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We are filing Chapter 7 bankruptcy

10K views 66 replies 25 participants last post by  AnW819 
#1 ·
I never in my life thought we would be in this position. My husband and I are both devastated but we dont have any choice as far as we can see. My husband went from earning about 1200.00 a week to 800.00 and all the credit card companies we dealt with are raising or have raised their minimum payments and interest rates. We are in Michigan and there are no jobs. I homeschool my oldest daughter who has a chronic illness and a full time job is not an option for me as long as she needs me even if I could find one. Dh works every second they allow him to work but we are now to the point that after the minimums are paid on things and we put gas in the vehicleds there is little or no money left for even the bare essentails. I have been having to even charge groceries. You know the classic dog chasing my tail scenario. We retained an attorney and he said the house is not in any danger. We owe 10,000 to 15,000 more then its worth and no money could be made from its sale. We dont have anything large that is of any value for the court to sell either. We are allowed to have 10,000 in personal and ordinary household items. Dh and I have sat down and hashed out a budget for if things go as the lawyer says and agreed that if as the attorney says secured credit card offers will start rolling in as soon as the bankruptcy is discharged we will not get one for at least a year. Then it will be in the custody of dh at all times becasue I am the weak one. He is very strong and can resist the urge to buy something that he wants very much. I however have learned to do without quite a bit in the last year and see things differently now then I ever did. I never ever ever want to owe a credit card company anything again. If we have this debt erased and can begin fresh we can start to save a little money and have learned that we are not entitled to instant gratification that credit cards allow. We will save for things and appreciate them much more this way as well. Right now we both feel like we are in this dark dark place of fear and not knowing what will happen next. I told my dh I am getting through the day by saying to myself in a 6 months this will be over and just a bad memory and we will be starting out fresh if the courts allow. I also pray . Alot. Its all the "ifs" right now that are so stressful. The creditors have not started calling yet but they will in the next week or so and I am dreading it so much. I know its my fault though I have to face the music. The lawyer has told me what to say and that is what I will do but it is still scary as hell. Thanks for letting me ramble and if there is anyone here who has been through this can you please tell me what it was like for you and what happened that you didnt expect and what wasnt as bad as you thought it would be?
 
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#3 ·
Ramble all you want. We're in a tough state in this state. My db may finally have ajob after 2 years. SIL found temp work again. I haven't worked in 2 almost 3 years now. DH works constantly. I drive DD to college because we can't insure her and she can't get a job. I have used a CC for groc. last month and this. Very disturbing. Our electric is up 36% because my DH works from home. We will owe $450. on the electric in 2 weeks even though we are on monthly budget. My poor dad called to tell us he can't give us as much this year for xmas. Now I worry about his financial situation. He got killed in the stock market too. We have no EF let alone money to help.
I will pray for you. Many good people, hard working people are in this way. Do what you have to for your family. Good luck. Please keep in touch w/ the board,it will help.
 
#4 ·
Have you actually been sued by one of the credit card companies?

If not - you may be jumping the gun.

If this is a bankruptcy attorney giving you the advice to declare - remember that's how he makes his living. His advice is biased.

Have you ever posted a budget, and a list of your debts?
 
#5 ·
I hope it works for you. It's hard not to fall back into it though since bankruptcy is so easy and no work...

Dh's parents were heavy in debt and filed and now are right back to where they were! And shouldn't be because they both have great incomes and he also gets disability and retirement from the AF.

DH and I got ourselves in the same mess with almost the same about of debt inlaws had when they filed when I started Dave Ramsey. We got out of debt and now have remained debt free for over 3 years now. I also did not work (my choice) because I am a homeschooling Mom and felt it best to stay home with them when they were younger. It was HARD we didn't even give Christmas presents to our own children (or anyone else) during that time we were working our way out. Clothes were never new if and when they were NEEDED, not wanted.

Good luck with whatever you decide, I just wanted to give you two different scenarios.
 
#6 ·
I hope it works for you. It's hard not to fall back into it though since bankruptcy is so easy and no work...

