Considering Chapter 7, advice would be great

[NotTheOne01]

What is the name of your state?What is the name of your state?What is the name of your state?Virginia

I posted some questions on the Debt Collection board, and have a few followups that apply here. My girlfriend just got hit with a couple of Judgement Summons' for an old medical debt (about $10K). She has no income (hasn't worked in several years), no real assets (clothes, some old furniture, misc personal possessions) and a car still under loan (that I have been paying for the past year). I'm dead serious about no income. Oh, and I was planning on not including the car loan in the list of debts to discharge - she likes the car, and no sense starting over with a new one when this one is within 2 years of being paid off.

I'm talking to her about filing Chapter 7, and was wondering about the exceptions. From an admittedly cursory reading, it sounds like some of them (car, etc.) are tied to the Homestead exception, but she doesn't have any equity in a home. They have already locked down the one account with her name on it - a joint account I set up so she could have a checkcard and I could easilly track/transfer funds to. They froze $85 - I'm sure they will be gratified when that's the last dollar they see.

My gut feeling is that for the $200 filing fee, we can get her out from under this. Seems like a pretty clear cut case to put in front of a trustee - no income, no real assets, no money of her own to use to discharge the debt.

Any "gotcha's" that aren't obvious? I really doubt we would need an attorney to file this one, but I am aware of the "fool for a client" proverb. Any opinions on how this case should play out? Thanks!

[olgethorpe]

First, do it quickly before the BK laws change. Second, get a copy of the NOLO PRESS book "How to file Chapter 7 Bankruptcy" for a checklist. Third, you MUST list ALL assets, debts and expenses. You can list the car and either reaffirm the loan, redeem it, or just keep paying on it (in all most all cases, the bank doesn't care as long as you keep the payments up).

[NotTheOne01]

Originally Posted by olgethorpe

First, do it quickly before the BK laws change. Second, get a copy of the NOLO PRESS book "How to file Chapter 7 Bankruptcy" for a checklist. Third, you MUST list ALL assets, debts and expenses. You can list the car and either reaffirm the loan, redeem it, or just keep paying on it (in all most all cases, the bank doesn't care as long as you keep the payments up).

Thanks - I already told her that it was now or never. I'll check out that book. I have had pretty good experience with some of their other titles.

We would prefer to keep paying on the car. Are you saying that if we list it as a debt to be included, but continue paying, then everything will still be kosher (depending on the bank, of course)? I was just planned on reaffirming it.

When we list all the assets, how detailed do we have to get? Is it a complete inventory (x Shirts, y Jeans, z VHS Tapes)? Seems like that would be a PITA, but no one said it was painless. As far as major assets (jewelry, fine furniture, etc.), there's nothing to list. But I guess if they want us to list her broken down furniture and all her t-shirts, we will.

Theoretically, we might be able to fight the default judgement since she was never served back when it was filed (2001). But I think it has been sitting around too long for it to be easy to vacate, or cheap.

I guess the crappiest thing about this is it looks like it will impact her employability in the future no matter what we do. She used to be in financial services, and was working on getting her broker's license. According to her, this (judgement or BK) will be a huge black mark on her record. The irony is that she was just getting geared up to start working again, and now this hits.

Thanks again for the feedback.

[Ladynred]

I wouldn't reaffirm the car loan at all. Virginia BK district does NOT require reaffirmation or redemption to keep secured property. That means as long as the bank keeps getting paid, she can keep the car. However, the debt itself will be discharged and should there be a situation later where you can't keep up the payments, then she walks away from the car with absolutely NO liability whatsoever. If you don't have to reaffirm, don't.

Nolo is releasing a brand new edition of the Ch 7 book next month, they're up to #12 now.

[NotTheOne01]

A followup question: I've been reading here, and I'm getting some mixed signals regarding reporting income. To restate, she has no job and no income - I am her sole means of support. We are not married or engaged, but we do live together. I have chosen to pay a few of her bills (car payment, auto insurance), but I'm not willing to take responsibility for her full debt, leading to her needing to file Chapter 7.

When she lists income, how is this situation handled. Does she just list the money that I give her, or are we going to have to list my income too? Any gotchas for this situation? Am I actually hurting her chances of getting a discharge by helping her pay bills?

Thanks again for all the great info!

[Ladynred]

You are not responsible for her debts. A lawyer will be able to tell you for sure whether or not your income will have to be listed. Obviously, with no income there's no way she could pay her bills even if you did shoulder all her normal living expenses. It shouldn't be a problem.