Bankruptcy

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I am considering declaring bankruptcy and would love to hear the pros and cons, as well as actual experiences with this step.

Since 1997, my annual gross earnings (largely working two jobs) have been $7,478.

There are at least 6 collection agencies after me.

I think one of the agencies is attempting to collect on a debt that was my son's which was partially paid by a grant from the state of Massachusetts directly to the debtor. The collection agency, however, refused to accept the amount paid to the debtor (which is illegal) and garnished my former husband's wages to pay said debt.

Another is from a charge made to purchase clothes when the above son went off to college. My former husband instructed my daughter to use her charge to buy said clothes. However, since she was to begin college herself a week later and since her limit was only $300, when the department store (Filene's) offered me a charge card to pay for the garments, I accepted. I presented the bill to my husband who said he had instructed my daughter to charge the clothes and since I did so, he would not pay the bill.

Another is for the car my former husband bought me in 1994. Although his salary was $490,000/annum, he hated paying for my car, his car and his girlfriend's car. I suggested he pay off mine. He subtracted the last payment; sent a check in and never told me of his actions. I think another agency is also after me for the car.

Another is for charges made to my clinic after my insurance ran out. I dutifully presented my insurance card at each visit. Neither the insurance company nor the clinic nor my former husband ever told me that the insurance had inspired.

One is from a credit card that was used largely to pay for car repair.

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I can not afford to file chapter 9. If I file chapter 13, the whole bloody thing ends but my name goes off the mortgage (increased by my former husband who signed my name to loan agreements as though he had power of attorney) and I end up homeless.

A friend declared bankruptcy a few years ago and her life improved. She's rich, compared to me, with an annual income of $18,000-20,000.

I spoke with one atty who seemed to know nothing about the subject.

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Find a lawyer who specializes in bankruptcy--you have very little money and can't afford to waste any of it.

I'm not an expert, but it seems to me that your local bar association could give you the names of bankruptcy specialists.

When you see the lawyer for the first time, give him copies of all your assets and debts, neatly organized.

Time is money, whether the time belongs to the lawyer or to his secretary. You're broke, but you have time.

Good luck. Hold your dominion.

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Before filing for bankruptcy, I'd consult one of these
debt consolidation agencies and see if they can help.

bankruptcy will be hanging over your head for a very
very long time, I'd exhaust any other option before
declaring bancruptcy.

Is there a possibility to increase your annual salary?
Do you work fulltime? If not, could you do so?

Contact the car dealer who holds the title to your car
and try to work out something with them. Dto. for
the credit card company.

With your income you're entitled to Medicaid Insurance,
apply for it at once. Yet contact the clinic and try to
work out something with them as well.

It is doable, if you put some effort into it. Filing bankruptcy
should be the last resort, not an alternative.

Good luck!

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First of all, because I have only one credit card debt, I am not really eligible for a debt consolidation agency. My friend who declared bankruptcy tried one prior to her declaration and found 1.) that her credit rating suffered because she used such a plan; 2.) that not all creditors accept such an agency, so her indebtedness actually increased. Bankruptcy damages your credit rating less.

I have been working two jobs at a time since 1998. It depends on what you mean by full time. Since February, 2003, I have been a permanently assigned sub at Arlington HS, which is full time teaching although not 40 hours per week. I have worked a retail job since Nov. 1997.

Since I am over 50, jobs are not easy to come by. Believe me, I have been searching since Nov. 1997. Since I receive child support, I am not eligible for Medicaid.

I have been trying to contact Chrysler Credit -- the dealer itself is out of business -- for almost a year. they can not find any record of my original loan.

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The debts you have described would be considered unsecured and therefore dischargeable in bankruptcy. Unsecured meaning that they are entitled to no special protection, and dischargeable meaning that they can be cleared out with the end of the case. It was not clear what your liability was with respect to the debt of your son's; if you were a coobligor on this account you may remain liable, if you never were on this account, it is not your debt.

Your income would qualify you for a Chapter 7. Chapter 7 is the type of bankruptcy that would liquidate all of your debts. This is in contrast to Chapter 13 which is a personal reorganization based on amounts you would pay to a court appointed trustee over a period of time, typically 3 to 5 years. Chapter 13 is not possible to do without regular income. In Chapter 7, where you have to be careful is the value of any assets that you have.

If you have a mortgage, this indicates you may own real estate; also you have indicated you may have a vehicle. The value of assets that you are allowed to keep in bankruptcy depends upon the property exemptions used in your state. You should consult a knowledgeable attorney in your area. As an experienced attorney who has handled many bankruptcy cases, while bankruptcy is a last resort, when it makes sense for someone's situation, I have had many tell that they feel that a real burden has been lifted off of their shoulders. Many attorneys will give you a free consultation and there are also agencies that provide free or low-cost service. A good resource and place to start would be nacba.org

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plainoldme,
by no means did I want to imply you're not working
at all. However, you've stated your gross income
is $ 7,478 per annum. Now with a minimum wage of
$ 5.00/hour you'd still would earn 10,400 per annum
and considering your second job and additional
child support, my math never arrives at $ 7,478 *confuse*

If Chrysler Credit has no record of your loan, who is
sending you the monthly statements?

Having only one credit card is a good thing Wink

and I'm sure if you contact the company, they'll work
something out with you.

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That is an odd thing about debt consolidation plans - that they can sometimes harm your credit more than help - but true.

Jane may be right that one or two creditors are easier to work with - but sometimes even they may not be that reasonable despite your best efforts.

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tiger,
wouldn't it be in their best interest to work out a payment plan with plainoldme as opposed to getting nothing through
bankruptcy procedures?

I'd think, any reasonable company would opt for the
former.

Obviously, I never filed for bankruptcy, but I hear all
over from these debt consolidation agencies and your
very knowledgeable - could you tell me why they harm
one's credit more than help?

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Definitely - but creditors often make the mistake of making unrealistic demands, such as a large lump sum payment upfront to settle, or even just to start a payment arrangement.

Debt consolidation agencies can do what Jane suggested - call your creditors for you and work out arrangements. But people who evaluate credit often note a debt consolidation plan as a negative. So if someone is wanting to propose a plan to pay their debt, it's just as helpful to call themselves to avoid this, as much of what agencies do can also be done directly if at all.

Another negative is that often reduced interest due to the fact that it continues to be compounded is not enough to make a real dent in debt. A common complaint is that many payments are made for months and balances still have not declined. Balances, and those that that stay the same, without much decline can have a continuing negative effect on credit.

Another unintended consequence can come from fees charged by the program. For instance I have seen the starting few payments of the program put towards the program's fee and nothing paid on the accounts, and the underlying credit card goes into default, which then is reflected on credit as well.

Legislation is in the works regarding a model consumer credit counseling law (Consumer Debt Counseling Act) - but until that is passed, there will continue to be a wide range of practice and fees charged. There are agencies under investigation by the ftc - can see ftc.gov for current info on fees and practices of debt consolidators under investigation. So an agency that is charging too much in fees without getting much in effective results may only produce limited benefits, if any real help at all, in the long run.

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Thank you tiger for your answer. Smile

Let's hope the Consumer Debt Counseling Act is implemented soon, so these poor people aren't victimized
twice through the system.

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Nine years late with this advice!

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