Thank you for the advice. First off I want to talk a bit about my thoughts on credit. Then I want to offer up what I believe the whole bankruptcy system is in the United States. Credit is a necessary evil. Americans are bigger consumers than in any other country in the world. If you look at the "welfare states" of Europe, where someone is taken care of from cradle to grave (Germany, France, Sweden, Amsterdam, etc) you see they have a higher rate of savings and a lower spending rate than the U.S. So who has it better? We don't have national healthcare (but the best healthcare sys in the world) but they do. We seem to have more homeless and a lower educational system as well as other problems they don't have, yet these other countries don't capitalize on their strengths. Credit has done great things to help the U.S become a stable country. On the other hand, credit has ruined many lives. While stories about the IRS going after people for back taxes may not be on our minds, there are so many people who have borrowed excessively. Red Fox and Kim Bassinger come to mind (she bought a GA town then she couldn't pay the bill) as people who had good credit and just went wild spending. How many of us could really say we could win the lottery and keep even HALF of that money in 10 years? Not many would as the need to spend and live above our means seems to be prevalent. It is so sad how many people are losing their standard of living because of this recession. However I am disgusted that people who make 2x my salary or more whine about not making ends meet. When times get tough we must modify our standard of living. Turn off the cable, stop going out to restaurants, spend time with friends or family at home. Does it get through to people that there comes a time when we must spend less in order to save for our futures? With credit people don't seem to understand! I know way too many single men and women with big @$$ suvs that get 14 mpg driving around aimlessly. These are people who don't have families to transport but simply want to show off. The problem is that they are using credit to maintain their standard of living vs. using their salaries to pay their bills. Someday the bill will come due and I hate to see what happens to them. It came due for me about a year ago and I did not realize it. Now I see that credit should be used in an intelligent way to improve my life. No one ever told me this. We are constantly bombarded with BUY THIS on TV, radio, the Internet and everywhere we go. The credit card companies do nothing to educate their customers on the use of credit. Their actions up to this point demonstrate that they could care less if we can't pay or over purchase. They want their money and expect to get it no matter our circumstances. The bankruptcy system seems very inept to me. I have actually spoken to ten BK attorneys up till now. Read seven books on chp7 and three on credit problems and counting. I've even sat it on several cases here in Florida and seen what the trustee did and how the cases generally went down. Honest people got screwed, greedy people got away with murder (they'll be back if they can...) and dishonesty seems to have been on one side of the court or the other. A local judge actually took away an old man's house because he was paying his c.c. bills vs. his mortgage. No family, no friends, and now he has almost no money and no home. It made the local paper. Very sad. The attorneys I've met had the range of attitudes one might expect in a divorce case! One guy was all about chp13 and shot me down when I mentioned chp7 (this was a few months back when I did have the job). Another woman was only interested in how well I could get the payments to her and if I was good at filling out paperwork (no doubt so she could take the $800 and put little into the case). Another attorney couldn't answer my most basic questions and had to consult his quick guide (I felt he either WAS stupid or wanted to blow me off). To make matters more incredible I have read that the local trustee is a real pitball when it comes to turning up unlisted property. No problems for me but...a local sports reporter filed BK a few years back and had the same trustee. He no doubt had much more than he listed but got away with it. So does this mean that the better someone is at coning the system the better they will come out afterward? I would hope the bankruptcy system is set up for people who have made mistakes in life or had a medical/financial accident that forced them into this. Not so. There are (maybe a majority?) people who file BK only because they don't WANT to pay their bills. Assuming they will be worse off without credit for years they still justify their actions and it DOES end up costing the honest debtor. As well as the c.c. companies and puts vile scum like NCO out there to harrass people into filing BK or settling with many fees and much frustration on top of the original debt. After my BK is over with I am going to live a much simpler life. To Hell with cars, people who judge me based on what I can charge and all the consumerism of our society. With a better view of what matters in life I hope to be my own boss or have a job I enjoy. I'll take the bus or a motorcycle or just WALK where I need to go. Unfortunately I will need credit someday but I don't look forward to that day. Living above my means is something that has been in my life from the beginning. That is not a good way to live and I hope others will make the tough choice and live an honest life where simple pleasures and family matter the most! Robert
I would seek legal help to find out in your state if you can they can bring suit for credit card debt. If they can not take legal action ove credit card debt than I would no do BK.
