Thinking about bankruptcy

[XorCist]

Hey all, small time poster, long time lurker...
okay so my question is, anyone have experience declaring bankruptcy in california? im $14K in CC debt, and ~$29K on the car. my main questions are, is the debt i have enough now to declare it? what happens to the car i have? does it get repo'd or do i just forfeit it? i dont have a home or anything, currently im going to school. thanks

[Captain Ned]

Your best bet, especially to get the various state-level nuances, is to talk to a bankruptcy attorney. Shouldn't be hard to find one in California these days.

[XorCist]

yea i want to talk to one, but i wanna try to get educated on it before i do. at least have an idea of what their talking about, and not just nod my head like a jackass while they are talking.

[Captain Ned]

yea i want to talk to one, but i wanna try to get educated on it before i do. at least have an idea of what their talking about, and not just nod my head like a jackass while they are talking.

Well, your basic decision is Chapter 7 or 13. Under 7 you lose all assets not covered by state-specific exemption rules and get relief from all debt. Under 13 you set a schedule to repay the collateral value of your secured debts while trying to give something to the unsecureds. Chapter 7 filings far outnumber Chapter 13 filings.

[moresmarterthanspock]

Also, DO NOT go through a debt reduction of debt consolidation service. When you sign up to work with them, you basically give them the rights to your assets if you cannot follow through to the end. They can take everything you own, and then some. Bascially, let the collection calls come in, you don't have to answer them. And they aren't going to come after you if they can't get anything out of you in court. Since you are in so much debt, and have no way to pay it off, they aren't even going to bother. All they can do is send threatening phone calls.

[XorCist]

am i reading this right?
http://www.californiabankruptcy.info/exemptions.html
basically everything gets wiped out except me and my wifes student loans, and we can choose to keep the car?
it can't be that simple can it?
and then 10 years until it clears my credit?

[videobits]

Ummm....Sell the car!!!
Seriously, why do you have a car that cost you $29,000 (or more if that is just your loan balance) if you are $14,000 in credit card debt?

Ditch the car, buy a $2-3k beater, and get a second or third job to pay off the rest.

If you haven't been paying the credit card for a while, perhaps they will arrange a settlement for 50% or less of the balance.

For inspiration listen to this guy: http://www.daveramsey.com/home/
Find his radio show and listen a bit. You'll hear people digging out of much deeper holes. And get some solid advice, too.
You could probably get this cleaned up in a year or two and not have the big ding on your credit history. Plus, you spent the money, you owe the money. No one else should have to cover your debt. And filing for bankruptcy is likely going to cost you $1500-2000. Might as well use that to clean up the mess.
While I'm sure it may seem overwhelming to you at times, I was young and stupid and cleaned up about that much mess once. It can be done. Good luck

[Captain Ned]

am i reading this right?
http://www.californiabankruptcy.info/exemptions.html
basically everything gets wiped out except me and my wifes student loans, and we can choose to keep the car?
it can't be that simple can it?
and then 10 years until it clears my credit?

Nope. According to that page (IANAL, especially in CA and you need to see one soon) If you've got equity in the car of less than the exemption limits you can keep the equity (and the car) only by maintaining payments. That page is silent on how upside-down cars (the vast majority) are treated under CA's exemption rules. And yes, student loans are 100% non-dischargeable in BK.

Again. Go see a lawyer. Now.

[XorCist]

the car loan includes the 6K i was upside down in the previous car
we pay on all our cards normally, we're not behind....just struggling to stay afloat

[EV42TMAN]

Before you tank your credit with bankruptcy, try and refinance what you can to save on interest and what not. I just finished repairing my credit to buy a house and it was a lot work for just a few corrections, i'd hate to see what a bankruptcy would do it.

[xtalentx]

I wouldn't declare bankruptcy over such a small amount of money. You can dig out of that with a part time job and a little hard work.

You made the debt, you should pay it. Bankruptcy isn't a get out of jail free card. The money you owe doesn't just disappear from the world.

[TDIdriver]

Talk to a good debtor's attorney. He/she will help you decide if you it would be beneficial to file or not, and can help you get going in the right direction if you want to settle/restructure. I have a lot of experience in these matters.

That's the only advice I can give because much else can be considered practicing law without a license....

[Sargent Duck]

You probably don't want to declare bankruptcy, that ramifications could really come back to haunt you later in your life...espicially if you try to get a house.

