Discussion in 'Credit Talk' started by aladyleo76, Sep 29, 2003.

  1. aladyleo76

    aladyleo76 Member

    I am in a situation where it looks like I will need to file Bankruptcy. I have about $12,000 in debt. I lost my job December 2002 and was unemployed until June 2003 due to the weak job market. Needless to say, what I was receiving from unemployment was barely enough to cover rent, living expensed and my car payment. So, I was unable to make payments to other creditors because I did not have anything left over to give them. The employer that I worked for from June 24, 2003 to September 5, 2003 was not paying me on time and still owes me money. I am currently laid off and once again am on unemployment and trying to meet my rent, car payments, utilities and living expenses.

    The creditors are now contacting attorneys and I am unable to pay them what they want. So, I am in a situation where bankruptcy seems unavoidable.
  2. DanS

    DanS Well-Known Member

    With no assets and no income, you're "uncollectable". Unless you owe that $12k to one creditor, court/judgement is unlikely.

    I've done a Ch7 BK, but I owed a LOT more than $12k. I don't think it's worth the cost (time to rebuild your credit) weighed against $12k, which might be $3k when you settle down on everything. Your settles/lates will age better than a BK. And you might be able to get some of them deleted over time. Not so easy for a BK.
  3. mbelden

    mbelden Member

    Just because you cannot pay your creditors doesn't mean bankruptcy is unavoidable. You may feel like you are trapped right now but bankruptcy is a huge step to take with only $12,000 in debt. Avoid your creditors for now & settle with them once you get another job. When we filed bankruptcy it was because there was no way we could possibly pay off our debt within 15 - 20 years under good circumstances, with any problems (lay offs, etc.) it would have taken us even longer. We filed on an amount much larger than your debt. Take a long look at what you feel is right for your situation. What would happen if you found a job tomorrow? Could you pay those debts? Or would they still be hard for you to pay? If you think bankruptcy may be right for you contact an attorney who specializes in bankruptcy for a consultation. The attorney will be able to give you an idea of your case (if you file) and what will happen. Good luck & I hope you find a job soon.
  4. aladyleo76

    aladyleo76 Member

    Attorneys are asking like $750.00 to represent me. I don't have anything. Is there any type of organization to help guide people in thi situation?
  5. pd11604

    pd11604 Well-Known Member

    I would listen to the other posters who have been there...

    Bankruptcy creates a big problem for your credit history

    If you are "judgment-proof" you are probably better off dealing with the creditors/ CA's and going the validation route . It will take time, and you may have derogs on your CR's but not nearly as much derog time that you would have with a BK on there.

    I know you feel that the $12000 is a huge hurdle, but in reality, as far as bankruptcy is concerned it is not such a large debt.

    The absolute worst that could happen is that you get judgments against you, but if they can't collect anything, and the judgment stays on your report, it won't be any worse than having a BK on your report
  6. DanS

    DanS Well-Known Member

    I'm no expert on validation, but it feels like that's something one would do after the debt has been discharged. It feels like a very oppositional position to assume and could speed up any legal proceedings.

    My thought is to go the other direction, for now, and talk w/each creditor, explain the circumstances and make token payments. They will be aware that you, like more of the country than ever recently, are unemployed and essentially "uncollectable". Keep talking to them, make the calls yourself and don't wait for them to call you. This approach should buy you some time. You're already over 90 days late, so you can't hurt your credit much more with this approach.

    At some point, you will be able to get back on your feet. Try negotiating settlements and keep moving on. Overall, the cost and impact should be lower than a BK.

    Some people have already pointed this out, but if there's a way to get this paid in a few years, then BK is not the way to go. And your BK lawyer will get paid up front.
  7. broncsboi

    broncsboi Well-Known Member

    I agree that filing BK should be a last resort but if that is the road you feel you need to go down, it isn't the end of the world either.

    You WILL raise your score post BK eventually.
    You WILL still be able to buy a car/house, etc. albeit at a lot higher interest rates.
    You WILL eventually get credit again after a long while.

    But if you don't have the money to pay your creditors (and losing a job is a good reason to me) you don't have it. It sounds like is isn't for a lack of trying either. So make an appointment with a local attorney for a free consolation and see what he says.