You said you were going to school. What are you studying to become? How long will it take you to graduate? What kind of income do you think you'll have when your're done? How committed are you to finishing? Those are the questions I think are important. If you're going to be in school for four or more years, by the time you get out, your BK will only have a few years left on your records. But if it's only going to take you a couple of years to finish, then you might want to think twice. I work with someone who filed a 7, went to school, graduated, and then did public service for two years to work off his student loans and wait out the negative effects of the BK on his credit reports; when he was done, he was clean and debt free. Other things being equal, I'd probably file. You walk away from a fair amount of debt, and clear the decks so you can focus on school. Also, the change in BK laws is coming up, so if you get scared about a judgment and try to file in the future, you might run into problems. When I was in your position I decided to walk away from the debt without filing BK and it worked out for me, but I was both lucky and in circumstances where it was easy to deal with the collectors, so I never got a judgment. If I had to do it over again, I'd file. It's just plain cleaner.
RefiBri, I have to strongly disagree with you. In 1993, after a horribly expensive custody battle, I finally gave up the ghost and filed BK - Ch7. The first thing was relief from all the harrassment and stress. I now got to use my money on the kids instead of lawyers and bills. After living on a cash and carry basis for 18 months, my landlord told us that she needed her house back. My hubby said, lets go buy a house! I thought he was out of his mind. Yet, 3 months later, we owned our own home. Six months later I started rebuilding my credit with secured cards. Ch7 is not as bad as the credit industry would lead you to believe.
Back when I filed I paid myself the money instead of trying to pay off the cards. This resulted in me having quite a savings account. Once you're behind it costs way too much to get current. It also gave me plenty of money to get secured cards and have peace of mind that nobody can come and collect from me.
After your bk is discharged and while you're back in school... as distasteful as it is.. get one credit card again. Just one... you need to reestablish new credit in some form and you can literally charge a Pepsi then pay it off every month... but you want something new in the model so you can later get a home... 24 mos is the golden number. No new credit problems in 24 mos and 1-2 good new trade lines and you'll be fine.
that is just so incorrect about handcuffing you... once the debts are discharged you can get a very competitive rate after 24 mos clean history or even immediately with a no doc (20%) down loan 2 years is really the max penalty for a mortgage... and in the interim you can do a slightly higher rate then refi after 24 mos... for a car loan... if you approach Ford or Cap1.. you can get a middle tier rate...and after 24 mos a reasonably competitive rate... and in the interim... the poster can save money and focus on school and not stupid debts. If the lesson is learned... then it's time to move on with life. Those debts will handcuff this person for far longer than will the bk... and for a much higher penalty (you won't incur 20k in 24 mos of higher interest b/c of the bk)... so financially... it's the better choice. Besides... how do you expect this person to pay these debts with no job anyway? magic?
I really think someone needs to point out that it *is* possible to get a BK off of your report within a relatively short time after the conclusion of its discharge. It doesn't work for everyone, but I've seen posts on here by people who made it happen.
