Chapter 7

Miscellaneous and Personal Stuff I Must Share
1

Anyone ever file a Chapter 7 Bankruptcy? I’m seriously considering calling my lawyer and doing it. I have bills coming out my ass and it’s gonna take me 20 years to pay them off. I already have bad credit due to my ex-husband maxing out our joint credit cards and then not paying the bills. The way I see it, having a bankruptcy on my credit report for 10 years isn’t going to be any worse than having charge-offs and late payments showing up on my credit report for the next 7 years.

A little background on why I’m so in debt…
When my son was born last year I had to stay in the hospital for 5 days because I was running an unexplained fever. They did all sorts of tests and I was taking a lot of different medication. My son was also running an unexplained fever and they ran tests on him and also gave him antibiotics through an IV for 10 days. He was there a total of 11 days. The total cost was about $12,000… which my insurance paid quite a bit of but I still have to pay about $3,000 of it. I’m also still paying for the pediatric doctor and my OBGYN appointments… that’s another $1000+.

This past July I had surgery and was off work without pay for 3 weeks. My bill for my surgery was a total of $13,000… this includes my OBGYN visits, anesthesiologists, x-rays, medications, hospital stay, etc. My insurance once again paid quite a bit but I still have about $2,000 that is my responsibility.

I also have my ex-husband’s credit cards, my car payment, and student loans. Not to mention my everyday living expenses… rent, utilities, phone, car insurance, life insurance, food, diapers, day care, etc., etc.,

I’m sending between $10-20 each month to about 13 different creditors. I’ve had several contact me saying I need to pay more than $10-20 a month. They act like they are the only person I owe money to and don’t understand that I can’t afford to pay them any more than I already am!! One creditor has called saying that I need to pay a minimum payment of $180 per month and if I don’t they will start garnishing my wages! WTF!! They don’t give a shit that I have two kids to take care of and am doing the best I can. I really feel like I’m out of options and this is the only way out!

I do live with my fiancee and he pays his share of the household bills along with his own personal bills - cell phone, truck payment, his auto insurance, etc. Even with him paying for half of my living expenses I’m still coming up short every month. I don’t expect him to give me money to pay these bills because that’s not his responsibility so that’s not even an option and he knows that. I don’t know how he’s going to feel about me filing bankruptcy though.

Anyone have any experience with this or any advice. It would be appreciated. I feel like I’m sinking lower and lower each month and it’s really starting to stress me out!

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:frowning:

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Rachelle, have you tried working with one of the non-profit credit counseling services that are around? Not one of those ones that charge you to “repair” your credit rating - they are scams. I’m talking about one of the non-profits that works for free with you and your creditors to come up with a reasonable payment plan based on your budget. Many creditors are willing to work with these agencies because at least they will be getting some or all of their money eventually, even if at a slower pace, rather than the zero they’d get if you file.

4

:frowning:
sorry to hear about that. I wish I had a fix-all solution for you. A couple of my in-laws have considered filing for bankruptcy…one of which was a lawyer. I’m not sure, but I don’t think they’ve filed yet. It’s probably worth just discussing it with a lawyer to see the implications.

If you don’t file, try…
(1) consolidating your debt as much as possible (fewer bills per month helps overall even if it will take longer to pay off the whole of it)
(2) working out some deal with that one jerk creditor to something less than $180/month
(3) borrow money from family :eek:
(4) focus on the critical debts (student loan creditors are usually understanding…some even have hardship deferrals…you may want to try for that to put off that one loan)
(5) your reluctance to borrow from your fiance is admirable…but keep in mind, once you marry, your debt will be shared (if not legally, at least as a stressor in your relationship) so it makes sense to work on it together now
(6) check out parenting groups for help with the financing involved with raising a child. there are also several federal programs (not welfare) to help parents.

best of luck

5

I’d look around and see if a credit counselor can help you like missbunny said. Consumer Credit Counselors is a very established and experienced group. They’ll try to work with the creditors on your non-secured debt to get you a reduced payment.

