Trying to keep my head above water

[JayGZ]

After a visit to a credit counseling place, I learned that even after being put on their debt management plan that my monthly budget would still be at $0 after paying out my usual expenses and cutting back on others. With a student loan payment coming on in 8 months, I don't see how I could be in the program and not fall out sooner or later and be right back where I am.

But I can't stay where I'm at now with the CC debt and high interest rates due to a late payment that impacted all of them.

I hope to have a few consultations with lawyers completed by next week.

The problems I'm facing now are mental mainly because I have so many questions that stress me out:

I make $75K a year. I have 23K in CC debt, plus $1,200 left in a holiday loan through credit union, another $1,200 in a medical bill, and then the student loan payment beginning in August.

This would see manageable except that I'm divorced and pay a lot of child support--up to a quarter of my take home pay.

So will I be able to file for bankruptcy? Will it be chap. 7 or chap. 13?
Should I just stop paying on my credit cards now? I'm not behind in payments but one late one sent them all up to 30%.
Will I lose my car if I file BK? I need it for work, for picking up my daughter, for basically living!
What will happen to the student loan that is in deferrment until August?

That kind of stress makes the day-to-day living hard. I try to put it outside of my mind knowing that if I went the route of BK I could stop paying the CC bills and just relax knowing I did the best I could and that now I'm accepting the facts that I need a fresh start. I basically ran into the 4 horsemen of the apocalypse (layoff from work, medical bills, divorce, high child support).

I basically just don't want to lose my car. That's all. I don't own a house. There's no plasma screen that I'm watching. I rent a 2BR apartment and that's it. My only splurge is Sunday trips to Starbucks for a mocha and a Sunday newspaper (that I'm clipping coupons from, too).

And I really would like to find a good, understanding lawyer in Dallas. One who can talk me through all of the steps, so I know just what to expect along the way.

Nor do I want anyone to find out about this--my work, my ex-wife. I feel like a failure and I just don't need to wear it like an albatross around my neck in front of other people.

I do not live an extravagant life at all. And frankly I'm fine not. I just want the stress to go away, so I can lead a calm life with my daughter and a focused life at work.

Most importantly, I just don't want my debt and debted lifestyle to handicap the future of my daughter. Divorce is enough.

Any advice on the above would be greatly appreciated. I'm just trying to get my head on straight so I'm not so stressed and sleepless. Thanks!

[Genenco]

Wow! Texas? Far out!

There's no garnishment possible in Texas..(Except for Child Support, Back Taxes and (Govt) Backed student loans) and so....

However, this doesn't mean they cannot bug the crap out of you.

I'd see a lawyer..More then likely, you'll be doing Ch 7.

Don't stress, you're actually in a creditor UNFRIENDLY state..Bless you!

[StaciMM]

Your income will play a part in whether or not you can file ch 7, and though your income is high I assume it would be taken into consideration the amount you pay in child support. A local attorney would be best for discussing that!

If you were to forget about credit card payments, medical payments, and the holiday loan* payments, and pay all your living expenses in cash-what is the end result each month? (Rent, child support, utilities, car payment, insurance, vehicle fuel & maintenance, clothing, personal care items, household supplies...) THe new guidelines do limit what you can claim-but from what you've said, you don't have any extravagant expenses.

If there is money remaining, you will probably be in a ch. 13 for 5 years. If there is money remaining now, but it will be taken up by your st. loan payment in 8 months, you might be better off waiting until the st. loans are in repayment. (Can't claim an expense that you don't have right now.)

As to your other questions-you should NOT lose your car if you file BK. If you are able to file ch. 7, you'll need to be current on it of course. *A quick question-you mentioned a CU holiday loan. Is your car thru that same CU? (If so, you may have to continue paying the loan in order to keep the car. CU accounts tend to be connected.)

If I were you, I would:

1. Consult w/ a BK attorney now to answer a few questions regarding local rules, etc.

2. Stop paying on credit cards.

3. Make a decision about what chapter to file in the next 6 months or so. (Based on student loan expense later.) Not to mention, the median income guidelines will possibly be adjusted for a new year soon.

Like Geneco said, creditors can't garnish you. They'll call, send letters, etc. They'll add late fees and more interest. But you won't waste any more money sending payments. **I don't know if they can garnish your bank account in TX. If they get a judgement, probably best not to leave money in the bank-just in case! If you stop paying now, it will likely be 4-9 months before they would get that far anyhow.

