Bankruptcy or bust?

I have spent the last two days reading the forum and trying to sort through all the advice and horror stories. I have $67K in credit card debt (6 cards). I make $73K a year and own a house (very little equity); lease a car (2 years left). Everything is current; my balance/limit ratio is obviously high; score is about 700. I've just hit the wall as far as payments go. I don't have enough money every month to pay the minimum on all cards.

I can't get any cash out of my house. I've researched CCCS and found out that they suck -- reaffirmed by this forum. myVesta.org is highly touted on many sites as being a great non-profit. I called and spent 20 minutes arguing with one of their "counselors" about why I should give them $3K (which I don't have) to negotiate with my creditors. All they kept trying to do was sell me packages for their services. So much for "non" profit! I also looked at debt settlement -- I don't know if that screws me too as far as my CR is concerned.

So then I read all the postings here about bankruptcy, plus some other stuff on the Web. I'm not sure I would qualify for a Chapter 7 because of my income, even though my mortgage is 50% of my take home and then there's a hefty car lease payment, student loan payments and regular living expenses. Chapter 13 doesn't sound like a much better alternative.

I guess what's scaring me about the whole process is reading all of the awful problems people have getting their reports cleared up after they declare bk. It's almost like you spend the entire 10 years stressed out just trying to clear things up. Has anyone ever had a positive experience?! Is there any other alternative -- is debt settlement so bad?

Diane

I don't think it would hurt to talk to a BK attorney to find out if you would qualify for Chapter 7.

If you don't qualify for Chapter 7, these would be some suggested considerations with regards to filing Chapter 13:

Your monthly payment(s) will be greatly reduced

You have "set period" in which the BK will be reported, 7 years from the filing date.

If you allow things to continue and run into a problem in "keeping up" you would run the risk of the following:

If the account(s) hit "charge-off" status, they will be reported 7 years from the DOLA.

The accounts will continue to accrue interest - more debt

You will get harassed by the creditors and/or collection agencies, via mail and phone.

If you end up being sued, you run into garnishment and lien issues.


I never advocate BK for anyone, I believe it's a personal decision. I think it's worth weighing the consequences and being well-informed.

Just a few thoughts.

There's a thread here somewhere about Equifax reporting a 13 for 10 years, in spite of their stating 7 years at their site.

I think the first thing to do is to meet with a couple bk attorneys for the free consultation and see if a Ch. 7 is doable, and if not, get the figures for a 13. Once you know what you CAN do, it's time to make a decisions.

Yes, bankruptcy will most likely screw up your credit and you'll have to pay for monitoring services IF scores are important.

But, that's nothing compared to having creditors and collectors hounding you for the next umpteen years. Not to mention the effect of new collections on your credit scores many years from now to collect these debts.

Of course it would be better to just pay the bill, but if you don't have the cash, that's not an option.

There is a thread somewhere on readers having some luck negotiating with MBNA after ccc, and I've also had a client with a good MBNA experience after the account was charged off.

But most creditors are morons when it comes to negotiating. Since it's a significant amount of debt, I'd check out the bk first.

As far as the reporting limitations, the DLA for a charge-off can't be any later than the charge-off date, often it's the date of first permanent delinquency.

Thanks, Christine and Trixie. I appreciate your responses. I'm making an appt with a bk atty next week. Guess I'll just document everything, take it in with me and see what he/she says. I'll keep you posted.

So does anyone think debt settlement is a good idea? What are the CR ramifications for that? I would think it would post like a chargeoff -- a 7 year black mark?

If you consider any type of settlement, you need to make sure you get everthing in writing prior to sending any money.

I'm not sure what effect settlement would have if the accounts aren't delinquent. (I think you posted that everything was presently being paid on time). I'm guessing it would have a negative notation on the account.

Another important thing to remember is; if you settle an account for less than the full amount, the OC or CA can re-sell the remaining debt to another CA for further collection efforts on the "unpaid" balance.

There is a way around that, but I'm not 100% sure exactly how it works. Something about requesting a 1099 (I think) for the balance and claiming it as income on your taxes.

I'm sure someone else will have input on this issue.

Get everything in writing, signed, sealed and delivered prior to making any payment.

With the amount of debt you're talking about, if each creditor settled for 50% or even 30%, you're talking about a huge amount of money out of your pocket, that will more than likely have the same negative effect as BK.

At least with either BK-7 or 13, there is essentially minimal outlay of cash and you would still have that 50-30% settlement money in you're pocket.

Gook luck.

I've seen that thread here about getting the 1099 as income for the write-off amount. In reading further about debt negotiation/settlement, it would appear that companies are only willing to strike a deal if they feel like they're never going to get the money any other way. You have to have a legitimate hardship that would prevent you from paying. I have a hardship of not enough money, but it almost sounds like you have to miss three or four payments to convince them that you're struggling. I'm at a disadvantage here because as far as the CC companies are concerned, I'm a good customer.

Right now I'm just stressing about being late for the first time in Feb. because my bills are due on the 3rd and I can't make all the payments. Course I guess if you are going to declare bk, having a 30-day late mark on the account isn't really going to make that much difference.

Talk to the BK attorney.

Don't stress, your not "late" until 30 days after the 3rd.

You will have an advantage over most people that file for BK because your not delinquent yet and have no charge-offs.

My parents were in a very similar situation as you are now. Excellent credit, little equity, over-extended. They qualified for 7 - they kept some items out of the BK (car loan & furniture account, which they continued to pay).

Approximately 2 years later, they bought a new car at a reasonable rate.

Believe me, if you think your "stressed" now, you have no idea what it's like to have CA's harassing you.

The key is learning from your experiences and not making the same choices in the future.

Choices are never easy. Just make sure you're "informed".

Trixie,

Thanks for that last post. I'm glad you told me about your parents. That makes me feel a lot better! I'm definitely going to go to the attorneys and discuss the bk next week.

I just followed Christine's advice and am looking at my "credit watch" on Equifax. (I used the link from your page, Christine, so you would get the referral!!) I signed up for the 30-day free trial. No big surprises, thank goodness.

The IRS doesn't count 1099s against you for discharged debts if you were insolvent. The definition of insolvent is when you owe more than you have assets.

Thanks, I've been meaning to mention that.

Many people who get those 1099s don't have to pay tax because they were insolvent. Does anyone know how the IRS reacts to that, what kind of documentation is required?

Should one include a financial statement with the return?

Is it insolvency at the time of PAYMENT or at the time of the CHARGE-OFF?

