Anyone have experience with bankruptcy vs. judgements?First off, I'd like to say that I'm scared to ask this here. I've gone to some legal advice forums and been called some things that have me very upset atm.
So, if you don't agree with what I'm doing with my finances/life, please please refrain from judging me and just move on. Please. Thank you.
When I was in college I racked up a bit of credit card debt (about $9k total on two cards) and took out students loans about $80k - combo of private and govt. backed loans. These were all for education expenses (or living while going through college).
AFTER I incurred these expenses I got married, so I'm not worried about that cross-over. We live in NY, which is not a communal property state as well. So, I think I'm correct to believe that they can't go after my husband for my debt I incurred while out of the marriage OR the house we live in, which he did purchase after our marriage but it's completely in his name and paid for by him. If I am wrong, please correct me there! Would be very important to know!
So, long story short, I got pregnant unexpectedly during my last semester of grad. school and never got into the working world. We had twins (unexpectedly too!). We are done having kids now.
We have chosen for me to stay home with them for several reasons. Mainly b/c my degree is in Early Childhood Education (Birth-2nd grade) and if I were working, then I'd be spending most of my day with other people's children all day while mine were in day-care. This isn't the right fit for us.
So, in order for me to stay home we must live off just his income. I have tried to work from home and it's just too much - twins are a handful! (they are 20 months now) I will again work someday, but it maybe many years away as we are considering homeschooling. When I work again, I would want to pay off my debts, of course. I just can't right now for the sake of my children. It's very important to us that one of us is a stay-at-home for now.
We can't afford even the minimum payments for the loans or credit cards. As it is we survive off food pantries and a budget so tight we sometimes have to wait a week or two to buy groceries so we can pay the bills we do have.
So, I stopped paying my credit cards and put deferments up on the student loans.
Yesterday I got a court summons for a judgement from one of the credit card companies. I'm figuring I'll get one from the other credit card some day too. Not sure if student loans need to do that to secure their money or not.
I have 10 days to answer the summons if I'm going to. My understanding is that I should only answer the summons (with a written letter) IF I contest what they are saying I owe. Then I found other advice that says I should ask for proof of the debt no matter what - on the chance that they don't have proof anymore and then they have to stop collections by default. Anyone hear of this?
So, if I do answer it would be to contest it.
If I don't, then a default judgement is placed against me.
From what I understand (again, please correct me if I am wrong or missing pieces!) that means they will garnish my wages when I work again (that is fine), that they will seize any assets I have (I'll talk about those next), that they can take my taxes (anyone have details about this?), and that it can affect my ability to get a job (I doubt that one, unless I'm going for state employment or something) and to get covered by insurance (anyone ever get denied ins. coverage for bad credit?). I'd like to know what I'm getting myself into if I let them put a judgement against me, so if there's more than this, please let me know if you know anything else.
My assets - I own nothing really, except our car. I've paid for in full and own it completely. Just me. It's current wholesale value is $2700. Anyone know if that falls under the allowable property value? If it does, then how do I protect it from seizure? Do I have to do anything to protect it from getting taken? I think the allowable value may be close to that, so if it's a tiny bit off, then what will happen? (ie, the allowable value is $2400 and the car is worth $2700)
Again, our house is in my husband's name and I contributed no money towards its purchase. Is it safe?
So, lastly (I'm so sorry this is so long, it's really tearing at me...) I am wondering if bankruptcy might be a better option for me.
I would only qualify, if at all, for Chapter 7, as Chapter 13 involves payments and I can't make any with no income.
But what benefits would I get from filing Chapter 7 that I wouldn't get from allowing judgements to be placed on my credit?
I know student loans can't be forgiven by a bankruptcy. There is also no SOL (statutes of limitations) on student loans.
The SOL on the credit cards is 6 years and after 7 years it will come off my credit. How long does a bankruptcy hang on your credit record for?
I guess that doesn't matter since my credit will be botched b/c of the student loans anyway.
Hhmm...guess I just can't see why spending the money on a bankruptcy now would be better in the long run instead of judgements that fall away in 7 years. Maybe the benefit would be that if I DO starting working before 6 years is up, then I don't get my wages garnished for the credit cards, only for the student loans.
Oksie, this was WAY longer than I anticipated! If you made it this far, thanks for listening!!! I really need someone to talk to as much as I need advice, so it's all appreciated.
BTW, I am meeting with a lawyer on Monday and will report what he says for others reference. I just am sick to my stomach with worry in the mean-time and so would love any advice from someone who's been there or knows about these things before then so I can get a little peace of mind or at least know instead of worrying about the unknown.
Thanks so much!