Chapter 7 bankruptcy?

[angelpie545]

Unfortunately I am seriously considering filing for chapter 7 bankruptcy. I have enormous amounts of credit card debt, up to the amount of about 14,000 dollars. I have chronic illness that affects me so much physically that I cannot work, and my dh cannot make as much money as I can. We are living off his income and are barely keeping a roof over our heads. Our bills are overdue, collection agencies call my cell phone over five times everyday. It is a nightmare. I feel like breaking down everyday, and I know that I brought this upon myself because I have a shopping addiction, and shopping has comforted me through this hard time. I realized too late just what I had done to myself. I am and have been seeking help for my illnesses and now I am realizing just what a terrific bed I have made for myself and my poor family to lie in. I guess this turned more into me venting than asking for advice. Really....I guess I just don't know what to expect. Are they going to try to seize our belongings? We don't have much of anything, just clothes and stuff, no big screen TVs, or expensive items. I just don't know what to do. My poor kids.

[Denvergirlie]

you most likely will not be allowed to file chapter 7, but more likely chapter 13 in which you will have to repay some of those debts no matter what.

Is it really that hopeless? Would following the Dave Ramsaey methods work?

I had $30K in debt last January, now it's about $8K. It was hard at first but now it's much easier to make those debt payments.

Good luck

[DevaMajka]

I filed chapter 7, and I am very glad I did it. I must say though, that I'm not married to dp, so his credit (and his debt) were unaffected. I haven't had any credit in my name since (hasn't been necessary), so I have no idea how easy or difficult that would be.
There was no way we were going to be able to pay my debt. It was about $15,000. Dp got an inheritance big enough to pay his debt, so now we are debt free (except owing on our van), and it's really really nice. We are bound and determined to not get into that situation again, so our cc's get paid every month in full, and the only thing that goes on cc's are monthly bills that are automatic. Everything else is cash and/or debit card.

They didn't take anything from me. There is a certain "allowance" of things you can keep (actually called exemptions). You keep clothes, etc. But not expensive furs, yk? In Ohio, it seems very reasonable. They weren't interested in how much $'s worth of clothes I had, for example. I didn't have much, but clothes, smallish older tv's, furniture (bought used), but they didn't get specific about it. Basically, the lawyer asked if I had anything more than basic household stuff, and that was that.
I got a laywer, and I'm glad I did. The lawyer didn't cost more than a couple months of CC payments anyways.

One thing to REALLY consider- if any of your debts has a co-signer, THEY will still be liable for that debt. So it really doesn't make sense to file BK on a co-signed debt.

This page will link you to exemptions info http://www.nolo.com/article.cfm/obje...3/161/128/CHK/

[angelpie545]

Okay...I think we're good...the only debt that I am trying to have discharged is credit card debt. We don't have any really expensive items at our house..just basic household items. Do they actually come and check out your house to see what is there or anything, or just trust you to report what you have?

[ChattyCat]

It depends on your state what the exemptions will be and for how much. Some states (like TX) have very generous exemptions. Others (like NC) are horrid. It really depends.

[DevaMajka]

Originally Posted by angelpie545

Okay...I think we're good...the only debt that I am trying to have discharged is credit card debt. We don't have any really expensive items at our house..just basic household items. Do they actually come and check out your house to see what is there or anything, or just trust you to report what you have?

nobody came to my house. They go over the last few months of cc bills, etc.
I think the one way that they CAN take something is if, say, you charged a tv or something on a Best Buy card, and now you're trying to file bankruptcy on it. If they care enough about it, they can go to court to have them make you give the tv back.

[wildhoneypie]

I'm not sure why some think you would need to file chapeter 13? Google Chapter 7 bankruptcy, you will find good information for your state and median tests that tell you if you qualify for chapter 7. Basically if you make more than the median income for your family size in your area then you may have to file chapter 13. You will have to reaffirm any secured loans that you want to make good on (ie car loans) which will probably cause an increase in your interest rate but making those payments on time every month will also help rebuild your credit score. And as pp said different states have different amounts of equity that they allow you to shelter. From my understanding, if you handle your credit well post bankruptcy, then your credit score can be great in a couple years, if you don't it can take up to ten years to recover your credit. You can also find tips for rebuilding your credit online. Also, you will have to take two classes under the new bankruptcy law. The first is before you file, you basically go over your budget to make sure that you qualify and to look at areas of improvement. The second explains your "fresh start" and how to rebuild your credit and manage money better so that you don't end up in a worse situation. (Like lots of debt but no option to file bankruptcy again for years.) Don't be too hard on yourself. You already feel like crap, obviously this isn't "no big deal' for you. Do what you have to do and move on. Good luck to you and your family. It really will be alright.