Dh's parents were heavy in debt and filed and now are right back to where they were! And shouldn't be because they both have great incomes and he also gets disability and retirement from the AF.
Bankruptcy is NOT easy and NO work. Maybe you personally see it that way because your inlaws DID do it all over again. Not everyone does. Some people have to start over again with nothing. Not even their home. For some there is no choice. This lady can't even buy food without adding it to a credit card.

Sorry, don't mean to go off here but don't say it's easy and no work. Hopefully they can do this without filing but if they can't dosen't make them taking the easy way out. It means they need a new start and for them this is it.
 
#8 ·
With a 41k income I question whether the judge will even allow for a chap 7.

Re-reading the OP, I think they're a long long way from bankrupt. It doesn't even sound like they're missing any payments.
 
#15 ·
With a 41k income I question whether the judge will even allow for a chap 7.

Re-reading the OP, I think they're a long long way from bankrupt. It doesn't even sound like they're missing any payments.
http://www.bankruptcylawnetwork.com/2009/05/13/relevance-means-test-numbers/

"In these courts, under limited circumstances, a debtor with “disposable income” per the means test may still be able to file Chapter 7 or a Chapter 13 with a monthly payment inconsistent with the means test. However, in most cases, the bottom line number generated by the means test will be used to determine whether Chapter 7 is possible or, if a Chapter 13 is mandated, what payout unsecured creditors in a Chapter 13 can expect."
 
#10 ·
We have not been sued by any of the credit card companies Greebo. The lawyer gave us several options and didnt pressure us at all one way or the other. It is only a matter of weeks though we will not be able to make even our minimum payments on the cards as they stand now and the December payments of every card is going up due to interest rate increases. If I want to reject the new interest rates then they will be raising our minimum payments. Dh's hours at his job are varying between 32 and 40. On the weeks he cant get 40 they have been letting him use a vacation day to make up the hours. When the vacation days are gone I don't know what will happen. There have even been weeks he has been on 24 hours. We have two kids, one of which requires several prescriptions a month and I am taking my medications every other day to make them go further( I know, I know, I shouldnt but her heart meds are priority over my thyroid and Ibs meds). We have about 45,000.00 in cc debt to 10 different sources and my husbands income is going to come in at about 53,000.00 this year. Last year it was near 70,000.00. We tried the snowball thing but the trouble is there is no extra money to put on a snowball and the debts never go away to add to the next one because I am having to use a card now for the basic expenses. The only bill we have that is not a NEED is the cable/internet and really internet is a need since oldest DD homeschools. So it would be cable tv I guess which is 40.00 a month. That would be a drop in the bucket in the realm of things. Just one cc payment will be increasing by that in December. We are on the budget plan for the utlitlies and I am spending no more then 50 bucks a week on food for a family of 4. There are nights I eat little or no dinner so that the kids and dh will have plenty. I am line drying clothes as much as possible, dont go anywhere that I dont have to in order to save gas and carpool my youngest to school with her friend around the block to minimize the gas usage. I keep the heat down as low as I and oldest dd can stand it during the day . Its getting cold here in Michigan now and I have bad arthritis in my fingers so sometimes I have to turn the electric fireplace on for a little while to warm up the rooms we are in. The only other expense I can think of we have that could go in theory is the cell phones but DH works in a horrendous neighborhood and really needs his as a safety issue and dd needs hers as well as she is sickly and needs to have a source of communication with us at all times if she is out with friends etc. . We are also under a contract for them for another year and have the cheapest plan we could get and share minutes between us. I have applied for many work at home jobs and been rejected at every turn. I even had a friend put in a good word with her employer dog walking but they arent hiring either. I have been out of the work force for 15 years now and have no education beyond high school so finding a job is nearly impossible for me in the state of the economy in Michigan. We have the highest unemployment rate in the country right now. Also Dh works in an industry where the winter months are the worst and his hours are already slashed and the cold hasnt even set in so things are not going to improve there anytime soon and the contract is up in December and I shudder to think what concessions they will want then and how much our health coverage is going to go up. That is all I can think of right as far as budget and debt etc go. I feel like I am living underwater though so if I forgot something I am sorry.
 
