advise about bankruptcy

[mog]

anyone have any ideas that might help me out. We are thinking about filing due to all of our medical debt. Since husband got hurt and out of work since Aug 2008 and not is disabled and I lost my job, we have been scraping by but still paying everything and doing other stuff but occasionally putting stuff on the cc. We are still ok but since we were told that we have to pay back all of husband's disability from his former employer I have been freaking out. The lady that we spoke with said that they will only make 12 month payment arrangements --hello that is more than he will be getting for permanent disability and I am on my last extension for unemployment. I have been on so many interviews but I can't physically do certain things anymore due to my injury but I want to work and need to work, I feel so useless right now and due to that I have gained so much weight.
I don't know how to get going forward without filing for bankruptcy. Please help!!

 

[LittleDudesMom]

Mog,

I'm not knowledgeable in the filing of bankruptcy, but I do remember numerous discussions and advice on this site. I did a search of the CD site and found a bunch of posts about it.

Hope it helps,
Sharon

 

[Mamaof5]

United states is different from Canada (I'm a bankrupt) but I can tell you about it emotionally and mentally. It's not that bad!!! I believe there is something called a Chapter 13 and Chapter 8 in the States. One is like out bankruptcy and one is like our consumer proposal (one you are stuck with worse than no credit, the other you are stuck like someone has no credit rather than bad credit).

Maybe sit with a trustee and ask about both options? A consumer proposal is a document fleshed out by a trustee lawyer and states how much you pay a month in trust to the trustee who then distributes that payment among your creditors for you. It can take anywhere from 3 to 5 years with these payments. Never, ever miss a payment or the whole thing defaults and your creditors can ask for full upfront payment (my sister in law did a consumer proposal a few years back).

Bankruptcy is a fresh start, from zero (well negative, below zero). 7 years from the date of release from your bankruptcy is when you can really start to build your credit again. It doesn't take long either and sometimes you can start building credit again way before the 7 year mark (hubby did after 2 years because you can't go bankrupt for another 7 years and creditors know that, so they offer it - high risk creditors though).

Emotionally - it's a relief. No more phone calls for late payments or non-payment. When you do get the odd one you redirect it to your trustee. No more rudeness from customer service reps calling for money. However the pit fall is you can't own a certain amount of assets, you'll be made to sell off say a brand new 2010 vehicle or return it to the dealership. Own a house, it's okay. You can work that out with the bank through the trustee. In proposals, mortgage and vehicle are not included (you can exclude certain things from a proposal as compared to a bankruptcy).

I'm not a trustee, and the laws change every year so talking to a trustee is always your best bet, most trustees will give a free consultation. They do their fees on a sliding scale rate according to income of the both of you (at least here in Canada they do).

 

[klmno]

There's a Ch 13 and a Ch 7. One is where you pay back a certain amount, monthly, for several years. While it makes your creditors happy, it actually doesn't do as much for you in other ways. The other type wipes out your debt. You would need to talk to an attny in your state- it costs to file and the cost depends on the specific debt you have and costs of fees in your area. You're better off talking to an attny earlier rather than latere to find out the details, even if you decide to wait a while longer to file.

 

[CrazyinVA]

I declared bankruptcy about 11 years ago, after a 2nd marriage failed and medical bills from Oldest's illnesses were mounting. It was painless, although the lawyer did cost me $700. I was able to "exclude" certain debts from the bankruptcy and keep my car and kept making those payments, but did end up letting go of my house. I couldn't afford the payments, anyway. All medical and credit card debt was wiped clean. That's what Chapter 7 does. Chapter 13 is more of a "re-organization" of debt, and is typically used by businesses, not by individuals, from what I understand. While it killed my credit at first, after a year I was able to get a high interest credit card to have on hand just for emergencies and things like car rentals/hotel reservations, since you typically can't get by with a debit card for those. Here I am 11 years later, finally bought another house, and am still paying cash for most everything.

Emotionally, it was an enormous relief. No more collection calls. I was able to get my financial life back together and have a fresh start, clean slate.

The U.S. laws on bankruptcy have changed a lot in recent years, however.. so you really do need to see a lawyer to discuss your options. Many will do a free consultation.

 

[AnnieO]

I did this in 1997. It's supposed to be 7 years but doesn't actually fall off your credit report till 10. It does wipe everything out, but you may lose stuff like vehicle(s), house, etc. They can demand anything of value. I had to prove my car wasn't worth squat! And since I had an apartment, no home.