As videobits said, sell your car. As much as I HATE the bus (and I use that term strongly), it'll save on car payments, insurance and gas. If you NEED a car to get to work (no busses or not pratical), buy a beater for $2 or 3 thousand and drive that into the ground till you get into a better financially.

Pick up a second job nearby. That amount of money is NOT a lot (unless you make minimum wage)

[Turkina]

I'm sure there are a lot of others with "I got out of debt" stories, but when I was abruptly laid off from my first job out of college (about 5 years ago) I owed like $15k in student loans, $10k on my car, and eventually racked up $2-3k on my credit cards in expenses (breaking my lease and moving back in with my parents). I went back to school (which deferred my loans), did some freelance IT work, and got a teaching assistant position.
I recommend prioritizing your debt and paying off the highest interest as fast as possible, even if it means trying to get the other creditors to play ball with longer payment schedules, etc (my car finance company was willing to do this, for instance so I could focus on repaying my credit cards immediately). I was also fortunate enough to get a 0 interest loan from my brother to pay some urgent expenses ($1200 for car insurance...). And obviuosly reduce your living expenses as much as possible.
I would kind of disagree with the "buy a 2 or 3 thousand dollar beater" car crowd in that, in my case anyway, there was no way I could've sold my car for what I owed on it (since it was nearly new) and the value of having a reliable car is important (and I have no mechanical aptitude in terms of judging what is/is not a reliable car, or fixing problems myself). If I wasn't able to make it to a client's site on time doing my freelance IT stuff, I could easily kiss the prospect of future business goodbye, so that was pretty key for me.

[cjcerny]

Does not make sense to declare bankruptcy if you are still able to make your payments on your loans. The penalties for declaring bankruptcy are not small--killing your ability to borrow money for 10 years is not a good idea if you can still make the payments now.

[clone]

I would kind of disagree with the "buy a 2 or 3 thousand dollar beater" car crowd in that, in my case anyway, there was no way I could've sold my car for what I owed on it

solid point, I had considered it as well, lose the car and you lose reliable transport + what is likely the only decent thing you have and go through life driving junk while paying off the debt is just a reminder of how far you fell.

okay so my question is, anyone have experience declaring bankruptcy in california? im $14K in CC debt, and ~$29K on the car. my main questions are, is the debt i have enough now to declare it? what happens to the car i have? does it get repo'd or do i just forfeit it? i dont have a home or anything, currently im going to school. thanks

bankruptcy is not an "oh well it's a little rough I think I'll declare bankruptcy and start over" option and not paying won't be an option, they'll destroy your credit not just for the next 10 years but until you pay the money back and they will sell off your debt to those who will hound you from that day forward until they get the money.

I know it sounds simple, you can tell anyone to screw off on the phone but it won't be simple, they won't screw off, they'll keep calling, if they are good they'll stay within the limits of the law and those limits are more than enough to put you in the looney bin over time.... not just over the course of a month but over years all the while you still won't be able to get credit.... they will extract every penny owed from you through stress and from your pocket, you will be their hobby until the debt is paid.

the calls won't stop, had an ex who was a financial disaster, her parents got the calls, I got the calls, her friends got the calls, she got the calls and no saying "she doesn't live here", "I've no clue where she is", "f'off a'hole she doesn't live here." doesn't make them go away.

you owe $43,000 and your car is worth whatever.... $23,000 so you owe $20,000 in unsecured debt, if you have a job your screwed, it's better you asked here because the moment you ask anyone involved or anyone who's going to get involved the first option will be to dock your pay, destroy your credit and impose a payment schedule they've decided you can afford.

I'm not sure what would happen to your ability to get additional student loans but suspect that door would be closed just like every other one.

your best bet is to refinance your existing debt to a lower FIXED interest rate that you can renegotiate every cppl years as required and start living within your limits.

$43,000 seems like a lot more than it is, get rid of your cell phones and start paying down your debt.

[kumori]

You shouldn't really worry about knowing too much about bankruptcy before going to see a lawyer. That's what your paying him or her for.

He or she can also advise you on the consequences of declaring bankruptcy and whether it makes sense in your particular case.

[Glorious]

they'll destroy your credit not just for the next 10 years but until you pay the money back and they will sell off your debt to those who will hound you from that day forward until they get the money.

What a surprise, clone doesn't know what he's talking about. Again.

Provided the bankruptcy successfully discharges your debt (which is the whole point of the endeavor) that's actually illegal. If they even try to do that you can sue them and win mega-bucks.

