In Ch.7 ...Personal bankruptcy.....If you Have planned and prepared properly...(1)all secured creditors will get their asset that they financed (house, car, atc, etc.)..back ..if you don't make arrangements to keep making payments , (2)All unsecured debt will be wiped out , basically all credit cards. Each state has set a specific amount $$ aside that is considered a Safe Harbour that will Usually protect ... one vehicle, personal possessions, farm animals , Tools of Your Trade if self employed. In Texas this is set at 30,000. Royalties from oil\gas wells is not a protected item. Your retirement in 401k's etc, is protected also for the most part. Normally, any Charges on a credit card 90 days prior to filing is considered a NO NO and may prevent some or all of your credit card debt from being wiped out. Prior to filing ...say 6 months or so you should remove all CASH, Cd's , etc. from the bank as all cash will immediately be taken into "Custody" by the court and probably paid to your creditors. Filing Ch.7 IS NOT a spur of the moment action . You(generic you) should educate yourself as to how the laws for your particular state of residence apply and start planning to minimize the Pain($$$) you will be subjected to. Finally , the REPUBLICANs in Congress....especially in the House have already Passed a very MEAN , revised new Bankruptcy Act that Was probably written by the Attorney's for Visa and M.Card. It turns the current law on its head in favor of the Creditors instead of us poor old sob's that need alittle relief. BUT...not too worry....it will have a hard time getting thru the Senate so the current law is safe for the near term..........fordy :haha: :worship: :no:
If you have credit card debts, also see if the creditor is willing to work with you somewhat. For example, they freeze the balance due (no further interest charged) if you pay off something (even perhaps as low as $20) a month against the balance.
Also playing into the equation is recover. As the saying goes, "When you find yourself in a hole, stop digging." This may mean allowing all your property to go back to the lender and basically starting all over again from scratch on a pay as you go basis. It might be practical for you to rent your property and then go live with a relative (if available) with the rent payments going to help pay your mortgage.
Apparently a lot of areas now have free debt counceling services. You should make arrangments to go see one ASAP. They know all of the details.
Bankruptcy paralegal here! Whether you can keep your property or not depends on what state you live in. Most states will permit you to keep your homestead property (the property you reside in); however, there is a limit to the value that property can have. That is established by your state bankruptcy laws. Although bankruptcy is a federal proceeding, the federal courts have allowed for certain elements of bankruptcy to be determined by the state. These include the value of your homestead property, value of your automobile, etc.
If you want to keep your property you still have to pay for it. You don't get to keep your property and not pay for it too. This means you would have to have all payments current and continue to make the regular monthly payments timely. If you owe on your property you have 3 options:
1. If you are behind on your payments you either have to bring all payments current or file for Chapter 13 bankruptcy. Under the Ch. 13 you would provide a plan of repayment (usually over 3-5 years) on the arrearages (and all other debts - including credit cards (no debts are wiped out in Ch. 13; however, unsecured debts, such as credit cards, are generally paid off at the rate of 10 cents on the dollar, although this amount will vary). You would also have to continue to make your regular monthly mortgage payment on the property in addition to your Ch. 13 payments.
2. You can file for Chapter 7 bankruptcy, if you have no arrears, and "reaffirm" the debt. This means you would sign an agreement with the mortgage holder to deal with the debt outside the bankruptcy. You agree to continue making your regular payments and they agree to let you keep the property as long as you continue to make all payments. Everything works just as you are doing now.
3. You can file for Chapter 7 and surrender your property. You would generally have a timeframe to vacate the property of approx. 3 months. The mortgage holder would have to get a Lift of Stay (a hearing to take the property from the federal court to the state court in order to foreclose) and then file a foreclosure suit against you. You would then have approx. 30 days (that also varies state-to-state) to vacate the property. The property would then be sold at auction (you would have to be out before the sale date).
Ordinarily, any difference in the amount you owed versus how much the property sold for you would have to pay; however, under the bankruptcy this deficiency would be wiped out. For instance, if you owed $70,000 on your mortgage and property sold for $50,000 at auction, you would still owe your mortgage holder $20,000 and they would aquire a judgment against you for this amount. This amount, however, would be forgiven in the bankruptcy.
I'm not an attorney and can't give you legal advice, but I can give you a very general idea of how things work. You want to consult with a qualified bankruptcy attorney ASAP. Whether you can qualify depends on many factors and the sooner you contact an attorney the better before you do something that would prevent you from filing. There are several time sensitive matters! There are also frequently other options that are available to you that you don't realize you have! Feel free to PM me if you have any questions or if you would like info on how to choose your attorney. Best wishes.
Guest, please be aware that the above posts are opinions; not to taken as issued legal advice, placeing legal advice over the web is not legal. I am sure the above posters have your best interests in mind and are not aware that their opinions could be misunderstood.
