Bankruptcy?

iVillage Member
Registered: 08-23-2005
Bankruptcy?
6
Tue, 08-23-2005 - 9:51pm

Question....

My husband and I are over $50k in debt in credit cards alone. Plus we own a home, we owe much more than it's worth due to borrowing the down payment.

We have 2 cars they are older and both paid for. All of our furniture is old hand me downs from 10-25 years ago.

I just found out today that my company is closing. We are now considering filing for bankruptcy before the laws change.

Can we do this? We're not behind on any of our cards and we have a good credit score and good credit but it's not gonna stay that way with out a job. I don't understand how all fo this works....Will the judge just say no to us? Does is work that way? We're afraid that I won't find anything until after the bankruptcy laws change and then we won't be able to list our credit card debt and that's what is killing us.

We are both so ashamed embarassed and so scared.

Does anyone know the answers to our question?

iVillage Member
Registered: 02-19-2004
In reply to: emmeee
Tue, 08-23-2005 - 10:10pm

Please don't be ashamed. Debt piles up on each and every one of us. It happens before you realize it and it's nothing to be ashamed over. I work as an advertising consultant and I have been working with a bankruptcy attorney on some ads about the law changes over the past couple of months. If you are going to file bankruptcy, do so before October 1. As the attorney informed me, that date is when the laws will go into full effect. Bankruptcy will be much, much more difficult and complex then. I don't believe a judge would tell you no.

I'm sorry to hear about your company closing. I have been in that situation before and it's scary, but I firmly believe that God will not close one door without opening a new and better one.

Angelpie41

iVillage Member
Registered: 08-23-2005
In reply to: emmeee
Tue, 08-23-2005 - 10:29pm

Thank you so much for the feedback!

My husband and I picture being in front of the judge and he/she just verbally scolding us for being so irresponsible and for taking the easy way out. I feel bad enough and don't want to go through that. It helps to know that that won't happen.

I'm so ready for that other door to open.

Thanks again.

iVillage Member
Registered: 02-14-2004
In reply to: emmeee
Tue, 08-23-2005 - 10:58pm

I would advise you to take your time before jumping into a bankruptcy. The changing laws basically mean that if your income is less than your state's median income, you could stil discharge all of your debts as previously. However, if you are over the state's median income, the judge would likely require you to restructure and pay back a lot of the debt. If you are losing your job you would fall below the state's median income? I'm not sure, as I don't know your income or state. In Texas the median income is $54,000.

I think my point is, if your income without your job would put you below your state's medican income, you don't need to worry about upcoming changes in the bankruptcy law. So you have time to make a decision. The other thing I'd suggest is meeting with a consumer credit counselor to give you some good advice. If they advise a debt management plan, your monthly payments would be roughly half of what you pay now. A debt management plan doesn't impact your credit score, as a bankruptcy certainly does. Would you be able to afford that, if receiving unemployment? How soon could you get another job? Have you requested any settlement offers from your creditors and would that help you? Does your state allow protection of your home in a bankruptcy? Often mortgage lenders will allow you to restructure your terms of the loan (reduce payments temporarily, etc) when you are experiencing financial difficulty. That may help you out as well.
You probably do have some options here and I think if you spoke to a credit counselor they could give you a lot of reassurance and guidance. There's no need to be embarrassed to ask for help!

iVillage Member
Registered: 08-23-2005
In reply to: emmeee
Wed, 08-24-2005 - 1:12am

Thanks for the advise on the credit counsler...

When I was in my 20's and had high intrest rates I did use a credit counsler and it helped.

Our problem now is that, (I hate saying it) the $50k is all credit card debt that have rates as low as 0% to the highest being 5.99% The 0% cards monthly min. payment is $305! The 1.9% is $280 the others are lower but when the laws change these payments are going up. I just don't see any other way out.

The anwer to your question is no....We would not fall below the income bracket w/out me working, so if we do this we're gonna have to do this before October. Yes, I do believe we have a law that lets us structure the so that we save our house. Even if they wanted it, it wouldn't be worth the liquidation b/c we're so upside down.

I don't know what the judge will say now....I'm so confused.

We have our first meeting with the attorney on Monday.

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
In reply to: emmeee
Thu, 08-25-2005 - 10:25am
Hi there and welcome to the DSG.

All my best,
Danni

iVillage Member
Registered: 08-23-2005
In reply to: emmeee
Thu, 08-25-2005 - 2:37pm

Thank you! When I searched for that, this was the closest one I could find.