... file a homestead act on your house if permissible in your state, and use that 700 score to take a 125% equity line on the house and pay off the credit card debt. if the plastic isn't maxed out, it's easy to rotate balances to keep interest and payments very low-- MBNA gave me 1.7% for six months, and i was paying $53/month on a $22,000 balance. chase is great for this kind of thing--see if you can get 0% for a year; with that 700 score, you probably can. they did this for me, and now are offering me 1.9% not for a year, but until paid off. i calculated $753/month for 6 years to pay it all off, every last nickel. if you don't mind taking more time, you can pay as little as $470, and be rid of it in 10 years. at 2% it's pretty hard to go wrong, and my FICO scores adamantly refuse to make it to 680, even with 15+ years of absolutely flawless performance on debtload sometimes $1 million or more. although i've had the income and equity to maintain it, FICO scoring models don't take this into account. a computer can only work with the information provided, and can only do what it is told to do by its programmer. asked to make a purely objective evaluation, it cannot consider all variables unless the programer has made provision for them in his/her instructional construct. factors such as income, equity, LTV ratios, and whole dollar positions are not components of today's numerical credit scores; they are based entirely upon information contained in the prospective borrower's credit bureaus:- equifax, trasnunion, and experian [trw.] as we all know too painfully well, these three repositories, whose customers are not the consumer, but creditors themselves, have non vested interest in protecting consumer rights, self-enforcing or even operating under federally mandated standards of accuracy/compliance with laws enacted to protect consumers, and could give one fast flying fico about little worms like you and me. levels of accuracy of the data they retain on virtually every adult in this country, and the care they take to ensure that our little worm errors are corrected, and little worms don't get trodden undergreed, leave much to be desired. this is what formulates FICO scores, the perverse scale upon which our rights and financial futures are weighed, measured, and sent to slave labor or straight to the gas chamber. "fair," isaac? gimme a break! "links.. rechts.. links.. links... links..," und arbeit macht frei. the only thing worse than hearing the vile orations of hitler is to understand them, and this is not to say that i regret learning the german language, as i do indeed treasure its finer practitioners. all i can think of when i get stuck with a high interest mortgage or can't refinance my house because of my FICO score is the reading of "mein kampf"[my struggle,] and a research project on nazi-ism and rightist fanaticism, then contrasting it with stalin's lefticism. i speak no russian, so i couldn't garner a first-hand comprehension as i did with fascism, though the FICO mentality seems to appeal to the ideals of both political extremes in remarkable paraboly. it is now in an economic milieu that this abomination has resurfaced in practise, here in the most self-spoken free-market, democratic soviety on earth! what was once a healthy, competitive business environment has been transformed into a state sponsored, FICO controlled monopoly. means by which this was allowed to come about is irrelevant-- the fact that this has not only happened, but flourishes and continues unchecked, bespeaks short-sightedness and gullibility equalled only by the greed and stupidity of those in correspondent positions able to effectuate action against it. by the time they wake up and yank their heads out of their rectums, any power they may hold today will have long been sucked away.

traditionally, bankruptcy would brand a borrower non-viable for any kind of consumer credit for a 10 year age off; 7 for chargeoff accounts. perhaps a car dealer would sell you an $8000 car for $11,000 with a $4000 down payment, charging 18% on the loan and repo-ing the vehicle if you pay 14 days late. today, all that matters is credit scores-- people with bankruptcies as recent as 2 years get excellent mortgages and other credit with an adequate score. "old school" concepts of "good" and "bad" credit are meaningles. to make a long story short, don't concern yourself with what's on your credit report or how a lender might interpret it as you apply for new credit. chances are, its contents will never be seen or evaluated by human eyes. this virtual certainty is one you can bank on--:)*

avoid bankruptcy if you can. sue {UN} fair isaac if you can find an attorney willing to take the case. enjoin the recent class actions in process in philadelphia if you can get the attention of attorneys now too overloaded to take a phone call. never attempt to settle grievances with violence-- that's the next step down to hell; hitler and stalin both have private quarters there. one of my neighbors committed suicide saturday night, and the street was blocked off when i came home from work around 9 pm.

welcome to life in the 21st century- this IS "the future," nicht war?

Doug, I did check into the 125% loan through DiTech, and they were charging 15% interest. The payments on that loan would have been about $1,550 a month, I think, which is just about the same as the credit card payments. However, that total is for paying the monthly minimum on the cards, which doesn't do squat to get the debt off my plate.

Why do the homestead? I don't want to include my mortgage (first and second), car lease payment and student loan payment in the bk. I thought they couldn't take your house?

I know you said avoid the bankruptcy, but at the same time it sounded like you didn't feel it was so bad. I have made an appt with a bankruptcy atty for Thurs, so I guess I'll get his two cents on the situation. We have a legal program through work that costs $18 per month, and allows us to get 100% atty fees coverage for just about everything -- including bankruptcy. I signed up for it in December not even thinking about bk; must have been a psychic move on my part.

I'll post again once I talk to the atty. Thanks.

Diane

In general I'm very much against moving credit card debt on your HOME, especially when bankruptcy is an option and it makes sense to discharge.

I've seen MANY people lose their homes because they didn't discharge when they should have.

There's nothing like losing your HOME (http://creditforum.org/showthread.php?s=&threadid=1276)

Let's see what the attorney says.

Well, after having to wait an additional week, I met with the atty today. I'm going to file for chptr 7; he feels pretty confident that the petition will be accepted. With keeping my first and second mortgages, car lease payment and student loan payment out of the bk, and with standard monthly expenses, I'll be paying out slightly more more than I'm taking in, but it's worth it just to get the CC debt off my back.

So hopefully the petition will be filed next week and we'll see what happens.

Been wondering what happened, thanks for the update.

A Ch. 7 sounds definitely like the way to go for you, hopefully everything will go smooth.

Keep us posted!

Thanks, Christine! I hope it goes smoothly too. Looks like Shylock and I will be traveling down the bk path on the same schedule. It will be interesting to see which one of us encounters the most pain. :) I feel very lucky to have discovered this board (and now creditboards.com where I registered yesterday) -- I sure as heck wouldn't want to go through this experience alone.

I have two cards which have zero balances -- The Bon Marche (div. of Federated/Macys) and Sears. It will be interesting to see if they allow these accounts to continue to stay open once they find out about my filing. My mom is going to put me on her Citibank card as an authorized user -- when should I have her do that? I read posts on here about AU, but not sure if this has to be done after the discharge or what. I really don't want to be without a credit card for 90 days. Not because I want to start spending again (god forbid!); I am going to have to rent a car in a couple of weeks, etc.

Being an AU should not be an issue at all, request that any time.

Regarding the other cards with the 0 balance, it might well be that they get notified of the filing through a data service.

Now, I *think* you should be able to use these accounts AFTER the filing, as debts not to be discharged.

If you buy some "household" item and have a balance, they may let you keep the cards even if they find out that you filed, rather than just closing the account and not getting paid.

The one thing you really do NOT want is a reaffirmation.

Diane, I have too file BK7 recently. I lost my $70k+ Information Technology job after 25 years and wasn't prepared financially. I have $110k in unsecured debt, a $135k 1st and 2nd mortgage, $25k student loan, $10k upside down on a car and did I mention, no job. I have an degree in Information Science and an MBA. I've tried everything and still, no job. I'm about ready to start looking for a warehouse job or some other manual labor.

Credit Counceling is out of the question for me, if they cut my credit card payments by 90% I still wouldn't be able to afford them, so it really was an easy decision. I file BK7 1st week of Jan. and my 341 meeting is the last week of Feb.

My credit report is already starting to look like a mess. My score before the filing was 650. It is now 480. Certain creditors have the accounts listed as charged off and others have it listed "included in BK" while others leave the accounts open and keep reporting them as late.