In almost every state you can be seriously harmed (credit wise atleast) for not paying your c.c. debts. Only in PA and a few other states is the SOL shorter and you have more protection from money judgements (salary withheld or bank accounts seized). If I live in PA for instance, I could theoretically never file a BK and as long as I don't have salary the creditors would have to take a walk...after 10 years they could do nothing. No BK on file. Not much harm, only they are fouled Unfortunately I live in FL, one of the most pro-creditor states in the country. Well maybe next to Delaware. Robert
That sounds right to me. At least Chapter means it will be over and after the proposed changes to the BK laws, if you have over the median state income you will not be allowed to file CH 7. JP
Marie While alot of your advice is good, there is one area that is glaringly inaccurate..... "You may also wish to consolidate your loans if you have a bunch of different loans (lots of trade lines)... it's easier to keep up with... and when you consolidate... the number of forbearances and deferrals start over again so you can defer/ forbear your loans for quite a while legally by consolidating every few years. Interest rates have never been better... " Consolidating is probably an excellant suggestion. However, you CANNOT reconsolidate unless one of 2 scenarios occur... (a) you have a Federally Guaranteed Student Loan that was not part of the original consolidation or (b) you take out additional Federally Guaranteed Student Loans after consolidating. Also, it is NOT an absolute that deferment and forbearance starts over. It is up to the servicer(s) who currently has/have the loan(s). If the servicer reports on the loan verification certification that X-years have been used then it is incumbant on the new servicer to deduct that amount of time from future deferment or forbearance. This does not occur everytime, but I have seen it happen many times when dealing with the consolidation of a borrower. Marie, I am not trying to "hammer" or pick on you, but when I see advice that is glaringly in error, and in an area that I have expertise, then it is incumbant on me to respond. fla-tan
refiBri Do you work for a bank or something? I also do mortgages and have had little trouble getting people post BK a mortgage. The FHA's regs state that there is to be 3 years after discharge before you can get an FHA mortgage. Most conventional lenders state that they need 4 years before getting a mortgage, though there are a few that will go 3 1/2 years. Most conconforming/subprime lenders will do a mortgage post BK after just 1 year while there a few that will do a mortgage one day post discharge. That is the reality of getting a mortgage post BK. You can get a mortgage more easily and quicker post BK than if you try to set up a payment arrangement with each seperate creditor. BTW the previous statement is NOT a recommendation for BK 7/13 just a statement of reality. Also, getting a mortgage post BK depends on reestablishing credit post BK. fla-tan
Original poster: You said you were back at school full time. So you may be able to get a deferment on your student loans, which can be even better than a forbearance because it can suspend interest accrual on subsidized loans. Since your student loans won't go away no matter what you do, and their "installment" vs. revolving status makes them a great tradeline on your credit report, contact the lending agency and let them help you take the right course of action. -ingenue
Like another poster on this thread, when I was in your shoes, I opted to not file BK. Instead, I fought the CC companies and the CA's into a stalemate and let the SOL clock run out on them. It worked for me because of my circumstances and my character. I certainly don't recommend it for most people. I love a good fight and I don't get rattled or scared, so I was able to handle the pressure. I also didn't have a student loan. If a large chunk of your debt is not dischargable, then why file? The answer depends on your circumstances and character. Some things to consider. (1) I think people who are in severe financial straights spend way too much time worrying about their credit report. Your credit report is incidential, and a distraction. You need to step back and look at the big picture. If you unshackle your self-worth from your FICA score, you will be much happier. In my case, going delinquent on my CC's trashed my credit. But I don't care because I'm not interested in obtaining more credit, or at least within the time frame where it matters. I don't know my FICA score, and I really could not care less. I'll get my credit report cleaned up in good time. Worse case, 7 years of bad credit. BFD. (2) When considering BK, people also tend to focus on how it will affect their ability to get credit. They take the attitude that if your credit is trashed from being deliquent, then you might as well trash it with a BK too. Or the only question they ask is "When can I get another credit card?" That's right.... get right back under that yoke. (3) What people tend to forget is that the difference between a charge off and a BK is that a BK is a LEGAL action. It becomes part of your PERMANENT legal history. Unlike the charge off that must drop from the public record in 7 years, the BK will be on your legal (not credit report) history