I can tell you how it went with our personal bankruptcy. As far as exact laws and so forth, I'm not sure but I'll share our story from Arizona. We gathered up all our bills and went down to a BK attorney for a free consoltation. He went through the figures and said we are a good candidate for Chapter 7. Meaning, they would wipe all our debts free and we wouldn't have to pay anything to the creditors. This did not include my wife's student loans which we still have to pay. We also wanted to keep both cars so we listed them but didn't include them in the papers. We paid him $400 to get started. We paid an additional $300 two weeks later which covered everything. We got a case number and was told to refer any credit calls to him and he would take care of it. He also told us to stop paying any creditors immediately as that would just be throwing money out the window. About three months later we got a date for a 341 meeting. We showed up with our attorney. It wasn't a courtroom but a room with a table and microphones, etc. The trustee asked us a few simple questions. We said yes. He asked if there were any of our creditors present to contest and there were none. Took all but three minutes. We left, shaked the attorney's hand. It's over. I think we started the process in April or June and our BK was discharged in early October of that year. Chapter 7. We still paid on the vehicles and loans but had no more credit card debt. Exactly one year later (after October discharge date) we applied for and was approved for our first home. $124,000 four bedroom house. My wife has a $7500 Cap1 card and I a $2250 Cap1 card. I'm not sure about my wife but my scores right now, which is about 1 1/2 years post BK are around 615-620. If you have to do it, don't feel bad about it. Sometimes you just need a clean start. Now if you go with Chap 13, you will have to pay back your creditors but just not as much as you currently owe. Again for more specifics hopefully someone else will chime in. This is our basic story. Hope it helps. We learned a lot about credit. That's what got us in trouble (charging). A little wiser from the bruising.
Thank you broncsoi on your story. I am newbie, but I just wanted to explore what options are ahead. It was interesting for me to find out that someone can use the money and after that just file bankruptcy. Don't get me wrong I'm not saying anything bad about you. Who knows what's ahead for me. That's new to me, and that's why I want to learn about it. Thanks, Denny
Well anything you charge within six months you probably have to give/pay back. You can't go charge a big screen tv and take out $3000 cash advance then file. There are things in place to avoid any fraud. There wasn't anything fraudulent with our situation. Basically we were paying all our bills on time and had enough money for necessities. But when we went to go buy a house the debt/income ratio was incredibly high so we began the process of trying to pay things off. After a few months we realized we would never be able to get our ratio down with the money we were bringing in. So we filed to wipe out our debt. That was the only way we could afford to get our house. With the CC debt gone we were able to save up enough money to put down on a house after the one year period. Of course we didn't get prime rate on the mortgage but after three years we can refi for a better interest rate. So we decided, if we wanted the house, to bite the bullet for a few years. So we're paying proabably about $300 more because of the BK than someone who didn't file would have to on their house. But we also figured most of the money we pay each month goes to interest and we can write that off at the end of the year.
Two years from discharge, so long as you're credit has been clean you can qualify for a conforming rate on a refinance. The rules on that change from time to time.