The score is low because of all the negatives. I intend to wait about 2 months after the discharge to begin cleaning up any inaccuracies. It takes many creditors that long to get the information updated. All discarged debts should read "included in BK" or something to that effect. None should have any balances listed or be listed as late or charged off. Some do list them as "Incl in BK/60 days late" or "Incl in BK/Charge Off" but I am unsure if this is any worse than a simple "Incl in BK." Charge Offs and Late Pays without the Included in BK will hurt your score more than the "include in BK" buy itself. Balances still showing also hurt becuase a potential creditor will still see these as potentially collectable. I will dispute anything that is inaccurate until they make it correct.

As soon as the debts are discharged, I intend on getting 2 secured credit cards to begin building my credit. Once I get the CR cleaned up and accurate, I may go to my friendly bank or credit union and attempt to get a uncesured card or personal loan. If that is not possible I may go with a secured personal loan. I will be honest with them, take my recent credit reports with me and talk to the finance manager about my prospects BEFORE I apply for anything. You don't want anymore "hard" inquiries on your report than are necessary.

Within 2 years, I should be able to get 2 unsecured cards. I will use these so there is activity. At least once, I will take the balances near the maximimum and they pay them down quickly. This will get my maximum credit used on the card high but will keep my costs for interest down. Of course all payment must be made on time.

By this time. I truely expect my score to be better than when I started and I will not be facing the impossibility of paying that $110k back in my lifetime. Do I feel bad about this? Not really. I've been this far in debt for 5+ years and to be honest with you, overall they (the blood sucking credit granting thieves) have already gotten a decent return on their money. Actually, they have not all been blood sucking and I do feel more remorse towards some than others. However, I would never get myself in this mess if had it to do over but that is not an option. I was stupid. I learned. I need a "fresh start" and BK is providing that for me. In the grande scheme of things, my finances are of very little importance.

m5k

Mike - you're using the tools provided by US LAW to get your fresh start. Your case is exactly why these laws are in place.

Rainlover - BK law doesn't require that you list credit cards that have "0" balances. These are potential creditors, just like every other creditor out there. Also, many creditors don't bother to run a credit check (costs money) on accounts that are current, so try to stay that way when you use them. If you do list the zero balance cards, they'll be notified by the trustee and 99.9% chance they will be closed.

You can be an authorized user on a credit card at any time. Your obligation will be to the owner of the account. Debts incurred after filing BK can't be discharged in your current case (some exceptions in Ch13 prior to confirmation).

A good thing to remember: NEVER reaffirm when the value of the collateral is less than the debt; and NEVER reaffirm an unsecured debt.

Thanks Mike and Elmo for your input. I am looking forward to discharging all that debt, but feeling very stressed out about it at the same time. Does the notice to your debtors go out as soon as you file, or is after your 341 meeting? My attorney told me not to pay any more on the cards I'm about to discharge, but I will be 30 days late on one account on March 7th. We file this week. So I guess I'm wondering if it takes two months to get a 341 hearing (as Mike mentioned), do I get the BK protection immediately or not until the trustee decides to accept my petition? Sounds silly, but I hate to mess up my CR any more than it will be with the BK on it...

The creditors get notified right away, and you have bk protection as of the filing.

Elmo, how do you feel about car leasing? Not personally, but in terms of BK. :) Just curious because it is secured debt, at least for the lender, but I'm not getting any equity out of it. And I want to reaffirm the loan because I need a car, obviously, and I'm current and in good standing with the lender. The payments are high, but I can't imagine anyone giving me a car loan at a decent rate if they see I turned in the car for a BK.

Reaffirmation = currently delinquent for scores even when paid on time? (http://creditforum.org/showthread.php?s=&threadid=1092)

Does the notice to your debtors go out as soon as you file, or is after your 341 meeting?
The stay is immediate. The notice may take a few days to go out. It took 6 days to get my BK setup. Some creditors were notified by electronic transmission 7 days later and the other creditors were served by first class mail 8 days later.

The creditors cannot legally do anything once the petition is filed and before the discharge without first requesting a release of stay for that particular item.

My attorney told me not to pay any more on the cards I'm about to discharge, but I will be 30 days late on one account on March 7th.

That's the way most people do it. I have yet to determine if paying up to the last second to avoid any late pays on your credit report would actually be any advantage or not. As I said earlier some will add on that late pay to the "Included in Bankruptcy" notation. I don't know if the additional late notation hurts your score. Does anybody know for sure?

I am 6 weeks after filing and some are still listing my account as open and getting later. Others list them as "included in BK/30 days late" etc. All my history showing that I was on time for the past 2 years is gone. Everything gets rolled into "Included in BK/30 days late." This makes things look worse than they actually were but I'm not so sure it really means that much. I sure would rather have everything just read "Incl in BK" as I think it should.

I'm wondering if it takes two months to get a 341 hearing

That's about it. Sometimes it takes a little longer because so many people are currently filing. Many BK courts are jammed at the moment.

Sounds silly, but I hate to mess up my CR any more than it will be with the BK on it...


I hear ya. I feel the same way. Unfortunately, when you file for BK you are entering into a war. At the best, it is you and the BK court against the creditors and the credit reporting agencies. If you were seriously late and had charge offs you need to add the collection agencies in there.

To win any war, you must become educated and learn about your opponents. You have rights and you need to get to know them. You must use diplomacy and have a strategy. It is a war that can be won but you must put up a fight or the opponents will win too many battles. You could hire somebody like Lexington Law (One of Christine's favorites :) ) however, they will NEVER do the job for you that you could do for yourself. There is no easy way that I know of. If anybody knows of one please let me know.

m5k

"Elmo, how do you feel about car leasing? Not personally, but in terms of BK."

One of the key items when planning BK is to have a car you can depend on for 2-3 years. Its ironic that you can go out and finance - or lease - a new car with tons of pre-BK debt load, but once you've decided to get your financial life in order you're no longer 'credible' enough to deal with. Irony still, is that you get to keep the new car, possibly without reaffirming, because its not worth the loan balance first day off the lot!!

We're currently in a 5-yr Ch13 100% payback with a leased car being paid outside the plan. We've had no problems with our lease company or trustee, but there are yellow flags to be aware of. More so for Ch7 than 13 because of asset liquidation. You'll need to read the fine print on your lease to make sure these don't apply:

For one, if not properly indemnified by the leasing company, some leases can be interpreted as a "purchase" by the Ch7 trustee (e.g., Chrystler's lease/purchase plan). If it's determined that there's significant non-exempt equity to boot, the trustee can sell your vehicle.

Another potential problem is that sometimes in the fine print is wording that makes the contract null & void if bankruptcy is filed. There is usually no distinction between Ch7 or 13 with this clause. If it's in the fine print, the leasing company can get a relief of stay and reposses. Both cases are rare, but both have been known to happen.

Whatever you do, get a good / affordable car before filing and reaffirm (if necessary) to keep it after you file. Getting another can be a humiliating waste of time up to a year after filing. It'll take at least two years - if you work at it - to rebuild your FICO score to get in on the better rates.

