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The decision to file bankruptcy is difficult at best.

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Bankruptcy may not be the right solution for you, but you at least owe it to yourself and your family to find out about all of your options so that you can make an informed decision.

Many people are hesitant to even think of filing bankruptcy because they are good, moral, upstanding, hard-working people. They have always paid their bills. And they aren’t the type to look for an easy way out.

So they struggle month in and month out to pay their bills. And all the while their creditors are turning up the heat. Before too long, with all of the late fees, penalties and interest, they realize that they are barely keeping their head above water. And without a miracle or a winning lottery ticket, they know in their hearts that there is simply no way they are ever going to be able to get caught up. More on Filing Personal Bankruptcy – Can I? Should I?

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Technorati Tags: Bankruptcy, bankruptcy attorney, considering bankruptcy, Credit Card Debt, Creditors, File Bankruptcy, filing bankruptcy, Filing Personal Bankruptcy, Financial Stress, Late Fees

It was clear that we were not going to be able to continue making payments on our debt. We wanted to know if bankruptcy was right for us, what it would be like, how we proceed from here.

How did I find this attorney? Well, Google of course.

My wife and I were both there, and we talked for about two hours. Turns out that was billed time. At $205/hr. First lesson: bankruptcy isn’t cheap.

We discussed many things.

First, will we get sued if we stop paying our bills? Should we file, and when?

Well, you can apparently let your credit card bills go unpaid for a while, just expect phone calls and letters. In fact, and this seems just crazy to me, you have to let your debts get overdue before even trying to negotiate for a lower interest rate or payment. So even if you want to pay off your bills, and you just want to cut a deal instead of filing bankruptcy, you have to be late first. After three months, your credit rating will start to go bad, but you can negotiate for a lower payment plan. After six months, they will be panicky, and say your debt will be “written-off”, sold to a third party, and your credit rating really goes to hell then. Either way, someone will be calling you about your late payments.

So we can wait a bit, let bills go unpaid, and then see about making deals. One could possibly negotiate a payment plan yourself, or even a negotiated payoff at a small percentage (maybe – say 30% of debt).

The problem with a negotiated payoff, is that the reduction is taxable as “debt forgiveness”. So not only would you have to borrow from relatives to pay off a lump sum, but at tax time you would have to come up with taxes on that reduction.

A payment plan sounds good, as there would be no bankruptcy, but you still have a huge debt payment to make, over time, and at some point, if you are unemployed or unable to pay, you might have to resort to bankruptcy anyway. I couldn’t make the payment plan that my debt counselor created, so why should I be able to do better myself?

So we should file bankruptcy, but wait some time. How much time? Well there are some issues that could cause a debtor to challenge our eligibility for certain debts.

• Increase in credit card usage shortly before filing
• Newly issued card
• Large cash advances in months before filing
• Pattern of borrowing on one card to make payments on others
• Using card when unemployed or without reasonable belief that the debt can be repaid
• Large balance at filing

In our case, we have not been adding to our debt extravagantly, but have been using any available credit to pay current bills, as our income was not covering them. I recently got new cards or used existing card to make transfers to my home equity line of credit so I could keep up with payments. So we need to wait, as in “time heals all wounds”.

By the way, in total, we have 22 cards, and about $190,000 in unsecured debt. Wow.

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Technorati Tags: bankruptcy attorney, considering bankruptcy

I have worked at this job for about one year now. They have lowered my already low starting wage twice. Not just for me, but for everyone in our group.

I thought that a year ago, this would be a temporary job, as I had been unemployed for seven months, and just needed to start making money again. Well, after countless job applications, several on-site and phone interviews with various local companies, I have not gotten one job offer. I am stuck here, and my salary is down to $16.20 an hour. In 2003 I was making over $70k. Everyone knows that one’s income validates their worth in our society – probably more so for men. And I am the breadwinner in our family. So I have every right to be depressed. How can I support a wife and child on what I make? And since my employer is an out-sourcing agency, it could lose the contract with HP for support, and I would be out of a job. Again.

So at least I have good credit to fall back on, right? I am wondering how far that can be strung out. I have just maxed almost every last credit card and also the second mortgage line-of-credit. I just keep moving money around. The Chase card teaser rate expired, so I paid it down after “clever” transfers from other cards. I used a transfer from my wife’s Macys card (usually used to get “points” from her clothing purchases),  and I got a new card from Advanta. Now I worry that with maxed-out credit, my credit score will go down, and I won’t have any more “teaser” rate offers coming in the mail to save me.

I need a new job – quick. I need a pay bump of at least $1000 a month. I cannot believe that our debts have hit $200k (that’s not including the first mortgage either). Even if we sold the house now, we are close to just break-even. We would still have to rent some place, which is almost as much as our mortgage anyway. And my wife might literally die if we left our home. She has attachment issues related to moving a zillion times when she was a kid.

I think we’re screwed. Too many debts, too little pay – it is getting me depressed.  I am thinking that bankruptcy is the only way out.

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Technorati Tags: considering bankruptcy, personal bankruptcy