If they can’t help or your creditors won’t work with them, filing Chapter 7 may be your next choice. Don’t feel too bad about it if you have to. Giving someone a fresh start was the orginal purpose of the Bankruptcy laws to begin with. Your situation is why the law is there. (Unlike many others who abuse the laws.)

One caveat, a Chapter 7 bankruptcy will discharge your unsecured consumer debts. It will not discharge your student loans, and if you intend to keep the car you will obviously have to continue to make payments on it as well.

I hope this helps and hope things work out for the best for you.

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I agree emphatically with missbunny and Gazoo. These non-profit organizations were a big help for a lot of people 10 years ago during the last recession, and most companies are accustomed to working with them and accepting their recommendations. The companies don’t have to accept the recommendations, but they usually do.

Phobos also offered some excellent advice.

My own advice:

Don’t let money problems drive you nuts. The companies really have only a limited ability to punish you, and declaring bankruptcy is always a fallback option.

The total of all your debts may be big, but the individual debts don’t seem all that huge. Don’t freak out over collection letters that sound like the company is going to crucify you. Just get in touch with the company, show a willingness to work with them, and use one of the non-profit consumer credit counseling agencies as an intermediary where necessary. Consider getting a loan from another source (family or friend) to pay off one or two particularly pesky creditors.

In general, I would advise that you get to one of these non-profit consumer credit counseling agencies (or use one or more of the other recommendations offered here), stick religiously to the payment plan that they give you, and otherwise don’t let it drive you nuts.

7

IAAL, and as usual when people ask for legal advice on the internet, my advice is to go talk to a lawyer.
Consumer Credit Counseling is a well established organization, but one of the (if not the only) major sources of their funding is credit card companies. Why? Because they prefer you to pay them off over declaring bankruptcy. CCC rarely if ever counsels its clients to actually go the chapter 7 route.
And a chapter 7 may or may not be the right thing for you. Do you have assets or wages your creditors may seize? Are your debts dischargable? Secured? How much are your dischargable debts (it doesn’t make a lot of sense to do a ch. 7 for just a couple of grand)?
Too many questions to answer online, of course. Go see a lawyer!
As for feeling bad about doing a chapter 7, if that is the best thing for you and your family, do it and do not feel guilty. It is a commercial decision. Just like a corporation downsizing to increase profits for its shareholders. Were I in a position where I had to choose between paying off MasterCard or keeping my kids in shoes, I wouldn’t have a problem determining which to do.

8

You might consider Chapter 13 instead. It’s essentially doing the same thing you’re doing now, paying off according to a court-approved plan, but the debtors are not allowed to garnish wages or harrass you. Its effect on your credit rating is not as dire as declaring bankruptcy because you make a good faith effort to pay off your debts.

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Excellent point, 2nd Law. I have heard many authoritative, impartial sources reccomend CCC highly. But I have also heard that proviso that you mentioned: that CCC will rarely steer you toward declaring bankruptcy. I forgot about that proviso in my endorsement of CCC, and I’m glad you brought it up.

I would presume that it wouldn’t cost too much to sit down with a lawyer for a quick session, go over the broad outlines of the existing debt with him/her, and find out if and when it might become appropriate to go the bankruptcy route.

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Rachelle,
I’d rather not post my financial business on the web, but if you want to discuss this e-mail me. I have some good info for you.
Zette

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Thanks Zette. I just sent you an e-mail!

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Consider ALL your options - bankruptcy might be best solution for you, but if you are looking for some basic, good financial advice and possible crisis help, try:

Formerly known as the Debt Counselors of America. They have a better reputation than CCC. I was in way over my head a year ago, and used some of their self-help stuff to get back on track.

(thank goodness for preview - originally I wrote back on crack).

13

You could file for Ch.7, but chapter 13 is probably a better way to go. If you file for Ch.7 the debtors will dissappear, but hardly a soul will ever loan you money again, and if you do get a loan the rate will suck. If you go for Ch.13 you barracade the debtors, they’re easier to deal with, and credit rating doesn’t get destroyed.

Then again it depends on how much money you’re in the hole. How much money, total, do you owe divided by your yearly net income? If this number is 1-2 I think Ch.13 would be a wiser choice. If the number is 3+ I’d lean towards Ch.7. Just my thoughts.