Be sure you file the reaffirmation agreement for the loans you are keeping. I told my atty that I wanted to keep my car loan out of it, so it was not discharged. However, on my loan on my credit report it kept being reported as included in bankruptcy/discharged. Well long of the short, it took me a couple of years to finally get anywhere with it with the finance company and credit bureaus on it and they told me that even though I continued to make payments on it for a couple years after the BK until I traded it in, it was still considered part of the bankruptcy because I didnt reaffirm the debt which is something my bk atty never told me about. They told me I could have just turned the car in at any time and walked away. I only wish I had known that instead of making timely payment for another few years only to not get any credit for it and being upside down when I traded it in.

Charlie

Charlie - In Ch7 the only time you're allowed to keep the car is if you owe more than its worth, or if you have equity, it doesn't exceed state exemptions. If this is the case, you can continue payments without reaffirming if you want to keep it.

Some states don't require that you reaffirm your car or your house. You can keep both as long as you continue to make timely payments. In the states that do require reaffirmation, and you choose not to, the lender can repossess at their discretion thru relief of stay or after your discharge - whether you continue making timely payments or not.

There is NEVER a reason to reaffirm if: 1) your state doesn't require it, and 2) the amount of the loan exceeds the value of the collateral. With timely payments the car can't be repossessed, and you will never be upside down on it because the negative equity was discharged in BK with all your other debts (as long as you didn't reaffirm).

Elmo,

I know they didnt discharge any negative equity in the car at the time of the bankruptcy. So by making timely payments on the car should the finance company have been able to list the debt as included in bankruptcy. On my credit report it says Discharged in CHapter 7 BK/Never late. Somebody at the finance company (arcadia financial) was the one that eventually told me in order to have not had it included in the bk I would have had to reaffirm the debt otherwise if I continued to make payments I could have kept the car or just turned it in to them if I didnt want it anymore. Which I definetly wanted to keep the car, but probably wouldn't have if I had known it was still going to be reported as a negative item even though I never had a late payment on it before or after the bk.

Thanks for your help. I was living in Texas at the time, so what ever the Texas rules are would apply.

Charlie

Charlie,

The CRA's tradeline was correctly reported, specifically for the reasons they gave. Since you had to list the debt in your petition and you didn't reaffirm, any negative equity that would ever occur on the car could never be your responsibility.

So, in fact you did discharge the (potential for) negative equity during BK. Its just that it wouldn't be realized until you got rid of the car, either by trade-in or repossession. So, yes the lender correctly reported "Discharged in Ch 7 BK/Never late" to the CRA's.

Truth of the matter is that you did the right thing, first of all by keeping the car, and secondly, by not reaffirming since you were 'upside-down'. Had the bank decided, for whatever reason, they wanted to reposses, you would have been sol. Finding a lender just after BK can be done, but more than a little humiliating. You'd have ended up needing 20% down for a 20% scam-loan.

We're currently in Ch13 / 100% repayment plan(Texas). Two weeks after filing, I lost my company car for a car allowance & mileage, so I was forced to go shopping. I can tell you from personal experience that you did the right thing - keeping your wheels. Even though I've never been more able to afford a car because of very favorable Ch 13 "bill consolidation", combined $150K wife & my salaries and previous A+ credit rating, I was turned down at 5 different dealers in one week because of BK. Of course, after the first decline, its all downhill from there.

All worked out for the best since I came clean with my employer and got a 6 month policy variance to keep the co. car. Now, its a race to see how much I can save cause I'll be paying cash for whatever it is. It's that, or reward sleaze-bag sub-prime lenders for scamming people just because they can.

Elmo, thanks for the information. I guess I dont feel so bad about it now that you have explained it all to me. That part of my bk really bothered me the past several years since I could never get a straight answer on it and I thought by doing the right thing with the car I still ended up on the short end. But I see now it was all the right things to do. Thanks again,

PS, rainlover sorry for tagging on to your thread.

Charlie

Hello all,

I have a similar situation and I am starting to think about what needs to be done. I have my 341 in a few days.

I have a primary mortgage and a second mortgage on my house. In my papers I said that I intended to keep the house. I have been current on payments and still am.

I pulled CRs and the primary lender TL status is Pays on time/Never Late. Good so far. The second mortgage TL says "Discharged through Bankruptcy Chapter 7/Never Late." Recent Balance: $0/paid as of 01/2003

I called the 2nd mortgage lender and was basically told that that is the way it is supposed to read. I did confirm with her that the loan was still open otherwise and as long as I paid no foreclosure etc. was scheduled. (She also told me she knows nothing about BK but did consult with someone else for several minutes)

I am a few thousand dollars upside down on the combined mortgages. I live in Pennsylvania and I haven't talked to my attorney about this yet. I do not know if affirmation is required in Pa. Does anybody know if one is required in Pennsylvania?

Should I leave it as-is (assuming I do not have to reaffirm) or should I look into reaffirming, even if it isn't required?

If I leave it as-is:
- If I need to default on the house they cannot come after me for the upside down part
- It does artificially reduce my debt/income ratio

If I get it back to Pays on Time/Never Late:
- I will have an additional postive mortgage TL

Any input will be appreciated.
Thanks
m5k

Mike,
In PA Chapter 7 you need to reaffirm to keep your house safe from foreclosure.

http://www.pennsylvania-bankruptcy.com/chapter7.html

"You may keep certain secured debts such as your car or your furniture or house by reaffirming those debts. To do so, you must sign a voluntary Reaffirmation Agreement."

There may be technicalities regarding how the 1st & 2nd mortgages were perfected and the ability or desire of the 2nd mortgage lender to foreclose with negative equity. In other words, foreclosure on a properly perfected contract by the primary lender would allow the 2nd lender only those funds available after paying the entire loan amount of the primary lender (a true equity loan). This may not be very much, if anything, at a Trustee or Sherrif's sale, and they know it.

When it comes to your house and you plan to keep it, its best to play it safe and reaffirm both mortgages. If you plan to reaffirm the 2nd mortgage (advisable), then establishing a good relationship with them will help to assure they will work with you to correct the tradeline.

Just kidding... it's great to read all this stuff. I just did a bunch of research on freeadvice.com. It's interesting how different the boards can be.

My filing will be March 3rd; I've decided not to reaffirm the car lease but will continue to make payments on it. That way if I really go under I can just walk away from it. Luckily for me (or unluckily?) my first and second mortgage, car loan and one of my soon-to-be discharged credit cards are all from Wells Fargo. My bank account has been there for 20 years too. Since I'm continuing to pay on the big ticket items, maybe they'll look more favorably at me when it comes to reestablishing credit.

Sure hope you have better luck with WF than most people.

And apparently you didn't see my previous posting:

Reaffirmation = currently delinquent for scores even when paid on time? (http://creditforum.org/showthread.php?s=&threadid=1092)

I'll even summarize it:

Do NOT reaffirm!!!!!!!!!

Possibly not being able to keep up with the payments is a good reason, but isn't the destruction of your credit a MUCH BETTER REASON?????

And, I'm not responding to questions by others in THIS thread - there is a "new thread" button. While I TRY to spend several hours a week just on splitting and moving threads, I sometimes just don't have the time.

PLEASE post new problems in new threads!