    I've been down that road and perhaps I'm the exception to the rule but within two years of my discharge I've bought a house, have an Exxon Gas Card ($200), Dillards ($1,000), Capitol One ($2250), Roomstore ($3500) and Orchard ($300). Last time I checked my scores were a little while back and they were around 623. Granted the BK will be on my Public Record for the next eight years but I've got credit cards for emergencies or reservations and I have a house to live in. One car is now paid off and runs great (Honda) and we're putting money away so other than gratification, I'm not too worried about the 700 club....yet.

    Our debt was a little over $50,000 but we still were able to keep both vehicles and the peace of mind of not having collection calls or knowing I'm getting a fresh start did wonders for us.

    Sincerely though, good luck with your whole situation. Don't forget a little prayer to the Man upstairs never hurts.
  8. pd11604

    pd11604 Well-Known Member


    You are right, I didn't mean to say she should become confrontational, and immediately fire off a validation letter, but that she should not file for bankruptcy, and that her course of action be governed by what the creditor does. I meant "validation route" in the broader sense
  9. aladyleo76

    aladyleo76 Member

    Yea, except I have a $22,000.00 car loan to pay off also. I'm struggling as it is with my $415.00/month car payments, rent and living expenses. The car and a roof over my head are my top priority. What the creditors want per month is impossible for me to pay. Even when I was working it was almost impossible and the chances I'm gonna find a job paying me what I was making is slim to none. And it would take me years to pay down all of the debt. My credit is already destroyed and it would take me years to pay off everything. I was reading that even if you pay off your debt which takes the person an average of 7 years, it'll still be on your record for another 10 years. A bankruptcy is 7 years and gives you a clean slate to start rebuilding. With the way my credit is now, it would actually be better. I have two friends who have filed within the past 2 years and their credit is already improved and better than mine. I have a total of about $34,000 in debt if you include the car. The car payments are current and I do not have to include that in the bankruptcy. I can't possibly carry all the debt though. I was struggling when I was making good money. The economy has since deteriorated and jobs are not paying as well and many people are laid off, as I am right now.
  10. mike5000

    mike5000 Active Member

    I think one needs to look at what percentage of your income the debt is. If you have $100k/yr. coming in then $12k of debt is not that big of a deal. But if you only make minimum wage and pull in $20k per year then its no longer so easy to say.

    Of course, you always want to avoid BK if you can. However, there are times when it makes the most sense, even for what appears to some as a small amount.

    I went through BK lately myself due to unexpected unemployment and overspending. I was able to wipe out $120k in debt and get on with my life. With that kind of debt and NO income its a fairly easy decision.

    I found a BK specific site like prarielaw to be very helpful.

  11. aladyleo76

    aladyleo76 Member

    Thank you. That is out the most helpful information I've received thus far. What gets me is that attorneys want to suck money out of someone filing bankruptcy when they would obviously not be filing if they had any money! Talk about irony. I would think that there would be some kind of low fee or non profit organization to help.
  12. Flyingifr

    Flyingifr Well-Known Member

    To alayaleo

    I suggest you do a search for a series of posts I put on these boards a while back, On eof them deals with making yourself Judgement Proof.

    Read it and see how it describes your situation.

    My point is that there is always time to file bankruptcy, but do it as a last resort only - when they are about to jump on your paycheck - not when you have no paycheck.

    Also, read my posts about Understanding the Bill Collector and Understanding the Collection Agency (2 threads) - they will give you insight into how the other side thinks, and if you understand them you can defend yourself psychologically against them. Seeking a bankruptcy now is a panic move, not a well thought out move.
  13. DanS

    DanS Well-Known Member

    Your car loan is secured against the car. I hope it has a value close to the loan amount. Try to separate secured loans, like a mortgage and car loan, from unsecured debt, like credit cards. You can only discharge unsecured debt in BK. It gets trickier w/secured debt, especially if you want to hold on to the car/home.

    Do take a look at the threads about how collectors think. They will not waste time on you if you can not yield something for them. You are "uncollectable" and right now, even the IRS would leave you alone.

