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Thread: Bankruptcy

  1. #1
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    Default Bankruptcy

    Well, here I am, 23 years old and ready to file bankruptcy. I got my first collections call on tuesday last week. I have a debt through citibank for over $8000 and don't have the money to pay it. The lady gave me an option of doing $4000 down and paying the rest $1000 a month till paid off. She's giving me til 4/15 to get the money. She originally told me to apply for a loan or another CC to just charge it. On thursday I get a call from her manager about it, when I had to call her friday, I told him and we hung up. I got denied for the loan and she said "Oh no don't apply for a loan, you need to get loans from family and friends." She back peddled on her original statement. I have until monday and i know it's not going to happen.

    I called a lawyer on friday and have an appt on wed, but my concern is what do I tell this woman that I have to call on monday? Do I tell her I'm going to speak to a lawyer about bankruptcy? Do I wait and have the lawyer call? The collections company is United Recovery Systems, they were taken to court for breaking the Fair Debt Collection Practices Act.
    Here's the link to the article:
    http://www.ftc.gov/opa/2002/04/unitedrecovery.shtm

    I really would like to speak with a lawyer before I call her on Monday.

    Any advice would help and be appreciated.

  2. #2
    God/dess Lysondra's Avatar
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    Default Re: Bankruptcy

    Just tell the truth. They want to help you and get what they can.

    I'm shocked she wouldn't do a payment plan with you though.

    I currently pay $500 every other week on my taxes... but that's only because I said that's what I could afford.


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  3. #3
    God/dess Lysondra's Avatar
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    Default Re: Bankruptcy

    A more logical payment plan, I mean.


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  4. #4
    BrunetteGoddess
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    Default Re: Bankruptcy

    Don't feel bad. I'm 23 and had to file with my husband for BK last year. I would avoid it if you can; it sucks. $8,000 is not worth filing for BK if you can work something out. Not when it will destroy your credit for years to come and you will have to start over from BK.

    If you do go forward with a lawyer consult, when the creditor calls just say "I am unable to pay you at this time and have made an appointment to consult with a bankruptcy lawyer. I will contact you once I speak with them and advise you on the course of action I will be taking. Thank you."

    And hang up. Because otherwise they will try to talk you out of it and give more horrendous solutions. Just hang up after your statement.

    If you do seek counsel and go forward with BK proceedings, once the collection agency calls, give them your lawyer's name and phone number and tell them any further contact regarding the debt should be directed to your lawyer.

    Chances are that with the small amount of debt you have, they might consider having to file for Chapter 13, where instead of discharging all debts without payment, they work out a payment plan for you. This will all be assessed as part of the process of filing.

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    Default Re: Bankruptcy

    Seems like a low amount of money to file bankruptcy over, especially with the repercussions of bankruptcy. I suggest exhausting all viable means before you go that route, especially with the collection agency. I mean, they should give you a more reasonable plan, otherwise they get nothing.

  6. #6
    BrunetteGoddess
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    ^^I would definitely bring that up with a creditor as a last effort before filing for BK. Remind them that you are very serious about consulting about bankruptcy because their terms are not realistic for you. Remind them that if you should choose to file, that they have ruined their chances of getting ANY money. If they would just work with you, they have a real shot of getting at least something.

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    God/dess Bella21's Avatar
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    Default Re: Bankruptcy

    Bankruptcy over 8k? Nooo! Don't do it! Hopefully someone else will be able to direct you to someone but... Yea. Don't let the creditors shove you around. They don't want you to file, they want your money. If you can put 1k down and $500 a month, they'll take that over nothing. Don't buy into their BS and play hardball. Tell that woman that you are struggling between paying this and bankruptcy and see what she says.
    If you think school is hard, try being stupid.

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    Banned Melonie's Avatar
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    Default Re: Bankruptcy

    ^^^ agreed agreed that, from the creditor's standpoint, accepting an offer of payments from you such as paying $1000 a month over the next 8 months is greatly preferable than having to pay a corporate attorney to make filings against you in a bankruptcy court plus very high probability they will receive nothing at all in the way of payments.