I did see your post, Christine, but it didn't make sense to me why the CRAs would report on-time payments as delinquent. Of course most of the things I read here don't make sense -- what a racket TU, EX, and EQ have going. I just needed to get the whole thing straight in my mind. I read everything about reaffirmation I could find on the various boards, and agree that I'd rather have the discharged notation on my CR.

I found only one negative story regarding a car lease. Someone did not reaffirm and had their car repossessed, even though they were on time and had no lates. And the loan was upside down. But that seemed to be the exception; most others just kept paying on the loan as if nothing had happened or turned the car in.

I hope you've had time to finish your filing -- I admire your persistence and ambition!

Christine,
I appologize for highjacking this thread. In retrospect it is clearer to me that I did but at the time it didn't seem so.

Update
I had my 341 meeting today. All went well. As many others have stated, it really only took about 5 minutes. Once I was sworn in and my ID was checked I was asked questions such as:
Do you live at.....?
Are you the only owner?
How did you value the house?
Do you own any other real estate?
Did you look over the papers before you signed them?
Do you have an assets that are not listed?
Do you expect to receive any proceeds from an inheritence or insuarance in the next 180 days?
What do you think is the reason you are here"
1. loss of employment
2. mismanagement of money
3. other
The trustee thanked me and wished me luck.

Sears was there. I owe about $800 and they offered to keep account open, lower balance to $500, lower CL to $750 if I reaffirmed. I have 60 days to decide. Probably won't but I'll think about it.

I questioned my attorney about reaffirming the 2nd mortgage since they are reporting to the CRAs as "Incl in BK" and from what I understand, that is the correct status without a reaffirmation. My 1st mortgage is still reporting Open, Pas On Time. He said there is no requirement to reaffirm in Pennsylvania. So I discussed the pros and cons with him. It's not cut and dry. I am currently still not working and I really don't know when I will be again.

If I reaffirm:
They may be a little easier on me if I get behind in my payments.
I should be able to get them to report the TL as Open/Pays on Time instead of "Incl in BK"

If I do not reaffirm,
I can just walk away from the house and even if I'm upside down, they cannot collect the difference. However, my attorney tells me they hardly ever go after anybody for the difference anyhow.

I'm going to wait and see if I can't get back to work in the next 60 days before I do anything. In the meantime I will be doing more research.

m5k

Hello All.....I'll be interested to read on how you guys make out....I am in just about an identical position(no lates.....YET.......but barely scraping by with the minimums with nothing left over. There is so much info out there....one day I'm leaning towards CCCS, then I say CH 7 all the way! The next day it's "maybe negotiaition is the way to go"....I still haven't made up my mind but I'm leaning strongly towards CH7 as ALL my debt in in Credit Cards........good luck to ya and I'll be keeping tabs.

I'd like to hear how you guys are coming along.......Post when you get a chance.....although I am sure you're pretty overwhelmed at the moment.

I'd like to hear how you guys are coming along.......Post when you get a chance.....although I am sure you're pretty overwhelmed at the moment.

Still looking for a job and waiting for my discharge.

m5k

Same with me. Filed and waiting for 341 date. Have paid for CreditWatch for a year so I'll take a peek at my CRs after the filing goes through to see how much I've tanked.

Thanks for the updates guys.........anybody have any probs? Any sticky situations I should know about? Hope everything's goin well....or "as well as can be expected". I have decided to file. I have a car note for 6k I wanna keep paying on. Do you guys have car notes as well? and what did ya do?

Oh I've been thinking about reaffirming Sears but I'm back to NOT doing it. I still haven't contacted them to ask how it will be reported but even if I do, I can't belive what they say. I think a clean break is the best way to go. If they want to come back and get their $450 appliance, so be it.

I did have a car that I was about $14k upside down on. I stated in my filing that I intended on surrendering the car and they came and got it 7 days after I filed. My father owns a vehicle that I can use so it is really no big deal and it provides me the opportunity to knock off another $14k in debt making for an even better fresh start.

My attorney did get a letter from Circuit City stating their interest in a few items I purchased in the last year. He suggested I ignore, which I will do. It is for 4 small appliances totaling about $450 total. They can come and get them if they want. Like Sears, it will cost them more in legal expenses than they are worth so I don't expect to hear from them.

Other than that I am waiting patiently, moving on with my life and still looking for a job.

m5k

My 341 hearing is on May 1st. Creditors have stopped calling me FINALLY -- last one was Discover Card, which was absolutely harassing. I finally called them up and had them put the BK filing date and case number in my file so that they would cease and desist. Now my phone is silent...

What's funny is that Sears, who of course is Discover's parent company, sent me a letter last week that they were closing my account (zero balance, perfect standing, never late, not included in BK) because I had filed. I'm not surprised, as they're pretty nasty. We'll see if anyone shows up at the hearing to object.

I think Sears and Discover are no longer related. And that letter could come in VERY handy once you're discharged send it to the bureaus with your disputes.

Went to my hearing this morning and was excused. The only question he asked me was what the strike price of my stock options were (they are not 100% vested and are under water right now anyway) -- I think he was just curious. It was a little strange being in a room with a whole bunch of people listening. None of my creditors showed up, so it's onward and upward. I'm going to wait until the discharge to check my CR. That should happen about July 1st.

That's good news! Now all you have to do is wait. :)

I got a copy of my Equifax credit report (I subscribed to Credit Watch) and my score has gone from around 700 to 486. It seems that Citibank and First USA did not receive a creditor's matrix for the BK and are reporting me as past due/collections. I haven't received a phone call or a letter from either of them, which is kind of strange. So I had to dispute that and a few other things and NOW I guess I'll sit back and wait for the tradelines to clear up. I hope I don't have to battle to get the collection info removed. Christine, does a score go up once the BK is discharged? Or is it just going to remain around 520 (I'm figuring I lost about 40 points with the collection stuff listed) until I get some new things on there?

Where did my post go????????????????????????


[edit] - I see where it is.......thanks Christine........and I agree BK should have it's own section....I wish there was one at creditboards.

Ask for it at creditboards!

And rainlover wrote:

"It seems that Citibank and First USA did not receive a creditor's matrix for the BK and are reporting me as past due/collections. "

Often they don't update. But I recommend waiting with the disputes until the accounts are discharged. Most people have scores over 600 then.

Well Christine, I had already disputed those CC accounts before you posted your reply, but as it turns out it may be of no consequence. I received a letter Saturday from my attorney, who enclosed a letter from the US Trustee's office challenging my filing of Chapter 7 (vs. 13). I guess even though it seemed that my 341 hearing went fine, the trustee was not convinced that I wa an ideal candidate and forwarded my petition.

The letter states that I can voluntarily switch over to a 13 (which I don't want to do -- god what a mess that would be), because the only remedy they have under the law is to dismiss the BK filing if they find that I am abusing the system under Ch 7. It makes me so mad because I was VERY conservative on my expenses, and even so I barely have $200 a month left over. If something catastrophic happens, I'm toast. Guess they didn't realize that the only reason I was making ends meet before was because I was using credit cards!