    You can get on the phone w/every one of your creditors and establish dates to reconfirm your inability to pay - say, three months, or one month, whatever you can get from them. Going into default is fine, you have nothing they can get (I hope).

    For now, your uncollectable status is your shield. Later, when you have some income, you can decide to pay off settlements or do a BK. You are only under fire because you think you are. Establish solid boundaries with your creditors and you can restore your peace. Will you enjoy telling them once a month your situation is no different? Of course not, but YOU will know exactly WHEN you are talking to them.
  14. Hedwig

    Hedwig Well-Known Member

    If I were you, I'd consider getting rid of that car and getting something cheaper. That would be several hundred dollars a month clear.

    The bankruptcy will be on your records for 10 years. For jobs paying over $75K and loans over a certain amount, the bankruptcy stays forever. My husband's still haunts him almost 15 years later.

    You won't have 7 to 10 years of bad credit after you pay off your debts. Once you get your payments current, you're on track, and seven years after that everything falls off. You could still be paying on bills at that point, as long as payments are current.

    But with the advice and techniques on this board, you'll get rid of a lot of those negatives in less than seven years.

    I know it sounds hard, but I've paid off almost $70K of debt and couldn't even consider bankruptcy. I'm not going to tell you it's been easy, but there's a good feeling to getting things paid off.

    Because of my job, bankruptcy was never an option, so when my ex-husband threatened to file, I took over all of the bills. At that point, my UNSECURED debt was about $77K and my salary was around $50K. That's been less than 10 years ago.

    My scores are around 700 now. I'm still paying debt, but their is definitely light at the end of the tunnel. And my salary has greatly increased, too.
  15. aladyleo76

    aladyleo76 Member

    Credit is too messed up to get another car and I've already paid 2 years on it. Car stays. LOL
  16. gli

    gli Active Member

    Have you contacted your state employment commission for help in obtaining these back wages? There must be a state agency that can help you with this.
  17. aladyleo76

    aladyleo76 Member

    As of today I have recovered alot of it. Although, I think I am going to have to go to the Dept. of Labor to get the rest.
  18. mbelden

    mbelden Member

    Re: Re: Bankruptcy?

    Just because you have paid 2 years on your car doesn't mean you have to keep it. There is a gerat deal of logic in selling the car and buying something much cheaper, you free up $400/mo! that you can use to pay bills once you find a job. When we filed bankruptcy my DH had to give up his car and buy an older, smaller car to drive. He went from driving a $30,000 SUV to a $2,000 Neon. Life isn't easy but you do what you have to. Sometimes we can't afford to keep things we want or like.

    With my car we did not reaffirm it in our bankruptcy but rather are making voluntary payments. The bank is letting us keep the car as long as we make the monthly payments on time, BUT we are NOT financially responsible for the car. At any point we can turn the car over to the bank and walk away since it that debt was discharged in our bankruptcy. This is another option you have if you file bankruptcy.

    Most bankruptcy attorneys charge $500-$1000 to do your bankruptcy plus you must pay court costs. Our attorney took payments and we paid what we could afford for months until we had enough to file.

    I wish you luck and hope everything works out. My DH lost his job back in Feb. & still hasn't found one. The job market is pretty stinky these days.
  19. aladyleo76

    aladyleo76 Member

    Re: Re: Bankruptcy?

    I've already considered getting another car but that simply is not possible. #1 I would not get enough on trade in to pay it off, vehicles depreciate as soon as you drive them off the lot #2 My credit is destroyed and I would not be able to secure another loan and I don't have money laying around to buy a car outright
  20. victoryvic

    victoryvic Member

    Re: Re: Bankruptcy?


    My situation is some what like yours. Not a lot but just enough for me to have not enough mopey to pay things off or current. My credit is shot happened in a matter of months. However, I have a house mortgage my income will go up for now Iam renting a room to a relative for 300 hundred but I know like you what car could I get with such bad credit. I need my car for work. also I do not have the money to pay an attorney for bankruptcy. My priority is to keep my house but it looks like the mortgage company is lying constantly and I may have to get a attorney just to repreent me on this alone. I am four payments behind and have three payments. I am waying my options on bakruptcy as well.

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