Currently, my FICO scores run from 512 to 525. I currently have about $9987 in unsecured, severely delinquent debt. About $1800 of that is under an SOL that expires in five months, another $7000 expires in a year, and all others are at least 18 months away. That $7000 has been recently DV'd (via CMRR) with no response yet. Assuming for the moment that all of the debt is actually mine and owed, and considering that my FICO scores are so low anyway, is BK7 something I should be looking into? Ordinarily I'd prefer to settle / pay the debts (assuming DV comes back valid), but BK7 seems attractive to me right now because my FICO is already so low, and I can only afford another $250 per month -- MAYBE -- in payment on these old debts. I also have another $15000 on a Sallie Mae loan (private "reeducation" loan used for career training). The loan is current with about 12 years left in repayment and was used for training at a non-accredited institution that didn't qualify for federal loan programs. Since it's a private loan, will it fall off from the bankruptcy? I'd like to fight these debts off, but at the end of the day, if they are legitimately mine, I doubt I have much left in the way of defense. And a judgement against me will result in my job loss (bankruptcy, however, will not) so that must be avoided at all costs. My only assets are my checking account and a car that is being financed. If I meet the criteria, is chapter 7 my best option here?
Correct. The $15k is a private "career loan" -- not a typical student loan. From what I've found (and please correct me if I'm wrong) this is dischargeable under bankruptcy.
You can bk anytime before a judgment is issued. If nobody sues, you have the option in reserve for later. With your credit already trashed, I'd start to look for opportunities to turn the tables on creditors and JDBs for FDCPA violations. Save the smart bomb (a bk filing) for the last instant. You never know the future ... and there may be unforeseen troubles down the road that you'll want to be able to use BK on. You won't be able to do that if you've already used it.
If the lawyer files a suit for judgement against me, can I still file for BK after the suit is filed but before it's heard by a judge? Saving BK for later is a good point, but I'm afraid that if the DV comes back verified, I'm SOL (and not the "statute of limitations" kind!). On the other hand, if this DV does NOT come back, I'd love to resolve everything using alternate means. So I guess my concern is, if I receive thorough, spot-on, unquestionable proof that the debt is mine on Monday, and the lawyer files suit on Monday (or worse, files suit the day he mails the validation), can I still file for BK7? To put it another way: I've got my finger on the trigger. What's the absolute latest I can file, and assuming the DV validates, is there a substantially better alternative? My CAs have thus far been in compliance with the FDCPA and FCRA. The only exception was an ignored DV sent to a CA, which wasn't sent CMRR (shame on me).
I wouldn't stir the pot too quickly, you might prompt a suit. You can file BK anytime. As soon as you file, the creditor is stayed (or atleast temporarily) from proceeding against you. As for discharging your student loan portion, that's debate able (durnit...where's spell check when you need it). If you would rather not file BK and or play the SOL lotto, I might have a couple of suggestions, if you're interested in repaying.
I'm not sure what you mean. I sent the DV CMRR to the lawyer, and now I'm just twiddling my thumbs in wait. I'm not taking any further action until I have an affirmative DV response in writing. If I receive a positive DV back, I'm willing to work out payment arrangements. I'd love to see frozen interest and a 25% settlement, especially given the age and proximity to SOL. I have a few thousand in savings (not $7000!) so I can afford a low-percentage payment-in-full. But I'm open to all suggestions. I'm hoping that the Prov account in question was one of the ones lost by WaMu, but I'm not banking on it since my report says CO in Sept 2005.
Of course if you question the debt and are trying to validate, by all means continue to follow up before paying anything. Assuming you don't dispute the continuing education loan, let's talk about just that one for now. Believe it or not, you have a couple of things in your favor. You have little to no assets and your credit sucks. The debts are relatively small, which makes you a less than favorable candidate for suit. Therefore, your negotiating power increases. My reference to stirring the pot was focused on (with all due respect to flacorps) "start looking for opportunities to turn the tables on the CA's". Instead, I'd look for opportunities to turn the table in your favor by using the creditors first. You say you can afford to pay $250 per month. Would you be willing to contact the CA holding the $15K loan to see if they'd agree to set you up on a Loan Modification/Forbearance Agreement, put you back in good standing and then after some consistant performance, report the debt to all 3 bureau's as a GOOD credit source in an effort to begin rebuilding your credit? Once the other debts are validated, attempt to follow the same procedure with them, until such time your situation improves and are able to contact them again to discuss possibly settlement. Do you have any family, friends or other private source you can borrow money from (i.e. family member loan ..pay back monthly no interest), this way the CA's dont see the inquiry on your CBR and hone in on you trying to rebuild your credit. BK Filing will certainly send your credit and borrowing potential backwards and in the long run cost you more money. You might as well use the creditors you got to begin rebuilding your credit as opposed to trying to do so Post BK Discharge.