I don't think the new laws are nearly strict enough, but then I'm one of those old-fashioned types who don't think 2 bathrooms in a house, or a phone line, or internet access is an entitlement. I see low-income housing in various areas that's tons nicer than a lot of regular housing these days. If I can't afford it, I live without it, or find a cheaper way to do it. For example, it constantly amazes me when people complain about creditors harassing them on the phone at home, when all they have to do is not have a phone! Real simple. I go weeks at a time without making a phone call. Internet I enjoy and use, but would get rid of it if I had to without a second thought, and go to the library more often.
I read your post under the assumption that you truly have no other options (no relatives to help, you've stopped all your credit accounts, gone down to eating rice and beans etc.). You can keep some assets, and it does vary by state. You will also have a new bill to your lawyer if you go that route, or to whomever you do the bankruptcy through. I have heard that going through the "counseling" services that negotiate lower rates and terms is just as bad as doing the other as far as credit reports go, but am not certain of that--looking at the TV commercials, it seems that there are still businesses around that will loan to anyone no matter what. I think if you own property, if at all possible you should sell it and go live in cheaper quarters for a while until things are paid off. You can move in with someone and do housekeeping/landscaping etc. in exchange for room and board, for example, and put any monies you earn from a job towards paying off your debts.
The suggestion to remove any cash and other assets in order to protect them, well, that is sad to see, on this board at least, because if you (anyone) incurs debt, you should pay it. Simple as that. If you loaned money to someone and they got out of paying it you would feel bad if you counted on that money to take care of your family, so.... It seems there is virtually no stigma attached to bankruptcy anymore, which is why often you see people think of it first, instead of last.
You might do better negotiating on your own with each creditor, especially hospitals (although again, there's something wrong, when instead of charging uniform lower rates to all, anyone with insurance or enough assets to attach is paying double or triple what someone else is for the same service).
If at all possible, please try to find some other way than bankruptcy to settle your obligations--you'll sleep better at night.
RAC, In a perfect world we would all repay everything we owe and never sleep around and never cheat , steal , or lie....but that's a perfect world and not the world we, as Imperfect citizens, live in. The problem is that the middle class thinks it is supposed to be guaranteed a 150,000 home, 2 new vehicles , and retire with a million in the bank. A Very Big Part of the Problem is that the Large Corporations that advertise Conspicious Consumption and the Throwaway Lifestyle......USE to Employ thousands of workers that it was selling TOO. Unfortunately, they have seen fit to Export most of those jobs to China and elsewhere. That means , in effect, all those middle class folks DON'T have jobs to Fund their lifestyle. Granted, nobody forced them to Borrow the money but they did based upon the Fact that they could Repay what they borrowed in Good faith. And now all the middle class workers have been basically forced Down one economic level into the Wal-Mart income strata and lots of them have utilized the CH-7 law and it's benefits to keep what little that they can salvage from their previous lifestyle. In the Last 3 years we are continuing to hear and discover how Crooked the Finanical Community has become in Stealing from anybody and everybody that they can Screw out they retirement and\or savings plans. The LEAD Prosecutor in the Discovery for all of this Theft is the NEW YORK A.G. Where the Hell is the SEC?? They just keep having to play catchup with the NY, A.G. WHY????....Because the National Gov't is run By and For the Lawyer\Lobbyists that give all that free money to Both National Political Party organizations. Why the Hell shouldn't the little Guy utilize the ONE Legal Tool that he has to Keep a portion of what he has earned???.......fordy :no: :worship:
Fordy, no one is forced to go work for Wal-Mart, or wherever. If people read the papers on a regular basis (and sad to say, they don't, and often don't even watch the news on TV) they would know in plenty of time that they need to get out of this field and go into that one. People get too comfortable in one job, or they tell themselves they can't possibly do this or that job because it is beneath them, and then wonder why it costs so much to hire a cleaning service (for example). They spend more than they make on a consistent basis. I don't care what job a person has and how much money they make, they can still be sunk by poor financial habits.
Also, credit companies extend too much credit to begin with. Get a loan on a house that is FOUR times your income? Gee, maybe that's a reason alone for so many foreclosures. But since those loans are secured, they'll at least get their investment back, providing it's not trashed first. And now you can even get a loan for your down payment--what's wrong with this picture? But no one makes you accept the loan.
But bankruptcy is like shoplifting, someone has to pay for the loss, and it is the rest of the people who do manage to pay their bills. Is that fair?
And, I'm not sure taking the cash/CDs out of the bank would help, either, the companies might hire a forensic accountant to look into transactions for the past x number of months, or see if you did a quit-claim to someone else and add the amount of those assets right back in.
Honest, I don't think that everyone who files for bankruptcy wants to just walk away, but because current laws make it so easy to do so, with relatively few ramifications, that I would say that close to 2/3 of people who file now, could have with proper counseling on budgeting and some "tough love" gotten out from under the debt instead of passing it on to someone else.