[Minnymouth]

CALM YOURSELF DOWN - NO STROKES ALLOWED ON THIS FORUM.......

Talk to an attorney, look at your options, bankruptcy may be better then debt counseling and trying to pay your debts.

Attorney will tell you options you will have.

TAKE A DEEP BREATH, take one day at a time - I guarantee most everything will go smoothly and have a good turnout....

Keep us posted what you are doing so we can help.

[JayGZ]

I met with a lawyer today---it was exhausting and deflating.
From looking at my finances, he wasn't sure if I would fit in a Chapter 7 or Chapter 13.

I'd prefer Chapter 7, of course, to have everything swept away. I'm hoping that's possible.

The consultation was free but he said that lawyers rarely do payment plans-- that they aren't supposed to. His fee for chapt. 13 was just the filing fee because he's paid through the chapter 13 stuff. Hard to explain.

Chapter 7, however, would cost me $2,500 plus a filing fee of $300. Does that sound like a lot?

What makes me sick is the thought of creditor calls. My phone, which I only use for DSL, so I rarely answer when it rings because I've given no one the number has rung twice tonight.

One was a wrong number, I think. The other was a collector calling for my brother who lives in an entirely different city. I knew he had money issues, but never received a call. Who does the bell, the bell tolls for thee!!

So I'm sort of numb now. What do I do?

I think I've got a small window of time here to do the bankruptcy worksheet so they can figure out if I'm chapter 7 or chapter 13. If it's chapter 13, I can pay the amount needed to do it. If it's chapter 7, I'm going to have to find ways to get the money together to cover it so they will file it.

And a little time to think about bankruptcy or the debt management program. Time is roughly until the day after Xmas, basically.

The lawyer also told me that my ex would receive a letter notifying me of my bankruptcy since she is a creditor (I send her child support). That makes me a bit sick to think about! How embarrassing since my ex doesn't think much of me. What ex does, right?

So here's my pros and cons:

Debt Management Program
Pros: not bankruptcy, reduced payment
Cons: may not cover all my identified expenses, plus grad school loan comes due in later 2006.

Chapter 7
Pros: sweeps it all away, fresh start
Cons: $2,500 to do it

Chapter 13
Pros: sweeps alot away, fresh start
Cons: $500, still have to pay money

Lottery:
Pros: Pays all bills and then some
Cons: More likely to die and be reincarnated as an umbrella than win lottery


I should probably see a few more lawyers just to get more opinions.

[StaciMM]

Why are you pressed to do something asap? (Just curious!)

[JayGZ]

That's a good question.
I guess because I just want to get moving in some kind of direction.
I want it settled because I'm having trouble sleeping and I'm worrying.

Since my credit cards have APRs of 30% due to a late fee, I feel like I've got to make a decision soon.

I basically have about a month in me before I can't cover everything and some bills--obviously the CCs begin to slide.

Now, I'm curious...should I not be in a hurry?

[StaciMM]

Not really... Consider this... If you are still making payments on your cards now, more than likely it would be 4-9 months before they charged off the cards and had a chance of trying to get a judgement.

If there is not already a judgement, and a creditor is not trying to garnish your wages or attach to any property, there really is no rush. Yes, if you file sooner you finish sooner. BUT BK is something that will stick with you for a while, taking time to explore everything won't hurt. If you are pretty certain that ultimately you'll file either 7 or 13, STOP paying the cards now. Don't send them another penny.

Use the money that you would have paid to the cards, and save for an attorney.

Regarding the fee you mentioned, the filing fee is about $274 I believe. The attorney cost will vary, used to be $500-1500 and w/ the new laws theory is it will cost more. Keep in mind yours is not a simple case, based on your income, and that might cost a little more.

Regardless-see at least 2 more attorneys before you decide.

[StaciMM]

Its a hard lesson to swallow, but, right now the worst that can happen (short term):

Creditors can call, charge late fees, extra interest. If you end up filing BK that will all be wiped out, so all of that won't matter really.

[FoolAndHisMoney]

Yesh $2500 sounds like a lot even for the new laws, but since it's still very new to us we don't know what "normal fees" are in post Oct 17th. Still cheaper then a lifetime of 30% interest debt.


Take the means test and calculate your disposable income and stop paying credit card bills if you feel you are going to file so you can hire a good lawyer.

Good luck!

[JayGZ]

Thanks for the great feedback.
I will go and see two more lawyers on this.

I woke up tonight feeling the usual dread about this. My main worry is that something happens to my daughter and I don't have the money.