When I tried to get a car in 2004 - 7 years, 2 months after - I could not get a loan AT ALL. The loan ended up in my Dad's name, the car in mine. AND... Then the loan ended up on my credit report, because I was making the payments.

I was able to get a secured credit card, too.

 

[susiestar]

I would find a not for profit consumer credit counseling agency first. They will try to work out payment arrangements with creditors and will cut payments and interest usually. Talk to them to see your options and then talk to a lawyer about bankruptcy. The CCC agency is funded by the credit card industry and most will try very hard to convince you that bankruptcy will ruin your life. Get their proposal and don't make any decisions until you see what an attorney says. Do whichever one makes the most sense realistically. We did credit counseling and were able to buy a house less than 6 months after we finished paying it off. They handled all the creditors.

The trick to using a CCC agency is to make sure that EVERY payment goes through them. Do NOT speak to collection agents, refer them all to the agency no matter what they say. Collections people want to get you to make a very small payment because if you make a payment with-o going through the agency then the creditor can say the agreement is void and they can get out of the agreement. We had several try, though Discover was really underhanded about it - they even sent someone who looked like a police officer to our door with a document that LOOKED "official" that said we had to pay by six pm that day or they would take our car. We did NOT secure the card with our car, we only owed about $200 on it to begin with, and the "officer" got arrested because I called the REAL cops because we had been warned of this scam. I did it from upstairs under the premise of finding spare checks because my husband had the checkbook. The guy was really a collection agent who bought the outfit from a buddy who WAS a cop and he used it all over a three state area! There were many reports filed by people he burned with this charade because he left the document with people and it had fine print that said it was a representation of what a court document might look like if they went to court and filed a judgement. People just got scared and paid him with-o reading it. I missed that in the print but he just didn't LOOK right or sound right to be a cop in our area. His cop buddy got into trouble too because the fools reported his badge as stolen and left it on the uniform! (FYI - the police will very very very RARELY come calling to collect debt for a credit card. They would arrest you for fraud, embezzlement or theft, but they won't take a check to get you out of it. That is what tipped me off.) I have heard that recently Discover has cleaned up their act a bit regarding collections.

 

[donna723]

I had to file about seven years ago and just got out from under it last summer. I filed Chapter 13 and paid it back over time by deductions from my paychecks. I had already moved out of my house and it was on the market when I filed and they took a HUGE amount out of my check until it sold because they considered the property to be an "asset". Once it sold though, the payments went down a lot - but still a big chunk out of my check. I could have kept the house if I were willing to pay the higher amount but I HATED that house anyway and had already planned to move.

My experience was a little different though. I was told that, according to the rules, you are not allowed to incur ANY further debt while still under bankruptcy without the permission of the bankruptcy court. Maybe that's just Chapter 13, and maybe you can get a credit card if you kind of fly under the radar. But they told me that if you do something like that and they find out, the bankruptcy can be called off and you could be left holding the bag to repay the full amounts of what you owed. Mine turned in to a mess because while the bankruptcy court was paying off the last few payments on my car, a deer ran out in front of it and totalled the car! My landlord owns a car lot and let me drive a much cheaper car from his lot - the plan was that the I would use my insurance settlement from the wrecked car to pay him for the cheaper car. It would pay for it all except a few hundred dollars that he told me to "just give it to him when I had it". Sounds simple, right? NOT! First, the court wanted to keep my insurance check and put it toward the unpaid amounts! Then they told me that THEY had to approve any major purchase, like a new car, even an appliance! I had to explain that I HAD to have a car to get to work - well, duh! Hard to pay off the rest with NO JOB!!! Then, instead of sending the insurance check to me, they sent it to my lawyers office, who didn't tell me they had it for weeks! I was fit to be tied! Then, the court wanted to consider those few hundred dollars I still owed on the car as a 'new debt' and it took even longer and even more paper work for them to approve that! If I didn't have a very understanding landlord selling me the car, I don't know what would have happened!

Most people don't consider bankruptcy unless they have no other alternative, and if you have to you have to. I did. But just be warned that it is NOT an easy fix, and that if you file Chapter 13 you will be pretty much under their control until it is completely paid off! It did help greatly though. I would have never been able to pay it off otherwise. The balances were reduced, no more fees were applied, and the interest rates were cut to almost nothing.

What I would do if I were you is to find an attorney that specializes in bankruptcy and go in and talk with them. Many don't charge for that first consultation and they can tell you what your options are. If I had filed for Chapter 7, I would have had to pay attorney fees before the process was started. But since I filed Chapter 13, the attorneys fees were deducted from my paycheck deductions and I didn't have to pay anything out of pocket to get it started.