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    God/dess VenusGoddess's Avatar
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    Default Re: Bankruptcy

    The creditors will always give you the worst payment plans when they first talk to you (like the one you got). But, if you tell them that you cannot afford that and the most you can afford is $200 a month with a $500 downpayment, they'll most likely take it.

    Don't BK over $8,000. In fact, the courts probably will not even allow it. Especially if collections have just started.

    I would also advise seeing if you can contact Citibank and work on a repayment plan with them and get the collection agency out of the way. It'll look better on your credit because you would have paid off the ORIGINAL creditor and not the collection agency.

    It's not the end of the world and all, but for the amount of money you are talking about, filing a BK at this age will greatly affect you up until your 30's. Especially the way that banks are now clamping down on all of their lending.

    Sit down and figure out how much you can reasonably afford to send to this debt and stand by it. Don't put yourself in a crunch. But do work on paying it back.

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    Default Re: Bankruptcy

    You will not be allowed to go bankrupt in any state for $8000 in debt.

    Even considering going bankrupt, as you are a dancer in Vegas, does not make any sense.

    And the lawyer is not going to be free. Give the lawyer money to the collection agency, and tell them to cool down while you get the rest. \

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    Default Re: Bankruptcy

    Thanks for the advice, but I should mention that I have other debt besides that. I owe $5000 to chase, $2700 in student loans, $4500 in loans for my furniture, $10,000 for my car, and $2000 for my capital card. Plus other little bills, express and nordstroms, $500 each. I'm going to talk to a lawyer anyway just to see what he has to say. I know where I am right now, and I've done some research online but I'm not a lawyer. Thanks for the advice.

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    God/dess Lysondra's Avatar
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    Default Re: Bankruptcy

    How the hell did you do that by 23? Ten grand OWING on the car? I know it's late now but something's wrong with your spending if your student loans are a tenth of your debt at 23. At least you'll learn from this. Hopefully you get to keep the car.

    I can't even figure out how you got the loans... I can't get a freaking card for $500!


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  13. #13
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    Default Re: Bankruptcy

    I bought the car when i was in the miltary. I actually got $3000 off of it because of that. I put $3000 down and the lease was 5 years at $300 a month. right now I owe around that. It might be a little under $10,000, but not by much. I haven't gotten the statement for this month yet. I have never made double payments or anything like that. If I did, I wouldn't owe that much.

    I tried going back to school last may, I ended up dropping. If I had stayed in I'd be looking at about $17,000 in student loans. It was an accelerated (sp?) program. School here is expensive, I know people with debt in the hundred thousands because of it. I have a friend who's looking at grad school in california for psychology and it's gonna cost her $80,000 without living expenses and $110,000 if she doesn take out money for that. I remember her telling me this when I went home for Christmas in December. Next time I go to school I'm using the GI bill. I didn't the first time and I should have.

    I realize now that my spending is out of control. I've actually stopped. I use to have really good credit. Not a day would go by where I wouldn't get credit card offers in the mail. I've also thought about debt consoldation (sp?). I tried it back in march but the company I called said that when they tried to process my application it came back as an error and to try again in 90 days. I will get to keep the car. I have a friend filing chapter 13 right now and he's keeping his house and his cars. I'm not worried about that.

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    Default Re: Bankruptcy

    Debt consolidation is just as bad if not worse than bankruptcy, in my opinion.

    Sorry, didn't mean to come off as judgemental it's just... yikes.


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    Default Re: Bankruptcy

    No, you didn't. I've never dealt with it nor do I know anyone who has. The company I got my furniture loan from is the one I applied through.

  16. #16
    BrunetteGoddess
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    Default Re: Bankruptcy

    As long as you're filing for Chapter 13, you should be able to keep the car. But if you file for Chapter 7, you'd better hope that the car is not worth any more than $8,000 or you will lose it.

    You DO realize that with Ch13 you still have to pay these debts? It's NOT like Chapter 7 where you are released of the debts.