[angelpie545]

Yes, according to the laws in our state I absolutely can file chap. 7 bankruptcy. I don't think we make enough to even qualify for chap. 13. Dh's salary can barely sustain one person let alone four. I don't know how in the world we could ever afford to pay back anything on a reasonable basis.

[cdahlgrd]

Something to think about: is your situation getting better or worse? If it is still getting worse, I wouldn't declare yet. Are you expecting to pile up more debt or health related bills? You can't declare again for 6 years, so you need to think if you are ready. $14,000 isn't very much money and once you tell the collectors that they can only contact you by mail, they have to lay off.

Check out the book bankruptcy for dummies. It does a good job of explaining the rules.

Can either of you take part-time jobs? A few hundred dollars a month would pay it off pretty quickly. Are you able to afford basic living expenses? Make sure you are paying those unless you plan on moving after you declare.

[angelpie545]

Originally Posted by cdahlgrd

Something to think about: is your situation getting better or worse? If it is still getting worse, I wouldn't declare yet. Are you expecting to pile up more debt or health related bills? You can't declare again for 6 years, so you need to think if you are ready. $14,000 isn't very much money and once you tell the collectors that they can only contact you by mail, they have to lay off.

Check out the book bankruptcy for dummies. It does a good job of explaining the rules.

Can either of you take part-time jobs? A few hundred dollars a month would pay it off pretty quickly. Are you able to afford basic living expenses? Make sure you are paying those unless you plan on moving after you declare.

We can *barely* afford basic living expenses. We do have sec. 8 for housing thank goodness, so the rent is paid every month, but we struggle to keep the electric bill paid. I cannot work at all period, even part-time due to physical disabilities, but boy do I wish I could! I have filed for SSI, but I know it can take up to a year to get approved, and even then it more than likely involves a court battle for benefits.

I didn't know that creditors can only contact you by mail after you tell them so...I believe you, but do you where is the law for that so I can tell them? I had no idea I could ask them that. I do NOT want to file for bankruptcy, not at all, but I don't want a long string of collections on my credit report; I'd rather have a bankruptcy almost. I am really starting to think about this more though.

[lalaland42]

Here is information on fair debt collection:

http://www.ftc.gov/bcp/conline/pubs/credit/fdc.shtm

http://en.wikipedia.org/wiki/Fair_De...quired_conduct


HTH.

[MidwifeErika]

Beth, I think the first step would be to talk to a financial councelor. Here we have an organization called FISC that is run through Goodwill so they are nonprofit.... if you could find something similar that would be a wise place to start. They can tell you what is the best plan for your budget and your needs. They can tell you if there is a debt managment program you can enter or if you do qualify for bankruptcy and what chapter, etc. It will just help you get all your ducks in a row before actually filing, then you will also have some ideas about how to recover from it afterwards.

[cravenab00]

i've been through bankruptcy hell. I would never recommend it to anyone.

like the PP said, once you send a letter saying they may only contact you by mail, they have to oblige. I would start there.

14,000 isnt that much. What is your annual income?

[zersha]

Originally Posted by angelpie545

I didn't know that creditors can only contact you by mail after you tell them so...I believe you, but do you where is the law for that so I can tell them? I had no idea I could ask them that. though.

You just need to send them a letter stating something like:

"Pursuant to the FDCPA (this is the Fair Debt Collection Practices Act - they will know what this is, so no need to spell it all out if you don't want to)you are to cease and desist in contacting me by phone regarding this alleged debt (don't admit to it in the letter), and are only allowed to contact me by mail. "

This will only work with collection agencies because the FDCPA only applies to collection agencies, not original creditors. If the original creditors are the ones calling you, there is another law, but I'm not sure of the specifics of that since I've never had OC's calling me.

Also, do not sign your name on the letter - only type it out. Collection agencies have been known to move signatures to other documents. And send it certified mail, return receipt requested. That way you have proof of the day they received the limited cease & desist, and if they call you after that date you can sue them.

Good luck, I hope everything works out for you.

[zersha]

You know, looking back over your original post, I don't think I would file Bankruptcy for $14K in CC debt.

I know things probably feel hard and hopeless right now, but a Bankruptcy will be with both you and your dh for a long time. If they are all just CC's, the limited C&D I posted above will get them to stop calling you. Then all they can do is report it on your credit report for 7.5 yrs from the date of first deliquency. Depending on how old they are, they may not even be able to sue you depending on the statute of limitations in your state (usually 3-6 yrs). Even if they did decide to sue you, I'm sure a judge would take your financial situation and disability into consideration. Most big CC company's won't even bother sueing for small amounts. So if this 14K is spread out on several cards, it wouldn't probably be worth it to them.