for your life. So what? That is the problem. You don't know "what". You don't know if down the line you are going to need to get a security clearance for a job. Credit, security, and job applications may ask have you EVER filed for BK (not have you filed in the last 7 years). You could run for public office years from now and have that BK come back to haunt you. (4) Judgements are forever. Don't allow any creditor to get a judgement on you. Declare BK before they do. A judgement can be renewed over and over in most states. Like a BK, a judgement is a LEGAL action. If you are going to have legal actions on your record, make sure they are your actions, not someone else's. (5) So why do a BK if you don't have to? Going delinquent on your credit cards does not always mean that you are going to have a judgement against you. The key is to walk that fine line between declaring BK and not loosing a lawsuit filed by a creditor for the period of time before the SOL expires on the debt. If you are up for the fight and have nothing too loose, then I would fight the creditors and not declare. If you don't have the stomach for it, then don't do it and hide behind a BK. If you have too much too loose, then file BK. What I did was pay for a BK filing and legal help to make sure it was going to stick. Then I prepared both for a long battle (5 year plan), and a chapter 7 BK. I stuck the filled in BK papers in my back pocket and declared war on the OC's and CA's. If things got to the point where a judgement was imminent, then I would simply walk down to the BK court and enter my papers. Then I fought CA's for 4 years. It wasn't that bad. You just have to be a evil nasty bastard and their worst nightmare. You have to be able to think on your feet and respond quickly to their threats. You have to keep THEM off balance. I am often asked why I expended the energy with this battle. The reason was simple. I found that whenever I waged war on a CA, it always ended with the same request from the CA: "Let us know your BK filing number". So I asked myself, "Why on earth would a CA want a BK number? What is in it for them?" Being the naturally suspectious person I am, I decided to not give them what they wanted on the theory that there is something in it for them. I still don't know what they get, other than the smug satisfaction that they have contributied to trashing my legal and credit history. I wanted to see how far they were willing to go to get me to file BK. Were they willing to engage in a long and expensive legal battle just to force me? I told them right off the bat that I had my BK papers ready to go and would never allow them to win a judgement. I also told them that I would fight them tooth and nail every inch of the way to court. I told them, and I meant it, that I was going to be their worst nightmare should them push me. Keep in mind that I was not going into battle empty handed. I took numerous defensive and offensive steps to prepare for a long bloody battle. I banked FDCPA violations to attack them with. I protected my assets and income from them. I set legal booby traps for them to step into to slow them down. I was determined to make this very expensive. The strategy is to move the battle from a legal arena to a business arena. You can't win the legal battle. They have all the laws on their side. You will get creamed. So you have to force them to make a business decision of how much money they are going to spend in order to get money from you. In order to get them to that point, you have to exaust the reserves they set aside when they opened your account, and when you went delinquent. Of course they can outspend you and force you into a corner. But will they throw good money after bad to do so? I bet no. Instead, they use that money to buy off Washington to get bankruptcy made illegal. None managed to get to the point where I would have been forced to use my "atomic weapons" and file the BK7 papers. Hmmmm.... I looks like I went on a rant there. Sorry. Anyhow, another perspective to consider. Cheers.
Very good post. I do have <i>quite</i> a few unsecured debts. $20,000 unsecured <i>alone</i> plus about $8,000 in student loans. Now I am going through my sixth BK book and will see an eighth lawyer before I file..many questions still unresolved. However, I can look forward to a good credit history <i>and</i> a good job once I finish my bachelor's degree. What does BFD mean if I may ask?
I wish I would have saw this post earlier. I filed at a young age.. Story similiar to yours but with MUCH LESS liabilities and a half of a job. No doubt your BK will be approved. I'm 7 years out almost completing my undergrad degree. Forget what you heard BK7 is GREAT. Save that moral crap for the politicians, Eron Exec's and Tony Soprano's of the world. Gainfully employed how long would it take you to pay those debts off? You don't even have a VEHICLE! BK7 is 10 years (fixed) vs. 7 years but as you stated that 7 years could turn into Indef. You qualify for student loan hardship and you could get more student loans as long as you stay current with student loans. The federal gov't don't care about the rest of your report! After you file... clean your reports. The offer's will come. Some crappy but take them, use them get better ones, dump older ones. You'll be surprised at what you would have accomplished.