#13 ·
Jamie I'm not saying your situation is GOOD. I sympathize with it.

But jumping from "the finances are getting tight" to "we're bankrupt" when you haven't even had one phone call from the creditors is a huge stretch.

And then you talk about 'wiping the debt clean' - well you did borrow the money - what about the creditors who you borrowed it from? Are they not entitled to be repaid? Using bankruptcy as an out when you ARE able to make some kind of payment, well to be honest, I have a real issue with the morals of that kind of use of bankruptcy.

And I still am not sure a judge will let you do a chap 7 - with 41k of income, it's more likely you'll get a chap 13, which won't eliminate any debt, it'll put you on a court mandated payment plan, while still trashing your credit.

Repeating the question: Have you posted your budget and your actual list of debts here anywhere?

What about a 2nd job for DH or a night job for you while DH is home?

New question: What have you sold? You've got 45k in CC debt - so where are the things that 45k bought? Have you sold em? What about cars? For that matter - what about your house? Even if you can't get out of the house w/ any money left over, what's the house payment? If it's not affordable, it's time to move and sell the house, even if its at a loss.

I don't have a problem with bankruptcy in certain circumstances - but I'm having a really hard time in this case NOT thinking that this is little more than a "oh times are getting hard lets just walk away from our responsibilities" move.
 
#14 ·
And then you talk about 'wiping the debt clean' - well you did borrow the money - what about the creditors who you borrowed it from? Are they not entitled to be repaid? Using bankruptcy as an out when you ARE able to make some kind of payment, well to be honest, I have a real issue with the morals of that kind of use of bankruptcy.
I've never agreed with that. It's not personal or moral, it's business. As long as she doesn't take on any additional debts in bad faith (and didn't take the debts on originally in bad faith), there's nothing wrong with assessing the situation and deciding what you think is best for yourself: paying the debt or accepting the consequences. That's the entire point of our market-based economy: Everyone acting in their own best interests within the law.

Like you said, though, I don't think the law is going to make it as easy to walk away from these debts as she thinks/hopes.
 
#20 ·
Well as far as wiping the debts clean, I went into this thinking we would probably end up in a chapter 13 or a restructuring program. I didnt want the house to be an issue so chapter 7 never occured to me. The lawyer looked at all the debt and the income and the monthly expenses and said we were well within the "means test" for a chapter 7. The thing is in Michigan there just arent any jobs. Even our McDonalds isnt hiring. There is not really anything here to sell other then ordinary household items. We are in a van lease that we intend on continuing to pay and most of the cards have not been used in several years and the interest rates are already high. For instance the Discover card, we havent used it in almost two years and the payment is 252.00 a month . The amount that goes toward the balance is about 5.oo . The rest is interest. The other visa is like that to and we havent used it in almost a year. They both have balances of about 10,000.00 and they never seem to budge due to the interest rates. When we started out with them the rates were low of course but they eventually raised them and raised them. When I tried to deal with Chase about lowering the payments they were so sympathetic they lowered the credit limit to make the balance higher then the limit and added on over the limit fees. As far as the house goes , we have two mortgages . The combined mortgage balances are 89,000.00 a few years ago the house was easily worth 100,000.00. Now the houses on our street are being listed for 60 at the most and they are sitting on the market for years sometimes . Even if we sold it we would still owe the mortgage company money so I dont see how that helps. PLus we would be homeless. My husband drives an old car to work every day we paid 400.00 cash for a year ago . Before that he drove a truck that was literally falling apart . With having a child at home all day that is ill I have to have some transportation. I am willing to turn in the van and get something cheap to get from her to dr. appointments etc. but the lawyer advised against turning in the van . If I start making partial payments on things wont the charges for that continue to accumulate month after month and add to the balance or minimum payments as well? Most of these cards have been paid on for the years and not been used with the exception of one in at least a year. I am willing to bet if we added up all my purchases and all my payments the purchases are more then paid for. Its the outrageous interest rates I cant seem to get ahead of. I am sorry if it seems like we are taking the "easy way" out. We are struggling to the point of having no money to live on from day to day and I dont know what else to do. This is not easy for us to do and it is only going to get worse . Should we wait until the house is in forclosure and all the cc's are behind? The cc's will all be behind next month without a doubt when all the changes kick in. My husband works as much as they will allow hiim to do and is willing to work a second job at night. The trouble is in Michigan , there arent any. I look in the paper and on Craigs list all the time for him and me. I have lowered every bill I can lower and buy only the essentials . I have only used the cc for things we needed like food in the last several months. I am not purchasing big ticket items like tv's or shoes or fancy clothes. The last clothes bought were bought with cash on the clearence rack at Kmart for 3.00 as a birthday gift for my daughter . If a judge says we dont qualify for chapter 7 but a chapter 13, thats fine to. If they say we dont qualify for either then I guess I will take creditor calls until they sue us.
 
