Is filing Chapter 7 bad or good?

Wow this is a toughie. Is this your only way out? Bottom line is "no." If you've eliminated every expense, the truth is you can start paying off your debts. Is filing ch 7 the end of the world? "No." Will you be able to get credit again? At some point "yes." But really think this through. Morally and ethically, they are your bills right? This is totally nothing personal, I want to help you think about some things, then you and only you can make the final decision. Bad part about it is, you have to live with it if decide down the road filing ch 7 was the wrong choice, there is no going back.
Facing all the debt you racked up is tough too. A lot of us have been there. Some have filed and some have not, then choosing to pay or not pay their debt as the case may be. None of us is any better than the other based on our decisions. Here is our situation. My dh and I have both been married before. Both of us got in way over our heads with debt in our first marriages. He and his ex decided to file bk, and 8 years later it STILL affects him very negatively. Would he tell you to file? No way in hades!! He wishes a million times over he hadn't. He has had to endure outrageous interest rates just to get a car (starting at 29.99 and the last was 12% only because he has successfully paid off so many auto loans...but he had to fight to get 12 "because of the bk" - they will use it as an excuse forever!) and credit cards. The mortgage is even worse, if it weren't for me we wouldn't have the rate we do.

He has had PERFECT credit for over 7 years and still, on 2 credit reports the bk shows up (rightfully so, he DID in fact file ch 7) so banks STILL leer away from him. You can forget doing business with most BANKs, and you will NOT get a business loan or credit card in most cases with a bk showing on your personal report. That's HIS experience.

Mine is that my ex and I decided it was our debt and we were going to pay it. Ironically even though the court told him more than half was his, after the divorce I ended up paying it (slowly but surely) because I wanted to repair MY credit. Did it take YEARS to dig myself out and fix my credit? YES! Did I hate having to deal with collection agent after collection agent and the stress of working on my reports and paying off debts while trying to make ends meet and be a single mom to 3 kids?? You bet it was more than extremely difficult! But who had to learn how to deal with credit and manage money? Who had to learn to appreciate it more? Who had to learn that tithing on my gross would be a bigger blessing to my income than I could have imagined? It is a TOUGH road to go down. But I would never change the way I did it, while my dh WOULD change the way he did it, because now we are in business and we rely heavily on our credit for working capital. Good credit gives a lot of freedoms when used wisely. I pray you make the right choice for you. God bless.

 

I agree it is a tough decision, but sometimes Ch. 7 is the only way out. Morally and ethically they are your debts, but then again everyone who files Ch. 7 discharges their legitimate debts because they either lost a high paying job or got in over their head. Amy is right. There is no "fresh start." The only loans you will be able to get are with high interest rates with lenders who will treat you like garbage.

If you had a job, I would tell you to go to CCS, but you need to have income in order for them to help you. If you do not mind me asking how did you rack up $50K in credit card debt as a college student. Thats where I got into some credit trouble also, but my debt was only about $14K. I got myself out of it without filing bankruptcy. I mostly used excess student loans and scholarships from being in graduate school to pay off debts. I got a pretty good job after my first year of law school and they hired me on permanetly after that summer so I was able to get out.

The problem is if you do not either settle or pay off your debts, you will probably be sued and they will obtain liens against all your current property and all your future property. If you are unable to pay these debts off soon, you are probably looking at Ch. 7. If you can find a job, Ch. 13 may be an option. Ch. 13 is on your reports for 3 less years and some lenders look a little (but not much) more favorable on Ch. 13.

As far as attorney fees as concerned, a typical Ch. 7 case here costs about $850 + filing fees. A typical Ch. 13 costs about $1500 + filing fees. With a Ch. 13, most attorneys will take half the money and let you pay the rest in your court approved payment plan. However, you would need steady income from a job to file Ch. 13.

Also, remember you cannot discharge your student loans, so you are stcuk with those.

