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Last edited by loveyonetwo; 08-15-2011 at 04:13 PM.
It’s great that you’ll be able to pay off 30K student loan, so let’s talk about 22K cc unsecured debt.
As you know, Chapter 7 governs the process of a liquidation bankruptcy, while Chapter 13 provides a reorganization process for the majority of private individuals.
Usually Ch. 13 is for the individuals with significant home equity and assets and it obligates you to pay off your debt within 3-5 years. BOTH Ch. 7 and Ch. 13 can sit on your credit report for 10-15 years.
You don’t have a house or car, so technically, nothing compromises your ability to go for a Chapter 7 bankruptcy (it got very difficult to be eligible for the last couple of years). Did you consider speaking with BK attorney in Ca to hear all possible options? Some do free consultations.
You are 23 and not planning to purchase your own home or car, at least for a while. If it would be my truly last resort, I’d personally go for BK if I knew that I could not borrow money from somebody or that I could not make needed $$ really fast.
I also would try to re-think BK in favor of debt reduction... (How late are you?) . I would start calling creditors -and for the most part, they may give you quotes for significant reductions on your accounts (starting with as much as 75%). They will get more flexible with time, you may pin them down to 20%, as long as your accounts are aged. For instance, City Cards has a tendency to harass you for 4-5 months non-stop on the phone for payment arrangement, and then surprise you by sending a 20-25% settlement offer which you is good for 2-4 weeks.
Debt reduction is always better than Bankruptcy on your credit score. If you feel you're doing fine settling your debts on your own and don't need a lawyer to help you, then don't get one. The best thing to do to stop the credit card companies from going back on their deals is to get everything in writing and have it signed by both parties. Also make sure you get an acknowledgment from the creditors that you've paid them in full, again in writing.
On the other hand, BK will give you a fresh start, eliminate lawsuits against you (as well as wage garnishments) and will stop a headache-but it will certainly affect your credit history for a long time. If you do not care about home and car loan/finance in the future (btw, if you a rent-BK may be problem for some landlords as well), that’s fine, but BK also affects employability as well and limits your ability to work in certain areas, such as finance. As long as you are positive that you can pull off another 10 years in dancing and make-up industry, you may be ok.
What can they *take* from me? Assets, etc.? I don't think I have any.
I would ask Ca BK attorney about it, but as far as I know, they can’t since you don’t seem to own any. However, there’s an issue called cross-collateral banking. Example: If you owe Bank of America’s Visa credit card $3,000, there is a good chance that if you stop paying Visa, and happen to have a checking/saving account in BOA bank, your accounts will be frozen. Thus, if you choose a debt settlement road on your own and stop paying creditors, make sure to move your accounts to the banks where you do not owe any money. And do it fast!
This may sound stupid, but they can't take like furniture or clothing from you can they?
In the North East I see the tendency that creditors from some stores such as Ashley Furniture and
Kay Jewels pay visits to debtors and actually knock on their doors to get their items back; however, it depends on the level of their desperation to get paid. In extreme cases you may be sued.
If I know I want to pursue filing bankruptcy, is it illegal to completely max out the rest of my credit cards?
If I were you, I would not add any extra damage and would not max out cc, but that’s just me.
Do I get to keep my debit card account if my account is in good standing?
Depends on state and case. One thing for sure-if you owe money to some cc and you are late with payments/stopped paying them, sooner or later other cc in good standing may take away a line of credit from you they have extended earlier.
I would research this subject as much as I could, it’s a big decision. I’d go for my own debt-settlement (by myself, obviously), considering the fact that:
1) I have to get patient and persistent with creditors on the phone
2) I have at least 35% to settle of the total sum of 22k (try to offer as little as 10%).
3) I realize the creditors may sue me, thus I am prepared to defend my case in front of the judge that I have a severe medical/financial hardship(make sure you don’t make any big purchases recently reflecting on your credit history-it will destroy your credibility!) Often a judge will order creditors to work out some kind of deal with you if he believes you case.
Good luck! There is also ton of info on http://www.debtconsolidationcare.com...ent/index.html.
Check forums, research everything about BK.
Last edited by precise212; 11-06-2010 at 06:45 PM.





A big thank you to precise212 for giving all this info. & I quoted the above to mention that my bank has treated me well even though I have some unfortunate outstanding debt issues, since they have zero knowledge of my debts. (Interestingly enough they do have a program to help people fix credit scores, but I haven't used that yet.
My pleasure!
BTW, in case of cross -collateral banking, they may "capture/freeze" your volt safe box in that bank. Make sure that your name is nowhere to be found on any account, move assets elsewhere, to financial institution where you do not owe money to their cc.
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