#30 ·
The thing is in Michigan there just arent any jobs. Even our McDonalds isnt hiring.
Check craigslist.

We are in a van lease that we intend on continuing to pay
Get out of the lease and get a beater. Convert the difference to unsecured debt. Delay paying that debt until you have the income to do so.
and most of the cards have not been used in several years and the interest rates are already high.
Close the accounts to freeze the rates and payments, then defer paying them until you can. Yes, you'll pay a fee for this - it'll be less than your attorney's fees for BK, I wager.

For instance the Discover card, we havent used it in almost two years and the payment is 252.00 a month . The amount that goes toward the balance is about 5.oo . The rest is interest. The other visa is like that to and we havent used it in almost a year. They both have balances of about 10,000.00 and they never seem to budge due to the interest rates.
Before you start having lates, try to get into lower rate cards. Once you're in - close the accounts to new charges.

As far as the house goes , we have two mortgages . The combined mortgage balances are 89,000.00 a few years ago the house was easily worth 100,000.00. Now the houses on our street are being listed for 60 at the most and they are sitting on the market for years sometimes . Even if we sold it we would still owe the mortgage company money so I dont see how that helps.
You'ld be out from under the mortgage debt and the difference would be unsecured debt, which you defer payment on until you can make good on your debt.

PLus we would be homeless.
No you would rent.

My husband drives an old car to work every day we paid 400.00 cash for a year ago . Before that he drove a truck that was literally falling apart . With having a child at home all day that is ill I have to have some transportation. I am willing to turn in the van and get something cheap to get from her to dr. appointments etc. but the lawyer advised against turning in the van .
Yeah because that would show you have options to avoid BK and he wants you to go into BK cause that's how he gets paid.

If I start making partial payments on things wont the charges for that continue to accumulate month after month and add to the balance or minimum payments as well?
You close the accounts, take a hit for a month or two and then they'll charge off the accounts. Eventaully the debts will be sold and resold and someday some junk debt buyer will take the original amount due as settlement - or less - because he only paid $0.25 per dollar of debt.

I am sorry if it seems like we are taking the "easy way" out. We are struggling to the point of having no money to live on from day to day and I dont know what else to do. This is not easy for us to do and it is only going to get worse .
There is a way to get through this without going through bankruptcy. It's harder, but it can be done.

Should we wait until the house is in forclosure and all the cc's are behind?
You need to get a budget put together. You start the top of the budget with what you bring in. Then you put the following 5 items:
1) Food
2) Lights
3) Roof
4) Transportation
5) Basic clothing

On each line you put down how much you NEED for each. You deduct that from your income.

Then you list the rest of the essentials.

THEN, and ONLY then, do you list the debts. Secured first, unsecured - LAST. Each month you do this, and each month you start at line 1 and pay yourself first. If you run out of money before you run out of debt, oh well. Let them wait. THey'll scream cry and fuss. They'll try to scare you. But this is the important part - UNTIL THEY ACTUALLY SUE YOU, if they ever do, you are not bankrupt. Every time they call you tell them, "I want to pay you, I can't now, I will when I can, but if you sue, you'll force me into bankruptcy - and neither of us wants that"


Stop using the CC's TODAY. Get your budget sorted out TODAY. Prioritize your spending TODAY.