Anyway, I have to provide the last two tax returns, copies of student loan and mortgage bills with terms and amount owed. So I will gather that info and meet with my attorney on Friday. We have to send it back to the Trustee's office by 6/2. I have no clue what happens if they bounce the Ch 7 -- all of a sudden all the CCs report that I'm four months past due on all accounts?!

I had a similar situation with my BK7 a couple of years ago. The hearing with the trustee went fine, but then I got a notice from the BK judge's staff (who supervise the trustees) that they did not think my budget was realistic. They said they would dismiss the BK7 unless I could document my expenses (no offer of a 13 even).

My salary at the time was over $75,000 per year and only extreme medical expenses and a 120 mile daily commute made a BK 7 even possible. ( I have two disabled adult children who live with us.)

Fortunately, my lawyer had advised me to keep tracK of every penny we spent for a month, in addition to locating documentation on health conditions etc.

I prepared what was about a 30 page documentation which my lawyer put a cover letter on and fowarded. The BK7 was approved a few weeks later.

Rainlover, I sure hope submitting additional documentation will do the trick like for mricthus.

Appreciate you're sharing your experiences, some people are too overconfident that it's ok to have disposable income.

Thanks Christine. I'm looking for similar situations on the two boards to guide me. 30 pages?! I admire your attention to detail, mricthus, but I don't think I've got that many expenses!

I was just reading over at creditboards that a dismissed chapter 7 or 13 can stay on your CR for 10 years, and a couple of members said that happened to them. That's not what I needed to hear. I'm envisioning getting bounced from the 7 and ending up in credit counseling hell... Or switching to the 13 voluntarily and then having both a 7 and a 13 on my report.

I think I'll call the attorney tomorrow and see if I can't get a couple of questions answered. His assistant couldn't answer any for me; said she'd never seen a 7 bounced before. Not too reassuring!

Hopefully the Ch. 7 will be approved.

And yes, dismissed filings stay on the credit, they ARE public records.

I don't know if they are rated the same for scores. It's one of those things that COULD be researched to be CHANGED. It would require time and energy I don't have and since nobody else is looking to CHANGE anything, I guess it's tough luck for people with dimissed bks. Just *another* one of those things ...

It doesn't matter if you have one of more filings. I've seen people with 3 or 4 filings, makes no difference.

Depending on the creditor, I have found that many regard a payment on an account, settling the tradeline, as the date of last activity rather than the date of first delinquency--this is true even if the account had been charged off.
Specifically, Bank of America and Discover. Others usually will drop off 7 yrs following the initial first date of delinquency. Arguing with Bank of America or Discover is a trip and hardly worth the breath.
As for declaring bk 7, i'd have to say even though it was hell, once you recover you should be a-ok with life. make sure you build up a ton of cash in the future--2 yrs or more. that's how long it can take to find a job. it might be even more in the future.

I agree that research is a good thing, Christine. I'll post over at creditboards and see if anyone has any knowledge of how the dismissals are rated. I produced the extra documentation and it will go to the Trustee's office next week. Hopefully they will rule quickly. My attorney told me that he had received two more challenge letters last week on Ch 7 cases he has filed, and thinks that someone is tightening the screws somewhere. Since the bankruptcy reform legislation hasn't passed, maybe this is an alternative. I remember when I was an independent contractor in the late 80s and the IRS began targeting us, saying we weren't paying enough self-employment tax. They were auditing left and right; my accountant had never seen so many challenges. I won that one; maybe justice will prevail again.

Senator, I hope I don't have to find out how my tradelines will change. I challenged BofA to change from a 3 rating (120 days past due) /account closed by grantor to included in bankruptcy. It just came back as a 3/closed by grantor. Guess I better read up on multiple disputes. :)

How does one know whether a creditor's debt was not discharged? Would I actually know? Would there be any letter from the court or any indication from the court letting me know?

It is also expensive to sue them for this violation right? I am confused about what to do.

This creditor and debt was listed but if for some reason the debt was not discharged, would it say anywhere in the bankruptcy files?

All I received is a letter from bankruptcy court saying that debt is discharged. How does one know that means everything was? I did include several accounts in the bk.

Look for you listing of creditors.

I have no clue whether this is a good or bad sign. I submitted my documentation on 5/27 (it was due by 6/2) and now it's been almost a month and no word on whether or not the Ch 7 will be allowed to proceed. At this rate I'll be at the discharge date by the time I hear. I'm sticking to my guns -- I don't want a 13. If they reject my petition, however, I have no clue what I'm going to do.

Christine, I did post over at creditboards about how much effect the "filed bankruptcy" notation has on scores. Someone said that when their notation was removed they saw about a 25 point jump.

I think you are much wiser to take care of it as soon as you did. I delayed, delayed, delayed and really felt guilty about filing. But economically it was a wise move and I could at last breathe again. Three to Four years down the road you should be capable of almost getting the same rates as the good credit people. But I would advise accumulate as much cash as you can in this economy. So many people I know have lost their jobs and if things get so tight you may even wind up working for a collection agency (see Christine's post)!
Good luck. Stay in touch. We can probably help you get thru the rugged times.

***But economically it was a wise move and I could at last breathe again. ***

I know that feeling very well!


***But I would advise accumulate as much cash as you can in this economy. So many people I know have lost their jobs...***

These are words of pure wisdom.


My BK made me, and allowed me, to make some of the most positive changes that I ever could.

"Christine, I did post over at creditboards about how much effect the "filed bankruptcy" notation has on scores. Someone said that when their notation was removed they saw about a 25 point jump."

Are you talking about the public record of the bankruptcy or the "included" accounts?

For the public filing. A couple of people have gotten the notation removed (before the 7 years) using letters.

Here's a link to the post:

Dismissed Bankruptcies -- Impact on FICO? (http://www.creditboards.com/phpBB2/viewtopic.php?t=3336&highlight=)

How many points you'll get really depends on your overall credit - sometimes scores can even go DOWN after the deletion of the filing because you're scored by a different model.

Well, I finally heard back from the Trustee's office a couple of weeks ago and they rejected my Chapter 7 filing, even with the additional documentation. They have several things incorrect in their findings, such as saying that I'm participating in my Employee Stock Purchase Plan (I haven't put anything into it since May of 2002 and have sold all of it), etc. They think I have $1000 extra per month to pay toward my bills and recommend that I do so for 3 years on a Ch 13. They filed the findings and I have until 8/25 to respond or they will dismiss my Ch 7. The plan that paid for my attorney so far doesn't cover this, so my attorney recommended that I find a bankruptcy atty to represent me. Gee, I thought that's what I had. :) He charges $200 an hour, which is a crock. We should have filed an amended petition including the personal loan I have from my mother; I think I mentioned before that he said I didn't have to claim it (wasn't necessary, had enough expenses) and now he says that he doesn't remember discussing it. It's a payment of $120 a month. Anyway, having worked at law firms for many years in the past, I think I'll file in pro per and answer the complaint myself. Finding an attorney and paying all that money is not especially attractive. I have no clue if I would do better on my own or with representation. Anyone have any thoughts?

First of all, really sorry this is all so messed up.

For OTHER readers:

Don't go with those legal plans. It's not to say that a "regular" bk attorney is better, but it's likely that they know what they're doing if they've been around for a while.

