Confirm Action

Are you sure you wish to do this?

Confirm Cancel
Member Login
Posted: 1/22/2002 4:13:21 PM EDT
Can anyone give me information on declaring bankrupcty? It looks like thing are getting really tight, especially with my car breaking down today. What do they take? What do they leave you with? What debt gets written off. What doesn't?
Link Posted: 1/22/2002 4:43:09 PM EDT
Well, here's a brief overview. This is not legal advice, it is just background: - There is chapter 7 and chapter 13 for personal bankruptcy. 13 is where you file a plan to repay within 3-5 years and expain how you will do it. Then your creditors must leave you alone as long as you follow the plan. It's complicated. - Ch. 7 is where you say "I'm broke and I can never pay". What happens is that you must turn over all your assets, except those exempted by your jurisdiction (fed has guidelines but states can set their own). Exemptions include your house, your car up to X dollars in value, and a whole bunch of other things that vary by jurisdiction. Your non-exempt assets are liquidated and used to pay some portion of your debts. In exchange for turning over this property, your debts are "discharged", meaning that they go *poof* and disappear. All of them usually, although courts do treat different types of debt differently. Obviously your credit, at least for a few years, will be negatively affected. Bankruptcy is an area of law unto itself. I know this minimal amount only because I work for a Professor that does this stuff. What you should do if you can't get a lawyer to do this for you is find a self-help bankruptcy book at a library and follow the step by step. A lawyer could tell you the details of your jurisdiction and the effects of Ch.7 and Ch.13 on your future credit, and an initial consult might even be free. Look in the yellow pages and find a lawyer that does bankruptcy and ask how they operate.
Link Posted: 1/22/2002 4:45:45 PM EDT
I know a person or two that has considered/gone through with a bankruptcy. Most important thing, be careful which lawyer you choose! There are some dirtbags out there that make a living off of filing "canned" bankruptcies and they are not what you want. Basically, you will get immediate protection from creditors while everything gets sorted out. (so, no repos of cars/homes can take place during the process) You will have to go before a judge and tell him why he should tell your creditors to go jump. Your best bet is to go in with an offer of a fair plan for you to repay your debt. Overall, its a very stressful and humiliating experience (at least from what I saw my friend go through) that is best avoided at all costs. If you're debt is too high, try one of those non-profit counseling services that work out reduced payment plans and consolidate your payments into one WITHOUT CHARGING A FEE OR MAKING YOU TAKE OUT ANOTHER LOAN. My other friend that avoided court did it this way and it was a lifesaver for him.
Link Posted: 1/22/2002 4:47:40 PM EDT
And, above all else, you can get through the tough times. Believe me, I know. Hang tough!
Link Posted: 1/22/2002 4:55:42 PM EDT
Swire, Don't do it! You are BETTER than Kmart! Most, if not all, of your creditors will work it out with you if you call them and tell them EXACTLY what is going on with you. Be upfront. Be honest. Be SWIRE.
Link Posted: 1/22/2002 5:19:44 PM EDT
There are non-profit credit council companies that can help you work things out with your creditors. You can also contact creditors yourself. I'm not an attorney but I've heard that the laws have gotten tougher to file so I agree with the earlier post that a good attorney is very important. Last but not least, remember that a chapter 7 stays on your credit report for 10 years so make sure you have no other recourse as it's a major step. The standard disclaimer applies... this isn't legal advice, just info. Good luck.
Link Posted: 1/22/2002 5:46:13 PM EDT
[Last Edit: 1/22/2002 5:47:33 PM EDT by Aimless]
Link Posted: 1/22/2002 5:49:30 PM EDT
[Last Edit: 1/22/2002 5:54:57 PM EDT by Dragracer_Art]
Chapter 7 is the way to go... That crap about "them" selling your stuff is a bunch of bullshit, plain and simple... Go see an Attorney that specializes in bankruptcy... Most will give a free initial consultation... I just went through a chapter 7, and it was the easiest, most painless process you can imagine... My only regret was not doing it sooner... And for you guys who think it's "dishonest" or "foolish" to file for bankruptcy, you've obviously never been in dire straits... I tried everything to get my debt squared away...Credit counseling, credit repair agencies, Tried to work out deals with my creditors, etc... All to no avail... Bottom line is, if you have more money going out, than coming in, and have no relief in sight, bankruptcy is the answer... The phone calls & nasty letters will stop immediately after you file... It's ILLEGAL for your creditors to contact you directly in ANY way, shape, or form...They MUST deal directly with your attorney... As far as liquidating assets and so forth, there are guideines as to how much debt vs. income vs. assets you may have... Unless you are in the upper income bracket, you have nothing to worry about... Your attorney can explain better than I can... I can only say, I wish I did it sooner... I struggled real bad financially for a few years before I finally commited to doing it... What really convinced me to do it was the poor attitude from my credit card companies...They didn't give a flying fu*k about trying to work with me...Didn't want to hear anyhing I had to say... Filing for bankruptcy was the best decision I ever made, especially since I just got laid-off from work last week... Since I went bankrupt, I only have a mortgage to pay... Now at least I will be able to feed my kids with unemployment compensation until I get called back or find a new job... Had I not gone bankrupt, I'd be... "up shit creek" right now... Ultimately it's your decision to make... It's not a big deal... Worried about having the "mark" on your credit report ? You actually look better on paper AFTER a bankruptcy than before... Remember: debt to income ratio ? You wouldn't believe all the credit solictations I get in the mail since I went bankrupt... Everybody wants to give you credit since you can't go bankrupt again for many years... Call a bankruptcy Attorney, they will steer you right...