I'm not saying you're not in for a rough ride - I know it will be. Trust me I've had creditors calls. But you CAN get through this - you have a lot going for you - DH is working, there's plenty of money there to feed the family *IF* you sort out the priorities in the right order - you're doing better than a lot of ppl these days.
 
#22 ·
Have you ever read Dave Ramsey's book? Please Please do before you file. Also, since your credit would be ruined anyway, why not put just a few bills over the line and just pay those till they're paid off and then work on the next one and so forth until their gone (yes this will take years). If you can't tell, I'm a little against bankrupcy because only you spent that money. Your income is more than double of a lot of us on here, you can do it! You can also listen to Dave Ramsey online at his website. Good luck.
 
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#23 ·
If the debts were discharged we could pay the mortgage, regular dr. bills, groceries and utilites, car payment , prescriptions and have a small amount to set aside for emergencies. Maybe 25.00 a week and still be able to put gas in the cars and live day to day.
 
#25 ·
~You're in a tight spot and I can see how worried you are.
I'm sure you have something to sell in your home. Nearly everyone has a dvd collection, cd's, musical instruments, books and collectibles that are rarely, if ever used. Start listing them on Half. com, Ebay and Craigslist. Sell your jewelry and furniture if you have to. I think you'll be surprised at how many people are buying!
If you have two cars, sell one.
Go to the food bank, that's what it's there for.
Call your local churches and explain your situation, they may have outreach programs.
I know there are hardship programs for people who are needed medications. I don't know who to call for that so someone else will have to chime in on that. You should also look into the qualifications to getting your kids on state health care just in case.
Definitely cancel the cable.
Many small drops in the bucket may very well give you a full bucket every month to pay off those cards.
Just keep swimming, Kim!~
 
#26 ·
That sounds like it'd be cutting it way too close to me. And since you have already cut to the bone, what would you do if the car died? When Christmas comes? When something needs fixed on the house?

I know my solutions tend to sound a bit extreme, but I think the fact here is that you can't afford to simultaneously live in Michigan and homeschool your daughter. Especially the Michigan part.
 
#29 ·
Not homeschooling my daughter is not even an option. She is homeschooled for health reasons only. How could we ever afford to move? We owe more then our house is worth and have no disposable income to "save" for a move. If the card dies my husband is a maintainance mechanic and he could do the repair. The parts themselves? Well thats where the chasing my tail with a credit card come in. Christmas? I have already told everyone not to expect anything from us and the kids know that there will be no Chrsitmas to speak of . If something needs to be fixed in the house , well if we continue this way muddling through and Dh cant fix it we are screwed unless of course we whip out that old cc again . Thats what I mean . NO CASH FLOW . NONE .
 
#32 ·
It is VERY hard to get a Ch 7 declared. CH 13 with a repayment plan and a trustee is more likely. DH filed for ch13 and just finished yr 1 of 5 in re-payment. (mental health issue). Basically the ch 13 stopped the interest. I am not included in the filing so my credit is ok. We have kept the house and our vehicles. Basically 2/3 of his income goes to his trustee for repayment. It is not easy. I have become the money caretaker. He is never going to be able to handle money responsibly due to his mental health condition.
He has taken a second job to get some more money flowing in. I admit we are just squeaking by. He ran up about 25,000$ in debt on my name that I am handling and repaying. There was close to 100,000$ on his name.
Take the counseling seriously, maybe get more too. There has to be a reason behind the mess and will help you not get back in once it is over.
 
#33 ·
WE too had to go through bankruptcy. We live in Michigan also.
Husband was laid off , I can no longer work due to medical reasons. There is a 18 to 24 month wait for a social security disability hearing in this state. Even after bankruptcy we are still having a hard time making ends meet. WE have been living pretty much on food hand outs from churches and other community donations. I feel for you. My credit was better than my husbands when we met . But There are a lot of people in the same boat as you and I. It took us a long time to come to this decision. A lot of tears cried. But I am thankful we did it.
The stress was making us sick.
Do what you have to do and don't feel guilty for doing it.
 