"the personal loan I have from my mother;"

This is really complicated stuff. There are special rules for "related parties" and you can't just say you'll pay her and not the other creditors.

"They have several things incorrect in their findings, such as saying that I'm participating in my Employee Stock Purchase Plan (I haven't put anything into it since May of 2002 and have sold all of it), etc. They think I have $1000 extra per month to pay toward my bills and recommend that I do so for 3 years on a Ch 13."

I don't know how THAT could happen! Did your attorney screw this up or what?

I have NO idea what to tell you about going Pro Se. Did you ever do the FREE consultations before the filing?

Thanks, Christine. I'm sorry it's so messed up too. I feel kind of ripped off, and also feel that my attorney didn't really know how to handle the notice from the Trustee's when they were questioning my assets. I did all the leg work rounding up the documentation, and my "bankruptcy attorney" just slapped a cover letter on it and sent it in. I think that was the first mistake.

Oh well, water under the bridge. The mistakes in the motion to dismiss are because the clerks in the Trustee's office are not the sharpest tools in the shed, I believe. They listed three things that I could do to get enough money to pay on a Ch 13: take the money I was submitting to my ESPP plan and add it to the $200 a month I have left over after all my expenses are paid (this is a misread on their part after looking at my payroll documentation; I'm not contributing anything right now, but they think it gives me $240 extra a month); stop contributing to my 401K (which I do, but have now stopped, and it only yields $173 more a paycheck, for a total of $346 a month; they're saying that it would give me almost $500 extra month (I think they're forgetting it's pre-tax dollars); stop the payment on the loan I have on my 401K, which gives me an extra $160 a month (I guess they allow you to do that if you're in bankruptcy? I had no clue). Those amounts combined with the $200 I have left over give me the $1,000 a month to pay to my creditors for 3 years in a 13. It's actually $700. Thing is, I was so conservative on my expenses that the $200 a month left over (and it's really only $80 because I do indeed pay my Mom the $120 a month for the loan) is like a lifeline for an emergency. My car insurance just went up by $168 a year because of my credit report. And I'm going to need new tires in about six months, which I didn't include in car expenses. And the most important thing of all -- I don't want a Chapter 13. I don't want my employer knowing my personal business and I don't want the mess on my credit report. I have to file an answer to the complaint for dismissal by 8/25. If I'm going to get a "real" BK attorney I guess I better act quick. The unknown is: once it gets to this point (notice of dismissal for substantial abuse) can you still win?

"notice of dismissal for substantial abuse"

That sounds really bad. I think you should see a lawyer who knows that stuff.

Maybe your budget should be adjusted, and I'm not sure really how they figure everything.

It's one of those situations you really want to avoid - obviously the plan attorney screwed up real bad and did NOT properly submit and explain the documentation.

Hi Christine,

Well, my Ch 7 got dismissed a couple of months ago, and luckily my legal insurance coverage will allow me to file a 13 instead. I managed to find a pretty good atty who thought my original atty was nuts to file a 7 because of my high income. He didn't feel that I would have gotten it unless I had a lot more expenses than I had. So I stopped contributing to my 401K etc., and we are in the process of redoing my expenses. If I thought my credit scores were bad before, now Wells Fargo, Discover, Citibank have all turned my accounts over to collection and are threatening legal action.

I wish there were an alternative to a 13. My atty wants me to turn in my leased car because it won't be allowed, but I don't know how I'm going to get financed for a different car with the way my score is. I got an offer in the mail telling me I was "pre-approved" for a car loan of up to $25K, but they wanted me to provide 6 personal references. Like I really want to tell 6 of my closest friends that I've filed for bankruptcy and ask them if they'll agree to be hounded if I miss a payment! Plus, how do I tell a dealership that the $600 a month I currently pay for the lease is about to go away because I'm filing bankrutpcy again? That'll go over real well. So there's that issue, and then it would seem that if I'm only paying 300-400 a month for a car, I'll have an additional $200 a month for my bills, plus they won't allow me to pay the $233 a month for my student loan in a 13. That goes to the trustee as well. I'll end up paying about $850 a month to my creditors. I don't mind paying that amount, as I was the one who charged it in the first place, but couldn't I accomplish the same by going through a non-profit? I know you don't feel those places are worthwhile; I guess I'm just wondering if I have to pay that much maybe I can accomplish the same thing without having another bankruptcy on my credit report.

Sorry for the late reply, I've been so busy with my suit ...

Well, it sucks that the Ch. 7 got dismissed. I'm not impressed with the legal plan attorneys, any lawyer who practices bk law should know what goes and what doesn't.

"I guess I'm just wondering if I have to pay that much maybe I can accomplish the same thing without having another bankruptcy on my credit report."

Nobody cares!!!!! NOBODY!

I have a client who went through CCC in the 80s. That's not a typo. This year we disputed the CCC notation with all 3 CRAs, as the account has been paid for many years and is definitely NOT managed by CCC, as the notations state.

All verified. I sent the PofA to CB/Goodyear, talked to those morons, they think it's perfectly ok to report it forever.

You have choice. Since you've been reading here for a long time, I have no idea what you're thinking.

What's so great here anyway? Why not quit paying, save a few bucks, and head for Peru?

LOL. Peru may turn out to be a viable option! I still keep trying to win the lottery. Pay cash for everything and be on my way...

Whatever I decide, I want to do it soon. I have 5 creditors that want their money and 3 of them have turned the accounts over to collection. That means phone calls at home and work day after day. The other two creditors are probably still wondering what route I'm going to take. As I said earlier, and as my current atty mentioned, if I have to pay such a high amount through a 13, it would probably be about the same to reach a settlement with the original creditors and set up a payment plan. The only advantage to a Ch 13 that I can see is the protection afforded by filing. It's a 36 month plan, the creditors cannot take any other action against me, and when it's dismissed they can't re-age the account on my CR. (At least in theory. :)) What I don't want is what you describe -- a never-ending battle with a bunch of different agencies. Either way, my CR is toast for at least 7 years. I'm just thankful that I have my house already and both my first and second mortgage are current.

Christine, thanks so much for caring and helping. I wish you a healthy and prosperous 2004!

Diane
(rainlover)

Diane, you might want to send a Cease and Desist letter to the collectors, and especially tell them to not call you at work. Send certified from USPS.com if you can.

If you're lucky, you can get some FDCPA violations before you file. Also, check your credit reports to see if they report and if yes, dispute the balances and request itemized accounting. Then dispute the collections with the bureaus "the balance is disputed" and check to see whether they'll report the disputes or delete. If they don't, it'll give you some leverage after you filed the 13, you got a year for FDCPA violatins and might be able to use those to settle some accounts for a good discount and deletion. You really want to get the collections deleted if you file.

While it's unlikely since you probably owe large amounts to all, I've seen creditors not submit the required paper work to the court and they got nothing.

If you just watch your reports and collect violations, your credit is going to be just fine in a couple years. Also check this ruling against Frist USA/Bank One:

http://forum.creditcourt.com/discus/messages/15/15.html

I can assure you that nothing is more difficult than negotiating with creditors directly and your credit scores will be lower than if you file. And at least you know that you can hold them to the plan.

Sure hope your 2004 gets better too!