[ludi]

While I would normally agree with the "sell the car and buy a beater" advice, it probably isn't an option here, at least not directly -- the car is probably security for the finance agency, which means they have a lien on the vehicle and are holding the title as well. However, once a bankruptcy attorney is involved, there may be a way to renegotiate, because now the lender knows that they are at very high risk of losing the difference between the principal+interest and the residual auction value of the security.

To reiterate what Captain Ned said: XorCist, if you absolutely can't work your way out of this hole, then talk to a bankruptcy attorney. Do some homework first to make sure you're dealing with someone reputable, of course, but that IS your very next step. Smiling and nodding isn't a problem here, the attorney will be requiring a standard fee from you regardless of which way the outcome goes; their only incentive is to get your situation patched as best as possible.

Provided the bankruptcy successfully discharges your debt (which is the whole point of the endeavor) that's actually illegal. If they even try to do that you can sue them and win mega-bucks.

And yet that doesn't stop them from doing it. Collection agencies are largely a cesspool, and good luck actually getting and collecting that megabucks judgment without investing more of your life and money into the hunt than any reasonable person can afford. You would have better odds with lotto tickets.

[Glorious]

And yet that doesn't stop them from doing it.

Generally because the vast majority of the time they have absolutely no idea if a person is really legally obligated to pay a debt they've bought.

But, if you refer them to fact that the debt was discharged, they can't "hound" you without judicial and legal repercussions.

I mean, yes, in the situation that you have lots and lots of individual debts that were discharged I would expect a constant trickle of such calls for years afterwards, but certainly not TEN years afterwards or the same calls over and over again like clone claimed.

collection agencies are largely a cesspool, and good luck actually getting and collecting that megabucks judgment without investing more of your life and money into the hunt than any reasonable person can afford. You would have better odds with lotto tickets.

I don't disagree with your characterization of collection agencies, but this kind of thing is a slam dunk. If they don't desist after you've referred them to your legitimate stay or discharge, they're in serious trouble.

This is *why* they are such cesspools, they make their money off of people who DIDN'T file bankruptcy years in the past and actually tried to work off their debts. Those are the ones who get a bill from several years ago that they can't even be sure they actually spent or even thought they paid off.

If you had a bankruptcy and a debt collector is hounding you over a debt you've discharged, lawyers advertise that they'll take your case on a contingent basis. Thus it can't be THAT hard.

[druidcent]

One area that may help a bit (not significantly, but every little bit helps) is consolidating your student loans.. there are several options for repayment especially if you can show a financial hardship.

I'd try and avoid bankruptcy if possible, but in some cases it could be alright.. living in CA, waiting 10 years for it to clear and you can buy a house isn't a bad thing (it sometimes takes that long to save up for an f'ing down payment). The only problem will be finding places to rent with this on your record...

[clone]

What a surprise, clone doesn't know what he's talking about. Again.

I'm honored you are keeping track Glorious, I only notice you when you seek me out and start crying for my attention, the comment you quoted was based upon a failure to get approval and missed payments following but you don't think you just attack so don't blame me for you looking notably petty, notably small.

1st getting bankruptcy approval requires certain conditions be met and is not not granted at a whim just because someone is having trouble keeping up with the bills.

$14k in credit and $29k in auto with the auto being an asset and he's employed.... not going to be easy and doubtful on the approval especially given the conditions required in the means test that look at projected earnings over the next 5 years and assess levels of disposable income, if I had to guess at best the author may qualify for Chapter 13 which would pretty much do what I mentioned which is a refinance over an extended period while allowing the author to keep property.

p.s. Glorious how about not trying to derail the thread..... try being a big boy and I'll forget about you like I always do.

[XorCist]

thanks all for the info, but heres a couple things i guess i should have put in the original post.
#1, i am not employed, i got laid off from my last job, and started school in january. i currently get unemployment, i go to school from 12-6 monday thru thursday
#2, i have 3 kids, so selling a car we all fit in, and can fit all our crap in it with us really isnt an option
#3, my wife works part time at victoria secret, but only from 6am til 1130am when i pick her up and then i get dropped off at school
#4, as crappy as it sounds, my family of 5, moved in with my parents. we went from a 3 bedroom apt to living in 2 rooms in my parents house.

[Glorious]

I'm honored you are keeping track Glorious, I only notice you when you seek me out and start crying for my attention, the comment you quoted was based upon a failure to get approval and missed payments following but you don't think you just attack so don't blame me for you looking notably petty, notably small.