Did anybody remind you that bankruptcy is a 10 year mistake? It's going to be on your credit record for at least that long. Any time you go to borrow money or need credit, you are going to have trouble. Many insurance companies do a credit check before issuing policies. In several states such as Alabama, Texas, many others, your credit score is part of the process as to whether they will issue you the policy.
I personally believe that it shouldn't even be an option. It causes more hurt for much longer than it's worth.
It is a mark of integrity to make arrangements for repayment, and to pay off your honest debts.
When someone files for bankruptcy, who do you think pays for it in the end? Everyone else does, it always gets passed on to the one's that pay their bills. There are some instances where bankruptcy is the only option due to unforeseen circumstances. I carried a heavy debt load for 15 years, driving new cars, etc. We finally decided enough was enough and sold the expensive items to pay the the debt and then scrimped and save to pay off the rest. All my cars are 10 years or older, my pickup is a 1972. Our house is 100 yrs old, but we do improvements when we can afford to. Within the last year my wife quit her job to stay home with the kid, which ended up being a good thing all around. We lost 30K in income, but still live a good lifestyle.
I ...Don't ....believe , for a NY minute that "everybody pays" when an individual files Ch.7 . Why???Well , ALL...large assets that are purchased such as houses and vehicles are collateraiized by their intinsic market value. Other than collection fee's and\or legal fees the lending institution retains title and therefore control over the item in question. So, they Don't lose in Ch-7.....Now lets look at Unsecured Debt. Does anybody here believe that ...IF...ALL credit card debt was paid off today that Visa\M.card would lower their Mafia interest Rates down to Prime plus a couple of points??????Not Hardly!!! Visa\M.Card both willingly accept a 20% default rate and they Still make an UnGodly amount of money on their credit card business.....So , they Don't lose either because of a Ch.7 filing as their interest rates are so high that they have Already taken their loses into account. I'm quite sure that I have omitted situations whereby finanical institutions do lose in a Ch.7 filing but they are Not that significant. The real Question here IS....Are credit card interest rates significantly HIGHER because of Ch.7 and My contention is ....NO , they are NOT. They are so outrageously HIGH because they are like PIGS at the Trough.....They Squeal when even the smallest morsel(sp) of their Slop is taken away. Now...boys fire at will............fordy :waa: :no: :worship:
Fordy, the credit card companies make the vast majority of their money off the businesses that pay for the privilege of accepting their cards. Interest charges/late fees/etc. on balances are icing on the cake, but those who pay off their balances in full every month aren't paying anything (so interest rates are of no interest to them), unless they're paying an annual fee for an airline/hotel card (I did read somewhere that credit card companies are looking at charging annual fees again because more people are getting smart and paying off balances every month--many have now shortened their grace periods to 20 days). If you have bad credit you will never get good interest rates, read the fine print in most offers. Someone extending you credit is taking a risk on you and they charge interest in many cases according to how risky they think you are.
The credit card companies need the businesses to survive. If all the businesses went back to cash/check only there wouldn't be any credit card companies. Just something to think about. I still see cash-only businesses (no checks, either), and they always cite card company fees (and machine rentals, other fees like for chargebacks, etc.) as the reason they don't take credit cards or accept checks. No checks, no bad check fees....
Houses might go up in value between a purchase and a foreclosure, but that is not always the case, and banks don't like to manage rentals or safeguard vacant properties, so often they are sold at a loss, and at quite a large loss when you consider that most people don't pay their mortgages early (all that interest income gone bye-bye), and add in any real estate commission fees, and fix-up fees. Cars lose a third of their value when you drive them over the lot, so the lenders also lose money there, even if they sell them, there are still detailing costs, repair costs, etc.
So everybody does pay, in some way, when people default on their obligations.
Personal responsibility. The key word there is "personal".
Banks aren't responsible for it. Advertisers aren't responsible for it. The government isn't responsible for it.
You, personally, are.
I've been through hard times, been through good times, then back to hard times. Money comes and goes, so do jobs in todays world. Property values fluctuate, so do interest rates. There are things I need and there are things I want.
None of that takes away from my personal responsibility to make the best decisions I can, using the values and morals I live by...honesty, integrity, etc. If I make a bad decision, I pay the price. If I make a good one, I accept the rewards.
If you've gotten yourself too far into debt, at least accept the responsibility...all the way to the bankrupcy court if need be, but don't whine and blame everyone else. It's childish and doesn't convince anyone that you are a victim, just tells them that you don't understand what personal responsibility is.
I do understand that there are times the most responsible person can face bankrupcy, as in the case of medical bills. I don't think they whine too much though. That's usually the way it works. The ones who are part of the problem are doing all the whining, while those who truly suffer, just do it in silence.
