?

He has the LEGAL and MORAL option to stop paying every debt that he is LEGALLY entitled to discharge in bankruptcy. I'm not advising him to do anything. I'm pointing out that I find it reasonable to SPEND his per diem on what it is intended to be spent on. In fact, if he LEGALLY plans his bankruptcy, he may even be able to repay his 401K loan and then wait sufficient time so that he is within the LEGAL timeframe to have it not considered a preferential creditor payment.


Let's do the math. He can't afford $500/month for credit card bills. But in your plan he can stop paying that and afford $1200 instead?


He apparently can't afford a car right now with all those debt payments and the LAW allows him a $489 per month car payment. The LAW also allows him to DECIDE to have a car and NOT pay his unsecured debt. If YOU don't think the LAWS are moral, call your congressman.

[AboveMyMeans]

Perhaps I should have left out HOW this debt was amassed, as it seems to be skewing the responses. As one post noted, I could keep going on for years and years, telling myself that the next bonus or next salary raise will get me ahead...until I'm 5 more years down the road and $50k more in debt. Would that be a more noble path to BK?!

I feel at this point that I am being penalized to take the harder road to becoming debt-free because I have amended my problems earlier than later. Maybe I should just keep living the good life, and there is no need to have this conversation because theres only one solution.

Thanks everyone for your input.

[StartingOver08]

One last comment before you go: I made 2 assumptions: 1)the assumption that you are young and healthy . Believe me, this is not always the case. It's not how you amassed the debt so much as, save the BK in case you find yourself in a huge insurmountable jam; and 2) you would rather control your own destiny then report to the Trustee for 5 yrs.

1) Yes, you can file more than one BK, but Ch 7's are limited to 1 x per 8 yrs. If something happens that is unexpected and large (accident or illness with large medical debt); then you may find yourself in a very difficult position to wait to discharge that debt. But of course, nothing may happen along those lines. It becomes a matter of weighing the probablities of needing the Bk later or now.

2) The other issue may very well be that you would be forced into a Ch 13 based on your numbers. An attorney familiar with your situation would be better able to determine which way the Trustee in your district would view your filing. My original thought was if you were going to file and be forced into a Ch 13 - it would be far better to make your own arrangements then to have the trustee looking over your shoulder for the next five years. That way you have more control out of the Ch 13 then in the Ch 13.

Naturally, the decision is yours.

[AboveMyMeans]

Thanks StartingOver08, very logical advice.

[joh]

Talk to a lawyer, keep in mind internet advise is only worth the paper it's written on.

[nc73]

I think what everyone's trying to tell you is that it's in your best interest to pay the debt without filing. Why have bankruptcy on your record when looking at the numbers it appears that you CAN pay the debt off without much trouble. We really don't care if you file or not but you posted here for opinions and you got it. Leave bankruptcy for those that are in dire need. It's really not meant for someone that refuses to live frugal for 3-5 years. It seems you had your mind made a long time ago, so why did you even post?

[poorold]

nc73,

I'm sorry but I don't quite understand the following comment: "Leave bankruptcy for those that are in dire need. It's really not meant for someone that refuses to live frugal for 3-5 years."

What Section of the Bankruptcy Code requires this.

Furthermore, along those lines of thinking, shouldn't there be no Chapter 7? After all, I'm sure everyone can afford to repay some/all of their debts if they live frugally. And along the same lines of thought, perhaps the 5 year repayment plan under Chapter 13 ought to be removed and you pay for the rest of your life.

No cable, no TV, no cellphones, no car valued at more than $1,000 (and only if actually necessary to commute because public transportation is not available), no air conditioning, in the winter you are forbidden to have the heat above 40 degrees (just to keep the pipes from freezing, if you are cold, put on another sweater). And, you can only shop at stores designated for bankruptees--day old bread, items near expiration, dented cans.

And, of course, absolutely no eating out or vacations for the rest of your life.