You didn't say anything about the failure to actually get a bankruptcy and I explicitly said that my point was contingent on the bankruptcy successfully discharging debts.

If your point was that he wouldn't actually be able to get a bankruptcy in his situation, maybe you should actually SAY that.

p.s. Glorious how about not trying to derail the thread

How about you spread factual information for once in your life? Instead of just blatantly making stuff up like you ALWAYS do?

$14k in credit and $29k in auto with the auto being an asset and he's employed

#1, i am not employed, i got laid off from my last job, and started school in january. i currently get unemployment, i go to school from 12-6 monday thru thursday

He even said he was in school in the first post, which means that the presumption should be that he's not employed. Instead you just started inventing "facts" again.

The sad thing is that you have made a very good point: He might not be able to get a bankruptcy. Why didn't you just say that the first time?

[clone]

#1, i am not employed, i got laid off from my last job, and started school in january. i currently get unemployment, i go to school from 12-6 monday thru thursday
#2, i have 3 kids, so selling a car we all fit in, and can fit all our crap in it with us really isnt an option
#3, my wife works part time at victoria secret, but only from 6am til 1130am when i pick her up and then i get dropped off at school
#4, as crappy as it sounds, my family of 5, moved in with my parents. we went from a 3 bedroom apt to living in 2 rooms in my parents house.

thx for the additional info, on the surface it appears you'll qualify for Chapter 13 but seriously if you can find any way around it and just do a refinance you'll be better off, atm while it looks grim you'll still likely fail the means test because of projected earnings.

that said I've not looked into it but isn't their a government program around right now during this recession that can be exploited to stretch and fix your payments?

You didn't say anything about the failure to actually get a bankruptcy

bankruptcy is not an "oh well it's a little rough I think I'll declare bankruptcy and start over" option and not paying won't be an option,

they'll destroy your credit not just for the next 10 years but until you pay the money back and they will sell off your debt to those who will hound you from that day forward until they get the money.

I did but you wanted something else so you ignored it.

He even said he was in school in the first post, which means that the presumption

gee I never had a job while going to school..... btw which bank hands out $29k car loans to the unemployed without a co-sign.

glorious your name is a lie and your "presumptions' are ridiculous.

The sad thing is that you have made a very good point: He might not be able to get a bankruptcy. Why didn't you just say that the first time?

an obvious point that needed to be said.... several times aparently.

the ops last post filled in the blanks so can we move on to you wearing the big boy pants and not derailing the thread any further with your personal issues?

[Captain Ned]

OK, the level of snark here is excessive and needs to stop. Now.

Thanks for listening.

[XorCist]

we bought the car before i was laid off...we bought it in june of '11, i got laid off in december...u can refinance credit cards? ive caled and tried ot get my interest lowered, but they always say " you currently have the lowest apr available...which is a load of garbage since some of mine are 18%

[grantmeaname]

What you probably want to do is a balance transfer, where you move all of the debt on the cards to card that has a low interest rate for a fixed period, like a year. You pay off as much of the debt as possible within that first year, and then you have a lower outstanding balance and you've gotten much less interest for at least a little bit of time.

[ludi]

You didn't mention what your car might be but here's the problem: If you're carrying a $29k principal and a typical 5-year loan, your payments are probably on the order of $500/month, right? You can pick up an older Ford Windstar or Dodge Caravan (plenty of room for a family of five plus luggage) for around $4k in rough but still serviceable condition. Reliable? Not at all, and you would need to plan around buying another one of similar vintage and condition within the next year or so when the transmission explodes. On the other hand, if you're unemployed and taking classes 12-6, you've got half a day to be learning automechanics, and once you've picked up some of that, you can start trading favors or cash with friends.

Again, that requires getting a bankruptcy attorney involved, since s/he'll know what letters to send and how to scare the finance company with the possibility of a much larger loss. Given that you've just moved your family in with your folks, another reduction in your standard of living is probably the last thing you want to hear about right now, but you need to focus on getting your monthly expenses down to the bare minimum for the next couple years by shaving $10 and $20 increments everywhere you can. That vehicle loan is weighing you down like a lead balloon -- both in terms of the vehicle itself and in terms of the insurance expenses. You could pay attorney fees, severance fees on the auto loan, and work your way through two or three beater minivans over the next couple years, and still come out ahead financially if you plan everything carefully.

[XorCist]

yea but how does one get rid of a car that has a loan that is 9K upside down? yea our payment is 426/month

i try to tell them yea i want to transfer 4K to X card, but they say, sorry we cant increase your limit