#34 ·
If you close your credit card accounts before they raise the rates, your rate will be locked at the lower rate for 5 years. If you use the card after they raise the rates, it acknowledgement that you agree to the new rate.
You'd be able to put that debt into payments, if you're late, well, then prioritize: Shelter, lights, food, etc....then the cards will have to wait.
I'll see if I can find the wording on the CC stuff and post the link.
I wish you the best.
 
#35 ·
Are there food banks in your area where you get your food? Are your churches assisting families? could you do childcare in your home - if not on a regular basis - how about babysitting?

I'm finding part time jobs to help make up income losses that are hitting us - see what's available.

Good luck and keep posting.
 
#36 ·
Ok, is anyone really reading what this woman is saying...I mean really reading. Right now groceries has to go on cards. There is no cash for food. She is "There are nights I eat little or no dinner so that the kids and dh will have plenty". She is only taking her meds now every other day and the kid has a serious heart problem with several meds. The only way they have got as far as they have is using vacation days which are almost up. His hours are going to be cut further this winter. There are 10 CC of which two are $10,000 each. That's just 2. And if I read right they haven't used them in ages and ages except the one for groceries.

She says interest rates are going up again in Dec, although I have no idea how she knows this and I keep up on all of that. That is my fear also on my end.

On a 7 it is wiped out unless house is reaffirmed but on a 13 CC's and unsecured are not paid back 100%. It is a percentage based on what you CAN pay back in 3 to 5 years. You will be asked to make an estimate of this figure and it will either be accepted or denied.

It sounds to me, and we are going thru this ourselves as you know, they know when vacation hours are over, the credit cards in Dec are raising, hours are cut in winter that it is not going to be doable. They are planning so that they aren't down to the lint in their pockets and quite frankly I don't blame them.

Also, while Ramsey may be a very smart man, he does not walk on water...GASP !!!! He himself filed bankruptcy...Another Gasp!!!
I agree with alot of what he says but not everything which is my right and does not make him right in every situation. Just means he has an opinion like everyone else which happens to work for alot of people, a whole lot of people....not everyone.
 
#37 ·
Niko, I am reading what she's saying, and it sounds to me like she's paying the credit cards before taking care of her household.

Dave Ramsey did file bankruptcy. He did it after a series of short notes totaling near a million dollars were called without warning or reason other than the bank that bought the bank he dealt with got freaked out by a 26 yr old owing a million when he had 6mil in real estate.

He also went back afterwords and paid back the creditors that he'd included in the bankruptcy.

Listen - Jamie MAY VERY WELL end up needing to file bankruptcy. But right now, from reading her posts, it sounds very much to me that there are a number of things she and DH could be trying *first* to avoid this outcome.
 
#45 ·
Niko, I am reading what she's saying, and it sounds to me like she's paying the credit cards before taking care of her household.

Dave Ramsey did file bankruptcy. He did it after a series of short notes totaling near a million dollars were called without warning or reason other than the bank that bought the bank he dealt with got freaked out by a 26 yr old owing a million when he had 6mil in real estate.

He also went back afterwords and paid back the creditors that he'd included in the bankruptcy.

Listen - Jamie MAY VERY WELL end up needing to file bankruptcy. But right now, from reading her posts, it sounds very much to me that there are a number of things she and DH could be trying *first* to avoid this outcome.
I agree, I just hate to see some people talk like it's the totally worst thing that could happen in life and the remark of the effect on taxpapers. They are taxpayers also and will continue to be so. If a horse is dead, no matter how much you beat it it isn't getting up. Thank you grandma.
What I saw was this, "Then it will be in the custody of dh at all times becasue I am the weak one." So would it start again, cause once filed they can't do it again for a long time. Then there is no out.
Some remarks when they hit home just get my ire up...sorry.
 
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