Several years ago, I was working as an adjunct professor (think: next to no pay), paying for school and just making ends meet, when someone backed out on $2000 they owed me. It sent me into total financial chaos and, as a result, I fell behind on payments for 3-4 mos.
I did quite seriously look into bankruptcy, but was told by a friend (who'd successfully declared it, due to several years of catastrophic medical bills) that I'd be laughed right out of bankruptcy court. I also looked at the consequences for future credit, and considered the general kind of *karma* of the whole thing. So I decided against it - my debt hardly compared to hundreds of thousands, probably more than a million in medical costs or anything similar - it was a paltry sum in comparison and the result of some bad judgment on my part in counting on this certain person to come through with what they owed me.
So I bit the bullet and started paying it off. And it took me a good 3-4 years to dig myself back out, but I did it, a nickel and a dime at a time.
It can be hard, sure, but it's do-able. I sold stuff on eBay, had running garage sales (it really is amazing what people will buy!), learned 75,000,000 billion miraculous ways to turn brown rice and an onion into gourmet fare! etc.
I came out of that with the belief that there are legitimate reasons to declare bankruptcy - people saddled with hundreds of thousands of dollars in medical bills, for example, can't possibly ever expect to dig out from under them, unless they're making a good half million a year. I say they ought to just do it, declare bankruptcy. I wouldn't ever hold it against them. Some others, though? No. I do think they have the obligation to pay it all back. And I know it's do-able.
My experience with credit is that it is a necessity, but one that should not be undertaken lightly. Credit is necessary in most cases to purchase a home or land.
If the credit card companies were going broke due to the record numbers of bankruptcies, why is it possible that I can call my card company, request a lower rate, and when they say no, tell them that XYZ is offering me a cheaper rate on a different card. Then I request to be placed with account closures department and zap, instantly I am placed with a customer service rep. who lowers my rate (the last time 5%). I have done this for the last two years and each time I get a rate reduction. If this keeps up, soon I'll be paying prime! :haha: I get around 4 to 5 credit card offers in the mail a week, but don't seek them out.
Some people have told me that they felt they had no choice except to file for Chap. 7 as the collections people were so rude, mean and threatening that they didn't know what else to do. People out of work have enough to do trying to put food on the table, hunt a job, keep a roof over their heads, and so forth - that they don't usually have the energy to fend off collections agents.
Sometimes bad things happen to good people - I have seen alot of people, good people, out of work due to layoffs and plant closures. Plants and services moving to Mexico, the Pacific Rim, and Asia. These are lost jobs - lost for good or at least any foreseeable future. The people who worked these jobs were average folks just trying to put braces on the kids, pay the house note, and keep food on the table. Well in my part of the US, when you have several plants close at about the same time, just where are all those people going to try to get work? Are they supposed to yank the kids out of school and move in hopes of getting a job? Around here, the loss of one plant can be dealt with, the loss of two and things start looking grim, and the loss of three pretty much can trash the local economy. Folks gotta make things in order to buy things..pretty much fact of life in a manufacturing community. So you see, it is not so easy to just "get another job in another industry" when there are no other industries hiring...or the other industries have closed their doors too.
And a result of that is a lot more people have to file for Chap. 7 - folks that wouldn't have considered it before, suddenly have to do something after being out of work or underemployed for a long period of time. It is very sad to see people go through that and many do lose their homes, or give them back and try to start over. Sometimes Chapter 7 is the only relief these people have, so I am not too quick to judge all by the bad actions of a few taking advantage of the system.
I disagree with you Jena. The credit card compaines who, by the way, are owned by Banks , make Credit much TOO easy to qualify for. That, in and of itself is ONE of the primary reasons that people get themselves into finanical trouble. It is all too easy to rationalize your ability to repay a credit balance . There are several reasons that validate a CH. 7 filing other than just medical bills. Such as when a major corporation moves its manufacturing capacity to China so it doesn't have to furnish it's employes some kind of retirement plan. And you think its whining for a worker who lost their job and can't make the multitude of payments to seek relief from Ch.7. You over simplified the situation just a tad mam me thinks. People , being the subjective and weak creatures that they are can and do make very stupid and irrational decisions with their credit but when XYZ corp. cuts 10,000 jobs and moves its operations to Kat Man Do to escape the FICA tax their Inability to Repay thie obligations IS NOT Necessiarly Their Fault..............fordy
Money management is all about choices. Your money, your choices.
No one makes you write a check or use your credit card or home equity line. Or even get a credit card or mortgage. You choose to. That is debt by choice. Manage it well or pay the price.
I agree that catastrophic health care is a different kind of debt. But even a large one can be paid of in increments. I am still making payments on debt for health care from 14 months ago and it bugs me to carry that debt. I have made extra payments as much as I can, yet I still owe some. Responsibility sure cramps my style!
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