 

P.S. - I should add that if you discharge any bad checks in Ch. 7, you will not be able to get a checking account anywhere. Just a thought.

Pay off if you are able to. Take the settlements if you can pay. Either way I think you are going to have to learn the hard way.

 

Re: Re: Is filing Chapter 7 bad or good?

I'm guessing you are a little overwhelmed with your situation. What have you been thinking about it lately?

 

There is a light at the end of the tunnel. Your situation virtually mirrors mine. I, too, came out of college, accepted a slew of "pre-approved" credit cards and defaulted on all of them. I had a car repoed, a couple of student loans in default & I still didn't get it. I tried to apply for a new car without having any idea what my credit situation was or what it meant to my future.

The more I applied for credit, the more I was denied. Finally, someone showed me my credit report and explained it all to me. They said, 'this is going to follow you for 7 years!' I thought I had been handed a death sentence! 7 years?! That seemed like such a long time.

I attempted to come to terms with one creditor, who hung up on me so I gave up. I decided I would wait the 7 years and not pay a dime to anyone. I did a lot of reading on credit and I eventually found this board. I read all the posts of people trying to "validate" bad debts that they knew they owed and I bided my time. I thought, 'why should I attempt to validate debts that are mine when I only have a few more years to go before they fall off?' I knew I would be rejected.

I hate rejection and I decided not to do that dance with the bureaus - until the time was right. 4 years into my "sentence" I applied for a new car and after a series of rejections I was finally approved at a high subprime interest rate due to my mid 400's FICO. I knew my 7 year sentence would be up in a few years and I needed to pay that car on time and that's what I did.

Finally my "sentence" was up and I ordered my credit report. I saw that the very worst items - the repo, student loans, credit cards were gone!!!

I had 3 items left, including a medical bill. I called the CRA's and disputed them as 'not mine'. They were deleted but they were due to fall off anyway.

I then applied for a Cap 1 secured card. I was approved. I immediately ran it up to within $50 of it's limit and then a few days before my closing date, I paid the total balance off. I did that every month so my tl would show the high limit - but with a zero balance due! I learned that from this board. =)

Slowly my FICO rose and so did my confidence. When I apllied for a prime card and I was instantly approved - I knew I had arrived!

That's my story. I did nothing to improve my scores other than to exercise my federal rights to have those negative items removed from my credit report after 7 years. There's no skill or luck required to do that. I put my trust in that law and I had the patience of Job.

If I can have perfect credit now - anybody can.

 

Filing bankruptcy was not an option for me. I would rather wait 7 years than 10.

 

When its discharged, come back here. Lots of good advice on how to rebuild your credit.

Good luck to you!

 

Re: Re: Is filing Chapter 7 bad or good?

Well, only you know what's best for your situation :/
I thought long and hard about it. I even consulted an eager attorney but I decided against it. I decided to wait. Yes it was a long wait but it paid off for me.

 

Re: Re: Re: Is filing Chapter 7 bad or good?

I didn't wait 7 years for a car loan. My credit situation was similar to yours. My car repo was still showing up on my credit report when I applied for a new car 4 years ago. Maybe the bank saw that the repo was ready to fall off in a few years and that's why they approved me. Or maybe they saw no new credit on my report, just the old bad stuff that would fall off eventually. Who knows.

But I can tell you that my FICO was in the mid 400's because the car salesman showed it to me. He also explained that the lone bank that gave me the loan was 'taking a risk with me.'

That bank is one of the top lenders in the country even though they have a subprime division. Yes, I received a very high subprime interest rate but I did get the car.

Maybe it's not too late for you to change your mind.

 

Re: Re: Re: Is filing Chapter 7 bad or good?

Chargeoffs are when a creditor writes off your debt to profit and loss.

As soon as your BK is discharged.

 

If it were me, I would send them an email, tell them you have filed for BK protection, and give them your lawyer's name, and contact information.

That's what you are paying him for.