But really, I don't have the money now. And after bankruptcy, I still won't. But my stress will be gone. It will be a fresh start and I would be able to build a safety fund in my savings account to handle emergencies.

And with any emergency, I'd like to think that a) I could get on a payment plan with a hospital or b) that family and in-laws would help out.

I need to stop thinking in life or death and just think in one day at a time.

Doing that makes the dread dissipate some.

[JayGZ]

For my peace of mind, I need to ask address this.

Let's say it's determined that I'm chapter 7 or chapter 13. In order to cover the legal expenses, I don't pay on credit cards for 3-5 months.

I imagine during that time that I'll get phone calls and letters requiring payment and so forth.

Once I file, all that should stop because the filing is in place, right?

I do have a signature loan payment and a hospital bill. Do I continue paying on those as well or let those slide and let them be included in the bk at their current and then additional amounts (additional being interest/late fees)?

I guess that's why I feel rushed to file now because I just don't want to be hassled and harangued by 5 different creditors (BA, Citi Cards, Credit Union, and a hospital).

This is all a bit mind numbing and distracting--what an understatement.

[StaciMM]

Yes-filing BK includes an 'automatic stay' where the creditors are not allowed to contact you.

For my peace of mind, I need to ask address this.

Let's say it's determined that I'm chapter 7 or chapter 13. In order to cover the legal expenses, I don't pay on credit cards for 3-5 months.

I imagine during that time that I'll get phone calls and letters requiring payment and so forth.

Once I file, all that should stop because the filing is in place, right?

You should stop paying the medical AND credit cards. If you have no other dealings with the same credit union that has the personal loan, stop paying that also. If your truck is financed there, you will probably need to keep paying the personal loan as CU tend to have an all or none policy... They have clauses that make the accounts connected. If your truck is not thru them, but you bank with them, would be wise to open an account somewhere else, and THEN stop paying the loan.
[/quote]

More than likely, the calls won't be too bad the first month or so. From, my experience-it isn't real people that call, but a machine. When you answer & stay on the line, they put a rep on. Simple solution-either avoid answering your phone, or answer it and if its not a person-hang up.

It seems that you are likely to end up either in ch. 7 or 13. If you can manage to put up w/ phone calls & letters, then putting your credit card payments to better use will probably be better for you in the end. They can't do anything more to you! True, your balances will go up in the next few months while you figure out where you're going from here. BUT if you end up w/ ch. 7, it all gets discharged anyhow. For ch. 13, they're going to be repaid a %, and you'll pay the same into the ch. 13 regardless of what your balances are. Such as-if you end up paying 5 years @ $250, it doesn't really matter that the card balances went up before filing.

I do have a signature loan payment and a hospital bill. Do I continue paying on those as well or let those slide and let them be included in the bk at their current and then additional amounts (additional being interest/late fees)?

I guess that's why I feel rushed to file now because I just don't want to be hassled and harangued by 5 different creditors (BA, Citi Cards, Credit Union, and a hospital).

This is all a bit mind numbing and distracting--what an understatement.

[Minnymouth]

iF YOU DECIDE TO FILE,
1. quit paying on everything that needs discharged - credit cards, hospital bills, loans, etc.
2. Only pay mortgage payments (if reaffirming), auto loans (if keeping) and utilities.
3. BANK THE REST OF THE MONEY FOR LAWYER FEES..
4. Put your phone on voice mail or buy a answering machine where you can screen calls.....
5. Calm yourself down and take a deep breath.....it will take time but things will turn around for you.... just be patient....
6. Ignore nasty phone calls and nasty letters from creditors.... they'll get over it......
7. Make you a list of YOUR PRIORITIES of how you want to live in the future - debt free...... get organized.
8. Count the blessing you do have...........

[StaciMM]

This may have been covered, but if not, its a good idea and worth repeating...

For a week or 2, keep track of everything you spend. Its easy to not know where the money goes! (Speaking from personal experience here...) When I did this, I figured out a few things about my spending habits:

Buying a 20 ounce soda 2-3/day... $1.19 each, OUCH! 5 work days, about $15/week!
Buying fast food each day at work... $5-6 each, $25/wk!
Fast food for dinner 2-3/week... $20 each, $40-60/wk!

Now, I buy drinks in a 6 pack at the grocery store, 2 six packs each week: save $8/week.
No fast food, take leftovers or bread, cheese, etc. to make sandwiches for lunch: save $20/week
Fast food every now and then, do more cooking at home & groceries cost less than fast food, save ~$20-30/week.