Link Posted: 1/22/2002 5:58:19 PM EDT
Link Posted: 1/22/2002 6:08:53 PM EDT
You must go see an attorney who specializes in bankruptcy. Your creditors are going to use the full force of the law against you. You must fight back, use the law in your favor.
Link Posted: 1/22/2002 6:45:13 PM EDT
[Last Edit: 1/22/2002 6:46:34 PM EDT by SWIRE]
Hopefully it doesn't come down to that but it sure seems to be getting close. It looks like I might have been able to fix my car. At the moment I have no house (renting), no job(laid of in Oct), a 10 year old car with 210,000 miles on it, students loans, and credit card debt a mile high. My credit is already screwed up for 6 years because my insurance company screwed me and refused to pay a single cent of a $16,000 medical bill. My unemployment runs out in 2 1/2 months. I have a job interview Thurs. I'm hoping for the best. "Working with the creditors" isn't really an option, as without a job it's kind of hard to pay them anything. Also, I had inquired about "working" with my credit card companies. Just by asking about any programs they might have the bastards signed me up for a "credit protection" program and charged me $65 when I wasn't even eligable for the program because I was laid off before I got signed up. I couldn't believe they would try to screw me when I was already down. So I wouldn't have any regrets about sticking it back to them.
Link Posted: 1/22/2002 6:46:15 PM EDT
I have practiced bankruptcy law since Jimmy Carter was President! In Louisiana and in Texas. Even though bankruptcy is a federal proceeding, the impact that it has upon you and your property is determined by state exemption laws and what they provide for their bankrupt citizens! So I'm not familar with Michigan real and personal property exemption laws, but if Michigan state law permits use of the federal exemptions, then you may be better off using the federal exemptions, but only a Michigan bankruptcy lawyer can ever advise you of this! What I may think is a valid exemption under the Michigan law, from the listing posted by [b]Aimless[/b], may be different from how Michigan courts have interpreted that exemption. You'll never know unless you deal with someone who is (1) familiar with bankruptcy, and (2) familiar with how bankruptcies are generally handled in Michigan. F'rinstance, when I practiced in Louisiana, the Chapter 7 Trustee (the fellow charged with collecting all [b]non-exempt[/b] property from your estate, with the view to sell it and apply the proceeds to your unsecured debt) actually made an appointment to come to the Debtor's house and make a 'walk-through' inspection to see if there were a 'Picasso' hanging in the living room. When I came to Texas and began to file Chapter 7 cases, I was amazed that the last thing that the Chapter 7 Trustees in Texas wanted to do was to go to the Debtor's house to see what's there! So you need to talk with a Michigan bankruptcy lawyer [b]before[/b] you do anything! I mean anything! Don't pay off Mom and Dad for any loans, don't prepay any debts - just go see the lawyer! He'll tell you what to do![:D] If you do pay off Mom and Dad, etc., the Trustee may go to your Mom and Dad and ask for the money back that you paid them within 120 days of your filing the case! Lots of landmines in this area! BTW, it's on your credit history for up to 10 years! Big deal, so's a money judgment, most liens, repossessions followed by a judgment for deficiency, and a lotta other stuff! Eric The(You'llGetFutureCreditWhenYouNeedIt,ButFor­$$$)Hun[>]:)]
Link Posted: 1/22/2002 6:53:15 PM EDT
From my experience as a finance manager in the car business, a BK will stay on your bureau for 10 years. A chapter 13 you have to pay off the BK befor it is dismissed. With a 7 after you are done in court that is all she wrote, no paybacks. I have seen people who filed chapter 7, after hiding a decent sum of money. And came out smelling like a rose because they had the downpayment to get a new car. But a chapter 13 you are screwed until it is paid off. A vast majority of the money sucking lawyers will try to get you to file a 13, knowing in less than a year you will come back to file a chapter 7. Bastards! [beer]
Link Posted: 1/22/2002 7:41:50 PM EDT
If you owe the money, and can pay a minimal amount, go through a chapter 13. Unless we are talking about medical bills, YOU OWE THE MONEY! To get into debt then "poof" it away is cowardly and not what a man does. I did a chapter 13 at age 19, and it hurt me for years. But those years tought me something, and I took my lumps. Advice to do a chapter 7, when you are able to adhere to a 13, is poor advice.