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    Banned Melonie's Avatar
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    Default Re: Bankruptcy

    Debt consolidation is just as bad if not worse than bankruptcy, in my opinion.
    just to clarify, debt CONSOLIDATION is usually accomplished by a new loan ... almost always backed by an asset such as home equity ... which essentially allows cash extraction to pay down other loans / bills and replaces that pile of separate loans / debts with a single home equity loan. These days, without a source of equity to pledge against a new loan, odds of getting approval for such a loan (unsecured) are practically nil.

    Debt COUNSELING is probably what you're referring to ... where the nearly bankrupt person signs a contract with a debt counseling service to turn over x dollars of their earnings per month. The debt counseling service then 'renegotiates' (i.e. strong-arms) the individual creditors to accept short payoffs / lower interest rates / lower payments over a longer term. Indeed this shows up just as badly in terms of credit rating ... and perhaps worse if the individual creditors will be strung along for years and the 'renegotiated' debt never fully satisfies the original debt obligations. With a 5 year repayment plan plus short settled debts, your credit report will continue to carry shrapnel for at least 8 years.

    If a whole bunch of creditors are involved, and if the total debt is in the $25,000 ballpark, and if your income is low enough to qualify for Chapter 7 (total elimination of debt) filing status, IMHO you'll be ahead of the game 7 years from now by going bankrupt now. However, odds are that the student loan cannot be erased (can't if it was gov't backed). One advantage of Chapter 13 BK versus credit counseling though is that the court's authority on 'crammed down' debt balances is final, whereas with a Credit Counseling service the creditor always has the option to claim that a 'voluntary' short settlement wasn't 'voluntary' at a later date (i.e. another collection agency may come looking for the short amount 5 years down the road). As such

    But if your income level forces you to file Chapter 13 instead (basically a court ordered 5 year repayment plan, with court ordered short settlements), the credit report shrapnel will be just as long as with Credit Counseling.

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    Default Re: Bankruptcy

    Quote Originally Posted by BrunetteGoddess View Post
    You DO realize that with Ch13 you still have to pay these debts? It's NOT like Chapter 7 where you are released of the debts.
    I realize that. I have a friend in ch.13 right now.

    The student loan is through sallie mae. I'm not going to do credit counseling.

  19. #19
    AudreyLeigh
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    Default Re: Bankruptcy

    You cannot bk student loans. Period. Not $2,000 worth and not $80,000 worth. Theyre federally backed and the feds wont let you not pay them their money. Mine are through Sallie Mae also.

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    Default Re: Bankruptcy

    ^^^ actually, a few people have taken out student loans that were financed by 'private sector' banks as part of federal 'community service' mandate from bank regulators. Since these are not underwritten by a gov't agency, you CAN go bankrupt on these student loans. However, banks hate making these sort of loans so there aren't very many of them out there.

  21. #21
    AudreyLeigh
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    Default Re: Bankruptcy

    Of course Mels right! I was going to write something about private loans but most people get fed backed ones and I assumed hers were... and we all know what assuming does...

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    Default Re: Bankruptcy

    Mine are through wachovia.

  23. #23
    BrunetteGoddess
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    Default Re: Bankruptcy

    Most likely then it won't be dischargable. Mine is through Wells Fargo and it didn't discharge.

    But since you're thinking about doing Chapter 13, you might as well not worry about whether it is or not.

    Are you a student? If so your loan payment should be able to be put off until you graduate. Or if you aren't , you can file for an Economic Hardship Deferment with Wachovia. That way you don't have to pay for 6 months, but you will still be accruing interest on the loan. You can go into deferment as many times as you need to.

    So that's my 2 cents re: student loans

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    Default Re: Bankruptcy

    I know about deferment. I'm not currently in school, I will be in the summer. But I'm going to a community college and I'm not gonna take out loans fot that, each credit hour is about $55. I'm going to apply for the GI bill, my mistake is that I didn't initially do that.

  25. #25
    BrunetteGoddess
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    Default Re: Bankruptcy

    Hey, me too. Good luck to you!

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