Question Is bankruptcy worth it for low debt?

[kilowatt]

I only have $19,000 in debt, but my income is $11,000 per year from social security disability. I am thinking about filing chapter 7 since the creditors are constantly calling me and refuse to settle the accounts. Is it best to just let the charge offs occur and deal with the collection agencies and hope for a sane settlement or is it best in the long run to pay the cost $1300 for chapter 7 bankruptcy? Any thoughts are welcome.

[keepmine]

If your disability is permanent, I'd think bk would be in your best interest.
However, do you have any assets to protect that are beyond your states exemptions?
Most bk lawyers will give a free or lowcost initial consultation. Speak with a few and get all of your options explained.

[keepsmiling]

Welcome to the forum!
Read a little bit and familiarize yourself with how bk tends to work.
We don't have enough info to help you. Do you own a home? Equity situation? Vehicles? Equity in them? Where are you located?
Critical q's for advice.
Frankly they are idiots for not settling... but how would you ever find the cash to pay them anyway?
also... you may qualify for free or low cost assistance. Keep reading, asking, and answering. Good luck!

[kilowatt]

How would I qualify for for free or low cost service? I desperately need it since it will take me five months to save the money to pay the lawyer to file for me. I have no car or never owned a home and no assets. I sold off my assets and used my savings to pay off bills. I had big medical bills that I paid off. I am not competent enough to represent myself in bankruptcy. Thank you for any help that you can provide. I'm single, so no spouse complications either. I live in Oregon.

[Pjmax]

Have you tried legal aid? Also, you can get a filing fee waiver, that will save you some.

[stray]

My debt was not much more than yours and I was near SOL. I had the same problem as you, I couldn't get them to agree to payments that I could afford. I did have a plan with one of them for 2 yrs. One month I was late, called and everything, they instantly took the plan away, threw on penalties, etc and it was almost like I never paid for 2 yrs.

I put off filing for 3 yrs, because I thought it wasn't enough debt to file too. But if you can't pay what they want, then it doesn't matter how low or high the debt is. Since you seem to have no assets to worry about, I think BK is a good option for you. Good luck to you.

[keepsmiling]

Get Google Voice so you aren't pressured and harassed. You will be a slam dunk ch7 but you are also collection-proof so no need to rush.
Have a few sitdowns, perhaps with a sympathetic attorney who may do your case pro bono. Take your time and see what works best for you.

[ksgirl38]

Personally I tend to go with the theory that if your debt is equal to at least half your income then BK probably is the right option for you. I believe someone mentioned Legal Aid. That's a good option. If they can't help you then they might be able to refer you to an attorney that would at least help you at a discount. Good luck.

[LadyInTheRed]

Besides your income to debt ratio, another good way to determine whether BK is a good option is to figure out whether you can pay all of your debt off within 3 to 5 years without BK.

Is paying $1300 in attorney fees worth discharging $19,000 in debt? I'd say so.

Here's a link to a list of legal aid services in Oregon: http://sites.lawhelp.org/program/1173/index.cfm Call the one closest to you and ask if they can help with BK or refer you to somebody who can.

[bookworm]

Besides your income to debt ratio, another good way to determine whether BK is a good option is to figure out whether you can pay all of your debt off within 3 to 5 years without BK.

Is paying $1300 in attorney fees worth discharging $19,000 in debt? I'd say so.

I couldn't agree more. My debt was only $15,000, and I was a simple, no-asset Chapter 7 case. I did consider other options, but realized there was no way I would have been able to settle, or pay it off inside five years. And since I was collection-proof, seeing if I could wait out the SOL was also an option. But, at the end of the day, I just wanted the debt gone. So, yes, it was worth paying $1,100 to keep $15,000 from growing even more out of control. I feel like I can breathe again without that dark cloud hanging over my head.

[kilowatt]

I couldn't agree more. My debt was only $15,000, and I was a simple, no-asset Chapter 7 case. I did consider other options, but realized there was no way I would have been able to settle, or pay it off inside five years. And since I was collection-proof, seeing if I could wait out the SOL was also an option. But, at the end of the day, I just wanted the debt gone. So, yes, it was worth paying $1,100 to keep $15,000 from growing even more out of control. I feel like I can breathe again without that dark cloud hanging over my head.

Yes, I'm concerned about having too fight bad debt listings on my credit report and if I move the bad credit rating will hinder me in renting an apartment or house. I can get the bankruptcy behind me then apply for a secured credit card to reestablish my credit. I'm really leaning towards BK now. Thanks for your input.

[ksgirl38]

Can you move before you file? There's also the possibility of renting from a private owner rather than a company. They might be more willing to work with you. I think there was a thread around here about this issue and it seems like someone ended up paying the first couple of months up front in order to secure a rental. I realize that's easier said than done financially, but I'm sure you can find some option.

[bookworm]

Yes, I'm concerned about having too fight bad debt listings on my credit report and if I move the bad credit rating will hinder me in renting an apartment or house. I can get the bankruptcy behind me then apply for a secured credit card to reestablish my credit. I'm really leaning towards BK now. Thanks for your input.

Are you planning on moving in the near future, or are you speaking hypothetically?

I'm planning on moving at the end of my lease, by which time, my BK will be almost two years behind me. I'm already looking at places, and calling around. I mention the bankruptcy up front and ask if filling out an application would be a waste of time. In most cases, they don't mind a bankruptcy, as long as everything else checks out (like work history, whether you meet income requirements, rental history, criminal background check, etc.). In many cases, a lower credit score just means you pay a higher deposit.

Honestly, bankruptcy is all too common, so apartments can't afford to be too picky. I wouldn't lose sleep over it.

[angles]

As others have stated, BK is typically used to protect what you currently have and/or what you may get in the future. You don’t have any real assets at the moment, which makes you collection proof, and if you don’t expect any in the future like a large inheritance or a tax refund every year then I would use the $1300 for something more important like food or utilities. Eventually the debt collecting trolls will realize you don’t have the money and will never have it and stop bothering you.

[Pjmax]

As others have stated, BK is typically used to protect what you currently have and/or what you may get in the future. You don’t have any real assets at the moment, which makes you collection proof, and if you don’t expect any in the future like a large inheritance or a tax refund every year then I would use the $1300 for something more important like food or utilities. Eventually the debt collecting trolls will realize you don’t have the money and will never have it and stop bothering you.

This is all true, but is it worth going through possibly years of harrassment, embarrassment and all the legal wranglings to keep proving the debt collectors can't legally take anything? Being collection-proof won't stop them from going after judgements and attempting bank account seizures.

I'm all for starting over. I filed 7 under similar circumstances, unemployment ended and my income is only SS now, with a dismal outlook for future employment. Chap. 7 was the best option for me, and I have no regrets over paying an attorney $1500 for a fresh start.