Link Posted: 1/22/2002 7:56:11 PM EDT
See how different the advice given on this Board appears. You should never file a Chapter 13 Case unless you would lose something in a Chapter 7 Case that you could save in a Chapter 13! Most often you file Chapter 13s when you have tax debts that cannot be discharged in Chapter 7, you're behind on your house payments or car payments, or you may have property that you want to save that you would have to give up in a Chapter 7 because it's non-exempt property. If you live in states that have little or no real and personal property exemptions, such as anywhere in New England, you may simply have to file Chapter 13 because you would lose too much property if you filed Chapter 7. Eric The(TalkToMichiganBanruptcyLawyerForInfo!)Hun­[>]:)]
Link Posted: 1/22/2002 8:12:18 PM EDT
Swire, form what you are saying, your credit is fucked anyway. You need to get out with you can keep. Go Chapter 7, you will get immediate relief from your creditors. I have some personal experience in this. I can get you a name of a lawyer. He charges $1500. Half up front. Half after. If your debts are high enough, its worth it. Scary experience at the downtown Detroit Federal Building. But not too bad. Some of the creditors will try to sue you. Expecially thre locals. The out of staters will just right you off as not worht it. Your student loans will never go away. But credit cards and and other bills are included. Follow the advice, dont pay anything back until you speak to a lawyer. New laws will take effect soon, that may limit your protection from credit card companies. So if you are going this route do it sooner then later. The BK will fuck up your ability to get credit for a while and you will pay higher interest rates.
Link Posted: 1/23/2002 5:48:40 AM EDT
I will reiterate that unless the debt is the result of catastrophie, to run up debt by purchasing items then chickening out with a chapter 7 is immature and dishonest, IMHO. You took the stuff, you need to pay for it. Eat your lumps.
Link Posted: 1/23/2002 8:15:14 AM EDT
You are much better off seeing a credit counselling service, such a Consumer Credit Counselling Service. They can get creditors to get off your back, set up a budget for you, a schedule for payoff. Some creditors will waive interest and penalties. Do this before seeking Bankruptcy, which will screw up your credit for the rest of your life. BUT if they see you got straight again, paying off your debts, changing your spending habits, etc, creditors look on this favorably, or at least do not hold it against you.
Link Posted: 1/23/2002 1:59:59 PM EDT
[Last Edit: 1/23/2002 2:03:20 PM EDT by HighlandMac]
Originally Posted By A_Free_Man: You are much better off seeing a credit counselling service, such a Consumer Credit Counselling Service. They can get creditors to get off your back, set up a budget for you, a schedule for payoff. Some creditors will waive interest and penalties. Do this before seeking Bankruptcy, which will screw up your credit for the rest of your life. BUT if they see you got straight again, paying off your debts, changing your spending habits, etc, creditors look on this favorably, or at least do not hold it against you.
View Quote
Bullshit!!!! As a finance manager I can tell you absolutely, positively do not go the route of Consumer Credit Counseling. It is worse than a BK and stays on your credit just as long. No bank will ever give you money while you are in CCC. CCC means you admit you are financially irresponsible and banks know this. With a BK you can get back the ability to borrow money much faster. [beer] Added: All the comercials with the happy smiling people who say "and I got to keep my good credit" are full of shit!! If you are going to go down take as much as you can with you and go for the BK!! You must plan for a BK to make it work out best, any assets you can hide with out being traceable do shortly befor the filing. If you are trying to hide a vehicle you should "sell" it to a friend more than a year before you file, so when they check DMV records it won't show you just sold your car last week!!
