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Thread: Bankruptcy

  1. #1
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    Default Bankruptcy

    I have searched the thread on this subject but I didn't find anything too in depth. I know some of you have filed for bankruptcy and I just want to know what the process is like. I have been thinking about filing for bankruptcy for a while now but the thing that is setting me back is that I don't want it on my name for a LONG time. Even while stripping, I'm still in major debt. Between 35k-40k...(mostly medical bills and credit card bills) And while stripping is decent $$$, I also have other things I need to do with my money.

    Since I live with my parents now I have been paying them $200 every month for rent and utility bills. I also have to buy food which is not cheap at all. (Has the prices of groceries went up???) And also, I need a new car asap. And I'm trying to move out into my own place asap as well. But paying off that much debt will take a really long time. I'm on payment arrangements with almost every credit agency but it will still take a long time. Alot of people have been telling me that bankruptcy is the way for me to go at this moment.

    What is the process like? I heard that you have to go to a consultation meeting or something like that. And that there is a fee for filing. And also, once filed, is it hard to get things such as a car or apartment? Because if filing will ruin my chances with that, I will just stick it out and continue on with money order payments. Any advice or info will help.

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    Banned Melonie's Avatar
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    Default Re: Bankruptcy

    The first question in regard to a possible bankruptcy filing (since the laws were changed in 2006) is whether or not the amount of money you have earned over the past 6 months is above or below the 'median' income for your area. The reason this is a 'key' question is because the amount of money you have earned in the past 6 months, when compared to the 'median' income for your area, determines whether your bankruptcy can be filed under Chapter 7 or must be filed under Chapter 13.

    If you aren't familiar, 'old fashioned' personal bankruptcy filings took place under Chapter 7 - and typically resulted in the bankruptcy judge 'washing away' all of your past debts thus allowing the filer to 'walk away' from a bankruptcy without payment obligations to creditors ... in other words, a totally clean slate upon which the filer could then rebuild his personal finances / credit. However, credit card companies, car loan companies etc. lobbied very hard for a rule change, pointing out that they were being 'stiffed' with major losses as a result of 'well-to-do' people using Chapter 7 bankruptcy to shield themselves from debts they could (at least partially) afford to pay.

    As a result of that lobbying, the bankruptcy laws were changed such that people who could (at least partially) afford to pay something towards their debts would no longer be allowed to simply 'walk away clean' under Chapter 7. Instead, these people are now forced to file bankruptcy under Chapter 13 - which involves the person making partial payments on their debts under the supervision of the bankruptcy court for a period of (typically) five years. Under Chapter 13, the court looks at how much money a person is capable of earning, the court looks at how much money at a bare minimum that person needs to cover costs of living, and the court then draws up a monthly payment plan such that every additional dollar that person earns must be paid in partial satisfaction of their delinquent debts.

    Filing under Chapter 13 would basically prevent you from moving into your own place for the next 5 years - unless the place you moved into was priced lower than the IRS cost of living schedule for your area. Filing Chapter 13 would also prevent you from obtaining a car loan or any other new credit within the next 5 years, because every non-essential dollar you earn must be paid towards your delinquent medical and credit card bills under the court ordered payment plan. Thus the first matter you need to determine is whether or not you may file under Chapter 7 or whether you'd be stuck filing under Chapter 13 ...

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    Default Re: Bankruptcy

    ^ Agreed. The fact that you live with your parents, have no car (so no insurance, no gas, no maintenance, no car payments)...I would say that your chances of getting a chapter 7 BK are slim if not impossible. Your rent is way, way, way below that of the local rents and while food is important, you are not spending all of your earnings on food and rent at your parents (most likely).

    The only bad thing about a Chpt. 13 BK is that it is court-approved and ordered and if you miss any payments, you can be in more trouble.

    In one of the other threads, someone posted a website on snowballing your debt (cannot remember who...Audrey Leigh, maybe?) and avoiding BK altogether.

    Definitely check the links that Mel provided...and good luck!

  4. #4
    AudreyLeigh
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    Default Re: Bankruptcy

    Debt snowball sheet

    Sign up and you can save your info. It tells you what to pay first and how much along with how long it will take and incurred interest. You want to check the 'Interest Order' box for max impact.



    My advice is to fill out all info and print it out... so you can refer to it each month.

    Good luck. I just paid off a bunch of mine and Bs debt and all the rest is in snowball mode. Its actually kind of fun to do see and really KNOW whats going on. Whatever you do DONT CLOSE ANY ACCOUNTS but you probably want to cut up CCs, do not default.

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    God/dess kitana's Avatar
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    Default Re: Bankruptcy

    Would you guys ever recommend bankruptcy if the debt was substantial enough?

    Like x3+ your before tax income?

    All of mine is medical besides 3k or so for various debts I pay a bit on each month, but the medical is what is KILLING me. (Over 80K for one instance alone)
    [SIGPIC][/SIGPIC]
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  6. #6
    AudreyLeigh
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    Default Re: Bankruptcy

    Kitana - I think a bk would be a great option for medical debt especially of that much. You could probably file ch7. May want to consult an attorney and look into your options. And with the money saved look into getting some insurance. Its one of those things you dont think you need - until you need it.

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    God/dess kitana's Avatar
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    Default Re: Bankruptcy

    Quote Originally Posted by AudreyLeigh View Post
    Kitana - I think a bk would be a great option for medical debt especially of that much. You could probably file ch7. May want to consult an attorney and look into your options. And with the money saved look into getting some insurance. Its one of those things you dont think you need - until you need it.
    I know now, lol. But when you are 27, you never think you will have an illness that usually only effects elderly, ya know? (pneumoccocal pneumonia, sepsis, and acute kidney failure)
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    Quote Originally Posted by ExoticEngineer View Post
    Feel like a damn salt lick at the goats petting zoo!
    <08SM>

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    Default Re: Bankruptcy

    Quote Originally Posted by AudreyLeigh View Post
    Debt snowball sheet

    Sign up and you can save your info. It tells you what to pay first and how much along with how long it will take and incurred interest. You want to check the 'Interest Order' box for max impact.

    Thank you for this link! I'm not going to declare BK, but do have a crap load of debt. This breakdown makes it easy to see where to start and what to do. So thanks.
    ~'A Seven Nation Army Couldn't Hold Me Back'~

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