Thinking of filing Bankruptcy

What is the name of your state? South Carolina
I am thinking of filing Bankrupcy. The depts I have are credit cards and a personal unsecured loan and a few medical bills. I do not own a home, I rent. My car is paid for. I am NOT late on any payments but, I can't continue to keep them current at this rate. The only things I have are household items, furniture. etc. I own no savings, property, or stocks or anything else. What do you suggest I do, and how? Thanks!

[Elmo-1]

The first thing you want to do is to see if you can arrange hardship payment plans with each of your creditors. DO NOT try consumer credit counselors and expect them to get this done for you. Most if not all are scam artists and will only create more of a problem and delay the inevitable.

If you personally can't arrange an affordable payment plan with your creditors (hardship depts) and you can't find any other means to consolidate your debt, then make an appointment to see (at least three) attorneys that specialize in bankruptcy. Bk should be a last resort as it will affect your credit for 7-10 years.

Before you see an attorney, make a list all of your normal monthly living expenses - make sure they're reasonable and not what you're having to get by on because you're broke. Reasonable living expenses do not include credit cards and unsecured signature loans. These are monthly expenditures for groceries, gas, car maintenance, renter's insurance, health insurance, medical co-pays, utilities, clothing, entertainment, dry cleaners, church/charity donations, pet care, etc. Don't forget a thing.

Also, get the amount, names & addresses of every creditor you have. Get the last 3-4 pay stubs. Get the amount of deposit, if any, you put down on your appartment lease.

Get a rough list of all your household items and outside assets. Put garage sale price (less 10%) opposite everything you have. Most - if not all of these will be exempt from seizure in a Chapter 7. This info will be part of the paperwork you'll need to do at the lawyer's office and having it ready can save lots of time.

Make appointments with at least two attorneys that specialize in bankruptcy, three is better. They will all offer free initial visits to discuss your case. Don't go with the first one you meet just yet.

Take some time to evaluate what several have to say about your case. There's a great discrepancy in talent & ability out there, but they all want your business and each one can convince you to sign right then. Don't do it. Picking the the most competent attorney (ideally one who has been a trustee) is the key to a keeping your stress down in this adventure. Visit this site often and ask questions.

I've been thinking about filing a Chapter 7 but the problem I'm running into is my vehicle. I owe more than what its worth and I don't want to give up my vehicle. I have asked a few questions about this and they said try to do a cram down. Do you know anything about this cram down?

[Ladynred]

Why can't you just reaffirm on the vehicle ??

What will that do for me? Would you kindly explain? THanks.

Also, to give you an idea about my vehicle, I owe $25,000 and the Kelly Blue Book on it NOW is $14-$15,000, I didn't realize that it had deappreciated that MUCH.

[Ladynred]

Yeah.. you're basically upside down on it the minute you drive it off the lot !!

Reaffirmation means you basically sign a new promise to pay. As long as you can keep up the car payments, you get to keep the vehicle. Reaffirmation isn't mandatory, so you can even include the vehicle, NOT reaffirm, but as long as you keep paying on it you can keep it. If you decide, after your discharge, that you don't want it, you let the bank have it back and you will owe nothing.

So no matter which route I take or either a cram down or to reaffirm the vehicle I am stuck paying the whole amount of my loan? Or unless I give it back too the bank and owe nothing. Hhhmmm, is there not a simpler way to lower the actually cost of the vehicle since Kelly Blue Book value is $10,000 lower?

What a mess.

[Ladynred]

First, I don't think you can do a cramdown in a Ch 7, I believe that only works on a Chapter 13, and it takes a talented lawyer to pull it off. Obviously the banks resist it.

Short of the cramdown in a Ch 13, I am not aware of any other method for you to pay less on the loan or give it back.

Originally posted by Elmo-1
The first thing you want to do is to see if you can arrange hardship payment plans with each of your creditors. DO NOT try consumer credit counselors and expect them to get this done for you. Most if not all are scam artists and will only create more of a problem and delay the inevitable.

If you personally can't arrange an affordable payment plan with your creditors (hardship depts) and you can't find any other means to consolidate your debt, then make an appointment to see (at least three) attorneys that specialize in bankruptcy. Bk should be a last resort as it will affect your credit for 7-10 years.

Before you see an attorney, make a list all of your normal monthly living expenses - make sure they're reasonable and not what you're having to get by on because you're broke. Reasonable living expenses do not include credit cards and unsecured signature loans. These are monthly expenditures for groceries, gas, car maintenance, renter's insurance, health insurance, medical co-pays, utilities, clothing, entertainment, dry cleaners, church/charity donations, pet care, etc. Don't forget a thing.

Also, get the amount, names & addresses of every creditor you have. Get the last 3-4 pay stubs. Get the amount of deposit, if any, you put down on your appartment lease.

Get a rough list of all your household items and outside assets. Put garage sale price (less 10%) opposite everything you have. Most - if not all of these will be exempt from seizure in a Chapter 7. This info will be part of the paperwork you'll need to do at the lawyer's office and having it ready can save lots of time.

Make appointments with at least two attorneys that specialize in bankruptcy, three is better. They will all offer free initial visits to discuss your case. Don't go with the first one you meet just yet.

Take some time to evaluate what several have to say about your case. There's a great discrepancy in talent & ability out there, but they all want your business and each one can convince you to sign right then. Don't do it. Picking the the most competent attorney (ideally one who has been a trustee) is the key to a keeping your stress down in this adventure. Visit this site often and ask questions.

If I speak to my creditors about a hardship, should I ask that my accounts be closed at customer request also? I have heard that this helps on your credit. I have excellent credit at this point and if this would keep it good, I feel this would be better than filing bankrupcy. The main reason I would like to keep it as good as possible is the fact that I don't have to put up deposits for utilities and such, if my credit rating stays good.
Would a hardship with my creditors make my credit bad? And thanks for the advise before. That really sounds like what I should try first.

[Elmo-1]

I don't think this would show up on your credit report at all as long as you're paying on the account as agreed with their hardship folks. You can ask when you call to see how they handle this on their end.

Regardless of how they handled it with the CRB's, it's still be a lot less damaging on your credit reports than a Bk.

Thanks Elmo, I think you have given me a better decision than BK. I'm following that advice first. Maybe this way I can maintain my credit and not have to file anything else. I'm not looking to duck out on my bills, just get a handle on them.....THANKS!

[Elmo-1]

I don't want to add confusion to your decision. Certainly do your best to get straight with your creditors. Be sure to ask if they report hardship plans to the CRA's.

After doing your best with each creditor, scratch out your revised financials and work up a budget. Will it be livable? Will the creditors who report derogs for hardship plans ruin my credit? Just be realistic about the whole picture.

If you're not able to get the deals you need, and if enough creditors report derogs to CRA's for hardship plans, your credit score may end up effectively as useless as if you were to file Bk.

If your best effort won't allow a tolerable standard of living and your credit takes a major hit, Bk is still an option. Besides, if you were to quickly loose the debt, you may actually have the cash for the larger deposits that come with Bk. Keep an open and realistic mind.