Just something to consider. I've never filed Bankruptcy, but I would think it would affect your dh too. And it is pretty easy to get them to stop calling, so that would be one less stress to deal with.

Maybe things will improve financially for you and dh and you could eventually start paying them off using a snowball. (for example, dh could get a better job, your SSI could be approved, etc).

[shayinme]

Originally Posted by zersha

You just need to send them a letter stating something like:

"Pursuant to the FDCPA (this is the Fair Debt Collection Practices Act - they will know what this is, so no need to spell it all out if you don't want to)you are to cease and desist in contacting me by phone regarding this alleged debt (don't admit to it in the letter), and are only allowed to contact me by mail. "

This will only work with collection agencies because the FDCPA only applies to collection agencies, not original creditors. If the original creditors are the ones calling you, there is another law, but I'm not sure of the specifics of that since I've never had OC's calling me.

Also, do not sign your name on the letter - only type it out. Collection agencies have been known to move signatures to other documents. And send it certified mail, return receipt requested. That way you have proof of the day they received the limited cease & desist, and if they call you after that date you can sue them.

Good luck, I hope everything works out for you.

ITA/w this. I have used a similiar letter to CA's and it does work, doesn't remove the debt but at least makes it so you can answer the phone without feeling horrible.

Originally Posted by zersha

You know, looking back over your original post, I don't think I would file Bankruptcy for $14K in CC debt.

I know things probably feel hard and hopeless right now, but a Bankruptcy will be with both you and your dh for a long time. If they are all just CC's, the limited C&D I posted above will get them to stop calling you. Then all they can do is report it on your credit report for 7.5 yrs from the date of first deliquency. Depending on how old they are, they may not even be able to sue you depending on the statute of limitations in your state (usually 3-6 yrs). Even if they did decide to sue you, I'm sure a judge would take your financial situation and disability into consideration. Most big CC company's won't even bother sueing for small amounts. So if this 14K is spread out on several cards, it wouldn't probably be worth it to them.

Just something to consider. I've never filed Bankruptcy, but I would think it would affect your dh too. And it is pretty easy to get them to stop calling, so that would be one less stress to deal with.

Maybe things will improve financially for you and dh and you could eventually start paying them off using a snowball. (for example, dh could get a better job, your SSI could be approved, etc).

I also agree with this post as well, I have over 200K in debt yet I am hesitant to file BK because it does have a lasting effect. I know 14K when you have no way to pay it feels overwhelminng but I would be hesitant to go that route. If I were you, I would talk with a couple of BK lawyers as well as checking out one of the non-profit credit cousnseling places to see what your best option is. In your shoes my concern would be what happens in 1-2 years if your income does increase and maybe then you can pay off these bills.

Ultimately though you have to do what is best for your family. (((Hug))

Shay

[baileyandmikey]

Originally Posted by cravenab00

i've been through bankruptcy hell. I would never recommend it to anyone.

like the PP said, once you send a letter saying they may only contact you by mail, they have to oblige. I would start there.

14,000 isnt that much. What is your annual income?

me too almost seven years ago, i filed for about $15,000 and I wish I wouldnt have. I know now that there are ways of paying off that debt, which I truley owed. Think things over first...

[phatchristy]

$14,000 is REALLY a small amount for considering bankruptcy. Especially as it will be in your credit report for 10 years. Keep in mind, insurance rates and even employment can be determined by a credit score.

[angelpie545]

Thank you so much for all the feedback. After some careful thinking and discussion with my husband, I have decided not to file for bankruptcy at this point. Some things are going to be sent to collections, and we won't be able to pay them regularly; I have come to terms with this-but I would rather have that then a permanent mark on my credit for ten years. My mother offered to take over the payments of my three most important credit cards, so I'm fine with keeping those. As far as the others go, I'm not sure what we will do, but we'll figure something out. It is possible the our financial situation will greatly change for the better in the coming months or year, and I would hate to file for bankruptcy and then be able to pay things off in a year.

[VegAmanda]

We filed a Chapter 7 a few years back, and I wouldn't recommend it to anyone, especially with only a few thousand in credit card debt. Credit-wise, it made things harder. Sure, we have less debt, but we still had to look at subprime loans when we went to buy a house. Thankfully, we decided to wait and didn't fall into that trap. Creditors still call, but now instead of trying to negotiate payments, we have to fax them our bankruptcy paperwork over and over, and sometimes that doesn't help. They don't get less ruthless, and will still try to collect illegally. Some things, like certain college debt, can't be discharged.

It looks like a quick way out, but it's not quite that easy.