Sorry, I should've been clearer - the student loans are in good shape. My reason for mentioning the Sallie Mae loan was that if I could cover it under BK, it would be nice to have that extra $250/mo open up for more productive things (like going into a savings account, paying down the other loans early, or reinsulating my house). But yes, my assets are pretty much nil. However, I'm curious -- you really don't think that single $7000 debt (to Prov) is big? I would have assumed that most collections lawyers are used to dealing with $1000 - $3000 plus court costs, so $7000 would be a nice big prize. And yes, I've actually borrowed $5000 from a family member in the hopes of remodelling my house (I have a very cheap contractor) and selling it at a slight markup, then using THAT money to pay down the debts. My area is undergoing a lot of development right now; we're slightly sheltered from the housing crisis so my cunning plan stood a chance of working. THEN I got the letter from the lawyer, and now I'm holding onto what's left (about $4000) in the hopes of dishing it out as a settlement.
No I think you should always get them to validate the debt, whether it be $7 or your $7000. When I referenced that your debt is relatively small I was really thinking about the entire $25K. Although $25K is alot of money to me, I think it's too small to file BK over and not try to resolve first. I missed that you own a house. Curious, what state is your property in?
Not own - rent. I'm renting a house (and live) in Pennsylvania. After the renovations are done (IF they ever get done) I might be able to help sell the house and keep the proceeds from the improvements. It's a deal that's far beyond the scope of this board or my story, but suffice to say that was my plan. Let's play ball in the opposite direction. Say this lawyer validates and I settle. I'll then go after all of my smaller debts (a lot of < $200 items) and probably get at least one or two knocked off. How long does it take before I see a noticeable change in my credit history? A year? Three? Five? I'm trying to weigh settling versus BK7. Since my FICO is already poor, and if it's going to take years and years to crawl back up, why not do BK7 and save some money in the process? Of course, best-case scenario is a lack of validation. From what I've read the JDBs often have a hard time with that.
BK7 is on the reports for 10 years, but it's verifiable (and the question is asked with no qualification as to how far back to look) forever. It can be done anytime, but if a judgment would cost you your job, you would want to do it before the judgment is entered. Conceivably, you could even do it orally in court after the judge rules against you but before the paperwork is completed.
That's good to know. At least now I have an "emergency exit". I've checked the chapter 7 requirements, and although I haven't yet met with an attorney, it appears that I meet the first set of criteria (my 6-month income is lower than the standard). I guess now it comes down to the worst-case scenario (again, I'm going to wait for validation first): Choosing between the damage caused by paying / settling all these old debts, or the damage caused by (and money saved by) BK7.
A couple of parts of the equation have been omitted: 1. Neither paying nor settling; and 2. Pursuing FDCPA and other violations of law against OCs, CAs and JDBs who violate the law. It can be like shooting fish in a barrel.
private student loans are treated the same as government guaranteed student loans under the new law. (i.e. very difficult, if not impossible, to discharge).
I'm with rocket on the student loan. Creditor only has to show at the meeting of creditors and argue that it's not dischargeable, and you'd probably see their attorney fees and costs tacked onto what you already owe. Also consider the legal fees and costs you'll incur to file. If I were an attorney I wouldn't file on your behalf before getting paid first. Considering the statements above are correct, you'd be filing BK to avoid having to pay $10K, but could cost you anywheres from $1,000 to $3,500 to file.
The same standard applies for private student loans and government guaranteed loans........... "undue hardship on debtor and the debtor's dependents" ETA: You would need to file an "adversary proceeding" to have a chance to discharge student loans. Attorney's fees for a Chapter 7 can be from $1,000 to $2,500 and that would NOT include adversary proceedings. The fee for the AP would likely run you another $3,500 or more.
I filed my own bankruptcy in Federal Court in 1996. It wasn't very difficult to do. (There were attorneys at the time who would file a BK for $300, but if I had $300 I would have paid bills with it.) There are several books and a lot of help on the web. The clerk at the Federal Court in New Orleans was also very helpful. I had no regrets over doing my own Chapter 7.
But the laws have changed in the past few years, it is more difficult now. I agree with JJAM, you have a lot of alternatives before you pull the BK trigger.