Is anyone still following this thread? If so, I'd love to hear any updates from those who filed last year. I would also like to tag on here if it's not being rude.. I just found this site after reading alot and posting a little on creditboards.com. I like this format much better with bk having an exclusive forum. Anyway, my situation is very similar to Diane's, but closer to another poster who described "hitting the wall"

I have been dragging around alot of debt for many years and it has grown slowly but steadily to approx $70 in CC debt. $40 is with one creditor (2 cards) and two other creditors have $15k each. That's $70k between 3 creditors!! There is also a handful of others totaling maybe $2 -$3k (store cards, gas cards, AMEX)
In addition I have about $40k in student loans and another $25k on two autos. The CC's are now about 90 days delinquent and everything else is current. No mortgage.

I am caught in that terrible mode of indecision. I have looked at and dismissed CCCS. I have also met with two different bk attorneys; read a few books, and surfed the web. All of this and now I am more confused than ever. I even talked to a guy in Texas who claimed that he could "handle" my creditors and any CA's who come along over the next several years for a small percentage of my debt. I feel like the proverbial deer caught in the headlights.

My income is commission based since early 2003 and I managed to keep current on everything until Dec/Jan. Of course I dug myself in deeper taking advances to pay bills/expenses. It takes approx $2500 a month to just pay minimums and my income varies (it averaged $2k before taxes last year).

My wife works a regular W-2 job and her income just barely covers living expenses like rent, groceries, utilities etc..
She file a ch7 in '97 before we were married due to illness and medical bills.

There is no disposable income. We could probably cut back in one or two areas and maybe save a couple hundred per month, but that is pushing it. I have been told by both attorneys that I "should be able" to qualify for ch7, but after hearing of your experiences I am questioning the reality.

Anyone have advice?

Hi Damos,

I'm still around. Getting ready to file my 13 around the middle of May. All I can say is to make sure that the advice you're getting from attys are from ones who handle bankruptcy filings on a regular basis, not from those that do it as a sideline. I could have saved myself a lot of grief had I known that.

My current atty, for example, knew that the Trustee would not allow my pre-tax 401K contributions, 401K loan payment and student loan payment to stand. That totals about $500 a month right there, and that's enough to give to creditors. So even though I have no money left over after my expenses every month, I am employed and they'll find a way to squeeze something out of me. :) My atty told me I would never have gotten the 7 anyway because he knows the judge that rules on them and he's particularly hard core. The old attorney just filled out the forms and filed them.

It's true that the courts are getting a lot pickier about 7s. The current atty told me that before last year only a small percentage of his filings would be challenged. Now it's much higher. It doesn't hurt to try for the 7, certainly, but if they do challenge it and send you that lovely letter that says give us all this documentation or switch to a 13, you might seriously want to consider the 13. :)

Diane

Thanks for the update, Diane. You gave some really good advice.

Many people file on their own, and if it's a slam dunk - that's not a problem. But when you're borderline, you really need the best representation you can find.

thank you both for the advice. I have been told by two attorneys that I should be able to get a ch7. The first attorney gave me both options and mentioned the possibility of the trustee denying ch7 and then we would go ch13. He was by far the most qualified and I will likely go back to him in a couple of weeks to file.
I wanted to check out all options before I pulled the plug and filed. As you already know there are too many other sources out there with contradictory opinions. I have grown tired of being confused and I don't want to screw around while our legislators are trying to limit our options.
Thanks again..I'll keep everyone posted. See you on the other side
Danny

Danny, why is the URL in your profile http://girlfriend-pics.teen-hardcore-photos.net/ ????

I thought people peddling porn make a lot of money. How can you be broke?

"teenage rape pics ( prom movie party )" - does this say anything about your values?

I have absolutely no idea what you are talking about. I did not even include a url in my profile. Geez, that is sick! How does something like this happen?

Well, I really don't know. I checked some other recent signups to make sure it's not a "virus" in my software.

I did see that URL or one that's very similar at a comment posting at the blog and I thought it was odd there too because it wasn't one of the 10 to 100 spams I delete there every day.

Personally, I got nothing against porn but I hate people advertising at my sites, and I kinda draw the line at rape, kiddie porn and violence.

Your posting seemed "normal" so it didn't make much sense to me either. Maybe there's scripts that insert URLS for people.

I looked at a whole bunch of recent registrations and there is one more person with that URL.

Danny, do you run a virus checker?

Actually I do Christine (Norton 2003) with a live update subscription. I may not have updated lately though and I have noticed that my homepage seems to get hijacked to some kind of search page when I sign on and a few other "quirks"
Guess I better do another scan.

Run a full system scan after you update, and please let us know

Yep, found two viruses. Actually it was the same virus showing up twice. Last system scan was March 16 so these are new.
Trojan Bookmarker F
This one is nasty..literally! Guess what it one does?
"adds pornographic bookmarks to the internet explorer favorites folder" and also redirects searches that use msn.com to use a search site that features mainly porn sites.
My Norton antivirus could not delete it so I had to do it manually which required disabling system restore and downloading new virus update.

Wow, I've never seen that one before!

Thanks for the update, I had sent a mail to the other person with that URL and hopefully he reads here.

It is a shame that nobody is suing these people. Recently someone sued VISA/MC for facilitating transactions and that's exactly what one should do with all these spammers, and especially the ones that distribute these viruses. They wouldn't do it if they didn't make money.

Sorry for the off topic turn in this thread, but it's really important that people become aware of these problems!

Also - Christine don't know if I can still post on this - if its problem, delete

Crystal,
Did you ever find out anything about where to find out if a debt was discharged in Ch7 or not? I have similar situation, this was from 1997 filing when Student loans could be discharged if within a certain timeframe. They are on my list of creditors and didn't write or appear in response. Afterward the SL people said it was NOT discharged. In hindsight I can say my atty was an idiot who claimed he knew about SL's and didn't. Wouldn't return my calls when I tried to get an answer, his paralegal said she wasn't sure, Trustee wouldn't answer question-said to contact atty. In reading my paperwork, there is clause saying "these are not dischargeable...SL less than 5 yrs. old.."
Mine were consolidated in 88, 2.6 yrs forebearance so that's mid-91=6 yrs.
I thought the court decided. Am not suprised SL said it wasn't but that doesn't mean they're right. Had to do a Ch13 later in order to make payments and did get a hardship discharge of sorts - will be paying them another 6 yrs. I'm better informed now and just trying to get a straight answer abut the 97 BK - its harder because I'm now in another state. I just hate the thought of paying if the court did discharge this before, SL's opinion is...at the least biased. I tried for years to make lower payments with them and they always refused, and added over 15,000 in interest on an 11,000 loan. I had paid about 6,000. Grr!

No problem with followup postings.

It's really weird that nobody tells you whether it was discharged or not, and I have NO clue.

Maybe Crystal will reply.

And I had no idea what scum those student loan lenders are, Nelnet also owns a collection agency. I can only recommend AGAINST taking out any student loans - don't let your kids do it.

Maybe you can find something useful here:

http://www.consumerlaw.org/initiatives/student_loans/index.shtml

Thank you Christine, I'll check there to see what I can find out.