Update on my situation...

iVillage Member
Registered: 03-27-2003
Update on my situation...
13
Thu, 02-03-2005 - 10:18am

Hey everyone!
First, I wanted to thank everyone that responded to my issues.
I have decided to file a Chapter 13 reorganization. I cannot tell you immense relief I feel about this!!!!
I will make payments for 36 months of $3200 a month to the bankruptcy court and my debt will be completely gone at the end. That is $117,000 worth of credit card debt erased. There is no way with my minimum payments at 29.9% interest that I could foresee being debt-free any time soon. Obviously, I am aware of the hit my credit will take, but I have a car and house and I have absolutely no desire whatsoever to ever own a credit card for as long as I live!

My attorney said credit card companies are modern day loan-sharks. While I do not underestimate the part I played in creating this debt, I really feel like they are not playing fair when they raise interest rates on someone who has faithfully paid them for years and years.

Anyway, if anyone has questions about the Ch. 13 I am happy to help. On a side note, I am a lawyer, although bankruptcy certainly isn't my specialty :)

I really wish I wouldn't have waited to so long to file. I was hoping to get out of this the Dave Ramsey way but in all honestly, it just wasn't practical or feasible.

Amanda

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iVillage Member
Registered: 01-04-2005
Thu, 02-03-2005 - 11:10am

Amanda-

I'm so glad you let us know how it went. I am so happy for you!

It's funny, people think that just because people are lawyers, or doctors, they have no financial problems. My husband is an architect who makes 6 figures. We don't even live in a large home, and we are 60,000 plus in debt.

Did your lawyer mention CCCS at all? I'm just wondering the difference between goign your route and mine, the CCCS Debt Management Plan.

iVillage Member
Registered: 04-22-2003
Thu, 02-03-2005 - 11:15am

I"m happy for you that you now have peace of mind. GOod luck.

slojuly

iVillage Member
Registered: 03-27-2003
Thu, 02-03-2005 - 11:24am

Oh definately the reaction of most...my in-laws think we are rich when we are so heavily indebted it is not even funny. I too do not live in an extravagent house (built in '83, bought for $90,000) and do not drive a fancy car. My DH drives a 1999 Silverado and I also drive a Chevy, albeit a newer model ;)

I have done extensive research on the CCCS and others. My understanding is that creditors view working with CCCS the same as filing bankruptcy. However, the big advantage is that on some employment applications when you are asked "Have you ever filed bankruptcy?" you can legally say "no." Remember that CCCS and the original counseling places were originated by the creditors themselves. Attorneys especially find that their position is adverserial to you becuase they are funded by "the enemy." Finally, I think that you would end up paying A LOT LESS back in the Ch. 13. My attorney basically stated that unsecured creditors (i.e. credit cards) are at the bottom of the barrel in a Ch. 13, that the court does not care about their interests because they are making so much money off of the interst that they charge, and that they don't even show up for the creditor's meetings to dipsute the amount they will receive in the payment plan. In my jurisdicition they will get back 10 cents on the dollar at most with priority unsecured creditors (i.e. student loans/taxes) being paid first along with secured creditors (i.e. car).

One time several years ago when I was trying to work out this mess, I went to CCCS and they refused to assist me becuase I wasn't behind in any payments. Considering I was trying to prevent this current mess, I found it ridiuclous that they require you to be behind before they will help you...

Amanda

iVillage Member
Registered: 03-27-2003
Thu, 02-03-2005 - 11:34am

First of all, I'm glad you are getting the peace of mind you need. What a relief for you.

But I am confused--how is it a break to pay back $3200 a month for 36 months? According to my calculations, that only takes about a grand or two off the total when all is said and done. Now, I understand you won't be paying interest on it, but I guess I'm just surprised that you even have to pay back that much.

I wouldn't try to tell you how you ought to have done it, because obviously you know what's best for you and your family, and you can't change it anyway, but just for the sake of discussion for others who might be considering bk, can you discuss a little further how this is different than having tried to pay it back without the court's help?

What I was thinking was, if you had negotiated with the creditors and paid back a la Dave Ramsey style for a while, eventually you would have been in a position to be paying much lower (if any) interest anyway (by surfing to 0% offers and other low-interest offers), and the bk wouldn't be on your record.