Link Posted: 1/23/2002 3:29:55 PM EDT
Link Posted: 1/23/2002 5:35:20 PM EDT
Link Posted: 1/23/2002 5:55:07 PM EDT
Originally Posted By HiramRanger: So let me get this straight, by entering a credit counseling program in which you pay off what you owe and don't try to stiff your creditors you are showing you are IRRESPONSIBLE, but by declaring bankruptcy and walking away from your debt you are proving you are financially RESPONSIBLE? Awhile back when my income wasn't as stable as it is now and I was overwhelmed by student loans and credit card debt from graduate school et cetera I signed on with a credit counseling service. They cut my interest rates by about two thirds, got my payments manageable, and I have been on time for over a year. I never used to get credit applications, now I receive a couple a week and at average interest rates. Now maybe the same thing would have happened had I filed for bankruptcy, but there was another option and that was to pay what I owed, and so long as I was able to I would. In about a year I'm going to have to buy a new car. I'm betting my credit union will look at the fact that my debt has almost been cut in half over a two year period and all payments will have been on time might reflect pretty favorably on me. That with the fact I have never bounced a check or dipped into overdraft. Maybe its just the slimey auto-financing industry that won't recognize an honest effort to make good. Of course they prefer bankruptcies, once you declare, you can not do so again for about seven years. Someone will have to explain to me how paying your bills proves you are irresponsible.
View Quote
No offense to you or anyone else who has been in a bad money situation, I am one of them. But yes, CCC is worse because it is looked at as though one did not have the good judgement not to bite off more than they could chew, as far as bank or lending institution is concerned. If you are in CCC I seriously doubt a bank or credit union will give you a loan, with the exception being if you have a good friend in the credit union who has some real pull that can and will do you a personal favor because it is normally against policy to loan money to one in CCC because if they have a hard time paying it back they will just include it in the CC arrangement. You can file BK sooner than 7 years. I have seen it on many credit bureaus befor, in fact some were filed within 2 years of the first filing. I am not downing anyone who has had credit problems, but the CCC advertizements are total bullshit and misleading as hell!! On a persons credit bureau who is in CCC it shows every account involved, including balance(always way higher than it should be) payment and times late payed, along with a statement "Consumer Credit Counseling." When a BK is on a bureau balance and payment history is gone it just shows account included in a BK. Included in a BK is veiwed better because no one but the original creditor and you know how bad is was. In CCC a lender can look at a bureau and see someone couldn't pay $890(example) a month worth of bills on time and now they want to borrow money again, fat chance on getting a loan. If you have any other questions you don't want out here hit me on Email!! [beer]
Link Posted: 1/23/2002 7:27:11 PM EDT
Link Posted: 1/23/2002 8:14:21 PM EDT
HiramRanger, If I understand it all correctly, a Chapter 13 bankruptcy would have allowed you to pay back everything, preserving your honor, but there would have been no interest on the credit cards and you'd have additional legal protection since the law prevents them from seizing anything or from hassling you about anything. What exactly is your problem with BK, or were you only thinking of Chapter 7?
Link Posted: 1/24/2002 4:06:28 AM EDT
Link Posted: 1/24/2002 6:18:11 AM EDT
Avoid it at all costs, I did it and spent 10 years rebuilding my life. My reason was the standard divorce, they would say they understand , but the dooor closed anyway. get credit counseling first, you need big debts and hidden money to make it worthwhile.
Link Posted: 1/24/2002 6:29:36 AM EDT
I totally agree with the Wind. It takes years to rebuild your credit, and forget getting even a high interest loan for a few years after you file. Call Ameridebt or some place like it to help you (for free) to consolidate your bills into one lower monthly payment. I will never recommend to anyone that they would be better off by filing bankruptcy.
Link Posted: 1/24/2002 7:10:08 AM EDT
If you go bankrupt, get used to a beat up old car, you will pay 26% for a new car loan, and a credit card up to 35% interest, And no mortage or refiance
Link Posted: 1/24/2002 7:33:59 AM EDT
Link Posted: 1/24/2002 7:35:43 AM EDT
[Last Edit: 1/24/2002 7:36:35 AM EDT by thedave1164]
Link Posted: 1/24/2002 8:22:17 AM EDT
First off, let me state for the record bankruptcy is not my area of practice - ETH would be the expert here. However, I think you need to look at your goals here. It sounds like your student loans and credit card debt are the two main components of your problem. As I understand it, student loans will survive bankruptcy. Additionally, as I recall, early last year the bankruptcy law was changed to allow credit card debt to also survive. If those are your two main problems, bankruptcy may not really accomplish much for you except putting a black mark on your name for the next 10 years. You may be better off trying to resolve it on your own. Call your creditors, explain your situation and see if you can come to some workable arrangement with them. If 90% of your debt will survive the bankruptcy, what will you have accomplished with a bankruptcy? Certainly you'll have a workable plan to pay off that 90%, but you can probably arrange that on your own without the bankruptcy and avoid the negative effects of having a bankruptcy on your record. Just my $.02
Link Posted: 1/25/2002 4:57:34 AM EDT
You can not file BK on studnet loans, but appearently now you can file BK on federal and state tax liens!! I saw this on a couple of bureaus and the bank wanted proof of the lien being paid off to get a loan, the guy brought in his BK papers and sure as hell he filed against and stuck the state and federal dept of revenue for about $20K!! [beer] More taxes for us to pay![B)]
Link Posted: 1/25/2002 6:28:09 AM EDT
From my experience the BK was a good choice. We had bought a house from my wife's step mother who sold it to us for $15K more than it was worth. We foolishly did not research it and trusted her. I couldn't find a job so we had to move and we rented out the house. After several renters, they had trashed the house so bad that I could not afford to fix it and it was in too bad shape to rent it out again. Moving back was not a possibility due to my job. Voila! Instant financial ruin. I couldn't pay a mortagage and my rent at the same time. BK was the answer. Threw in the CC debt while I was at it and all of our misery ended. We bought a new car 6 mos after the BK, got to keep a couple of Credit Cards and our other car and all of our stuff. Paid 15% interest on the car though. Also bought a house 1.5 years after the BK (10% interest), but are refinancing soon down to 7.5%. All in all it was either BK or living in squalor til the end of time. We made a bad call on the house. Moral of the Story: Don't trust anyone when buying a house!!!
Link Posted: 1/25/2002 6:58:42 AM EDT
Post from shaggy -
Additionally, as I recall, early last year the bankruptcy law was changed to allow credit card debt to also survive.
View Quote
That bill is still in conference and has not yet been passed. The Senate and the House versions were different. Bankruptcy is never, ever, the pretty answer to your financial woes. It's just sometimes the [b]only[/b] answer in your particular situation. As of 1997 or so, student loans were not dischargeable in bankruptcy no matter how old. The law prior to that was that they were dischargeable if they had first become due more than six years prior to the bankruptcy. So, if you're faced with student loans that you can't pay as you have agreed, you can stop the collection process, stop the garnishment of your salary, stop the interest on the loans, and repay the student loans in full over a five year Chapter 13 Plan. Sometimes it's you only choice. Try living on a salary that's being garnished. You will see that banruptcy may be the only avenue of relief! Eric The('Bankruptcy'CameFrom'BrokenBench'WhichIsW­hatHappenedToVenetianMerchantsWhoCouldn'tRepa­yTheirDebts-TheirBenchWasSymbolicallyBroken)Hun[>]:)]
Link Posted: 1/25/2002 7:06:27 AM EDT
Don't do it unless you [b]REALLY, REALLY, REALLY,[/b] have to. I had a dirt bag partner run off in the night with all the business money once, I had to do it. That was nearly 9 years ago and it still haunts me at times. We had some debts we got reaffirmed were we just payed a interest free monthly payment. This made the creditors mad and they tried to get the B thing reversed by making it look like I wasn't following the strict terms. I would make a payment and they would neglect to credit it and not properly notify me the credit wasn't there. Show check stubs you say? Here's how they tried got around that. By not telling me I supossedly wasn't making my payment, it was sent to a hardcore outside collection agency. This agency tried to pressure me into telling them who my bankruptcy trustee was. They were wanting to contact him so they could report to him that I was refered to an outside agency because I wasn't following the terms. The trustee would then get upset and immediatly have the bankruptcy reversed. By the time the checkstubs come to light, the ereversable damage has been done. What saved me was I consulted with my attorney before I decided to devulge any info and this is what he told me they were doing. Beware of trustees too. We had a house we were renting once, ripped out from under us due to a bad trustee. The people we were renting from filed, and part of the agreement was they had to pay the mortgage through the trustee. They were sending it to him and instead of sending it to the debtor, it was going into his pocket. One day out of the blue, we get this letter from the state addressed to the occupants of the house. It said we had to get out because in 45 days the house was going up on the auction block. We showed the letter to the landlord and they were floored. We moved out and the house was auctioned off. I never did find out what became of it. Anyhow, don't do it unless you have to. Besides, you have to come up with a large sum of money up front to do it before it's even processed.
Link Posted: 1/25/2002 9:57:04 AM EDT
SWIRE, Do not accept any canned answers as to whether you should declare BR. First and foremost, your decision should be based upon your total debt level and your income. From your total debt level you should subtract student loans, recent credit card purchases, etc. that BR would not allow you to discharge. You shold then compare this modified debt level against your income and make a common sense decision on whether this debt is worth BR. You should also consider what you will be allowed to keep. In most states, BR allows you to keep a significant amount of equity in your home. There may be other very generous exemptions. In short, you should use common sense and consult an attorney in your state. You need to weigh the benefits and losses of BR.
Top Top