Again, PLEASE don't take this as a criticism, because I absolutely do not mean it that way. I know that for many people bk is the only and/or best way out, and I know that the ccs can be downright heartless and infuriating, so I certainly have no tears for them. I really do just want to hear the details of how this works for you.

Thanks and blessings, and enjoy your new sense of freedom!

Heather

iVillage Member
Registered: 01-04-2005
Thu, 02-03-2005 - 11:35am

Thanks for the info. I'm am going to give CCCS a try and see how it goes. Of course if something were to happen like my husband losing his job, we would be forced into bankruptcy.

and if you don't mind me asking one more question - why not chapter 7?

iVillage Member
Registered: 03-27-2003
Thu, 02-03-2005 - 11:36am

Ok, I decided that sounded to harsh against CCCS. I do think it can work if you seriously make the payments according to the plan and most importantly, do not incur any new debt. And, although I know creditors do not look upon it favorably, I am sure it is looked upon more favorably than filing bankruptcy.

If you are a chronic overspender like me, I personally feel like the "legality" of the bankruptcy and the seriousness of it will be more of a hindrance (or rather a complete stop) to me incurring any debt, since I won't have any credit. I will basically be forced to live within the budget for neccessities and get adjusted to that way of living...
I think there is potential in CCCS to consolidate and with the new reduced payment, feel like you can go out and buy some more...(That would be me, not necessarily anyone else.)

A

iVillage Member
Registered: 03-27-2003
Thu, 02-03-2005 - 11:42am

Hey HEather!
I totally understand your questions...
The $3200 a month includes not only the $117,000 worth of credit card debt, but also $70,000 of school loans, and a $36,000 car note. The majority of $115,200 I will pay back will be to the school loans and car..with VERY little going to the CC companies.

I tried to negotiate and I got nowhere because I had no leverage. I had no cards left to surf to...I had used up all of my 0% interest offers ages ago. Those interest rates were not changing. I told the creditors when I called, "look I have paid you people on time for years and years. You have made thousands of dollars in interest off of me. If you do not lower the rate, you are forcing me to file bankruptcy." They refused to do anything.

I really felt and enormous sense of guilt for a long time about doing the right thing and paying back the debt I incurred, but when you see how quick they are to screw you as opposed to working with you, your tune changes.

iVillage Member
Registered: 03-27-2003
Thu, 02-03-2005 - 11:49am

Re: Chapter 7

You cannot file Chapter 7 if you have ANY disposable income after your basic neccessities are met. When you figure this out, you DO NOT include current minimum payments on unsecured debts. So our monthly net income is $6600. Basic living expenses (which means house, food, clothing, medical bills, transporation, etc.) are $3400. All the rest goes into the payment.

You would only qualify for Ch. 7 if your current income did not meet your basic living reuquirements...I am guessing you would only qualify for Ch. 13 also.
Also, there is no danger of losing your property in a Ch. 13, whereas in a Ch. 7 they can force you to sell your home depending on the equity and homestead exemption for your partiuclar state.

My attorney also said that there is a new trend for BR judges to feel that anyone making more than $50,000 a year must do a Ch. 13 and pay back some of their debt.

iVillage Member
Registered: 01-04-2005
Thu, 02-03-2005 - 11:57am

thank you thank you!!!! that is the info I was looking for. we would not qualify. once our debt is paid (unsecured credit card debt) we will be living nicely.

I think our difference is the student loans. Between my husband and I we only owe $2700. That is down from over 30K when we started.

Most of our debt is unsecured credit card debt. So for us the best option right now is cccs. I'm glad you found your best option.

I, too, had to get to apoint where I needed to stop my spending. before my children were born and my husband and I were both working and making good salaries, I would think nothing at dropping money at starbucks, manicures, etc. But then I quit my job to stay home with our children, and even though I work at home, I am not in the black yet with my business. After I quit, we did not change our spending habits enough, and we bought a home and had a very expensive few years after that. That is how we got where we are now.

I am very optimistic and I hope you are too. It will all be worth it in a few years!

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Thu, 02-03-2005 - 12:06pm

Amanda - thank you so much for posting your update.

All my best,
Danni

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