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kba4
join:2001-10-23
Canton, OH
 ·RoadRunner Cable
1 edit | when bankruptcy makes sense
Hello all.
I've been reading a little bit about how credit card companies are going to start charging for not using a card. I am wondering if bankruptcy is something to consider for someone with a lot of CC debt, and also many open accounts.
I have a car loan, some retail purchases (washer/dryer, tires/wheels and some net purchases) on financing, and live in an apartment (rent). These costs in addition to my electric, cable and cell bills are within my planed budget. However, I also have over $30K in CC debt, and if I'm to be charged for zero-balance accounts, plus at least minimums on the accounts with a balance, I am quickly becoming trapped. It seems I need a way out before I 'drown' so to speak.
Now, granted this is my fault. I knew full well what I could be getting into when I got my first CC. Then before I knew it, over the past 6 years of easy credit, I had amassed some 13 cards with over $100K in credit. It's a balance-transfer scheme, and I never once lied anywhere; they asked for some very basic information, which I provided.
I suppose living in the same house for some 23 years and renting (moved there at 3, grew up for 15 more, rented from 18-26 before moving), having a family making at least $80K (annual household income), and having good to excellent credit (due to both paying on an auto loan and paying off a balance via a balance transfer!), oh and working at get this- Pizza Hut (not sure they even cared about this one) helped matters.
I think I've gotten about as far as I can with this easy credit scheme. Is it now time to call it quits or could another CC offer be in the mail as I write this, waiting for me to take advantage and continue this game another year or longer?
--
"I saw Matlock in a bar last night; the sound was off, but I think I got the gist of it..." | |
Full Power
join:2009-09-25
Houston, TX
1 edit | said by kba4  :.... if I'm to be charged for zero-balance account plus at least minimums on the accounts with a balance, I am quickly becoming trapped. It seems I need a way out before I 'drown' so to speak. Seems that cancelling the zero balance cards may be a simpler solution than bankruptcy. | |
Network Guy
join:2000-08-25
New York
 ·PHONE POWER
·Broadvox Direct
 ·Verizon Online DSL
| reply to kba4
Your story mirrors my very own. I hope you decide to read mine in it's entirety. I'm also in your very same shoes.
I've never worked at a Pizza Hut, though. I have held computer tech support jobs for the past 11 years, thankfully managing to raise my salary almost every time I switched jobs. Believing that my salary is good enough to sustain some consumer debt, and the whole "I want it now" consumerism is what started it for me. Unfortunately over the years, some personal circumstances also arose.
Just like you, I also managed to get myself aproved up to $103,000 in combined unsecured credit. The kicker is that more than half of that credit was, as you say, easy cheap credit.
As I kept piling on debt, I also played the balance transfer game. I had as much as $35,000 sitting between 0% ~ 3% in interest for long periods of time. I'd always remit sizeable payments towards it, though. It's not that I had decided to rack up and flee. It was common for me to earmark about $900 of my monthly take-home pay just to pay the creditors. This worked for me until my girl left me, and left me paying rent and bills all by myself. And oh yea, child support also came along around this time as well. Yes, it was a bad break-up.
Around this time the 0% promo offers started drying up too. Then the balance transfer fee caps went away, some charging 4% fee tied to the amount of balances transferred. I thought to myself... Shit... I need to clean up my act and start repaying fast. I developed a very tight budget and payment schedule revolving around paying the cards back as quickly as possible. I hardly went out. It was common for me to stay in and hibernate so that I didn't have any opportunity at spending money I didn't have.
This approach was working for a little while. The balances started coming down a bit, for a minute I thought I was getting back on track. Then the promo offers completely stopped and the interest rates started coming up.
AMEX kicked off the rate hike on me. The AMEX Blue card went from 7.99% for the four years I had it to 10.99%. This doubled the interest I paid from $80 to $160 monthly on average.
Bank of America also jumped on the bandwagon. They went from 3.99% to 11.99%, effectively raising average monthly interest charges from $70 to $155.
So, very quickly I came to the realization that either I needed to live in the projects in some real cheap apartment and enslave myself to these blood sucking douchebags for as long as it took, or take the alternate, popularly detested route of bankruptcy.
And well.... Since I can really give a fuck what anyone says about my personal financial situation, I filed for a Chapter 13 bankruptcy back in August of this year.
Yes, I was irresponsible. I should have known easy cheap credit was not forever. Some people intentionally raked in bank's stupidity of loosey goosey lending, I simply tried to finance a comfortable life for me, my girl and our child. And well... that was that.
At first it was hard to accept that the only piece of plastic that could pay my bills, get groceries and gas was the debit card from my local bank, and that I was limited to cash money on deposit. But it has been sobering to finally end a very long love-hate relationship with consumer credit.
Point of my story is.... This is not the Middle East. There won't be public demonstrations of your financial misfortunes. The police won't throw you in jail. Depending on how your state bankruptcy laws do things, the worst you can experience from filing for bankruptcy is some embarrasment or guilt. Once you can get over that, fuck what anyone else tells you. It's your life, your choices, you have to live with them, not anybody else.
Depending on your local bankruptcy laws, you might get to keep all your things. Hell... When I filed, nobody asked for an inventory of all the things I own. I even got to keep my piece of shit, but very reliable Honda Civic. And since you rent, you won't have to worry about losing any real estate. If you do have some income property, and again depending on your local laws, you might have to liquidate that.
If you're finding yourself one dollar short away from living under an overpass due to your creditors, sounds like you need to consult a bankruptcy lawyer. You are not doing the economy any favors by hanging on to a financial thread. The banks are greedy bastards, and Obama and the cronite little Congress is busy plugging holes into a consumer credit ship that has long-ago sank into the abyss. | |
Snakeoil
Taxes are Armed robbery.
Premium
join:2000-08-05
Mentor, OH
·RoadRunner Cable
| reply to kba4
We declared chapt 13 Bankruptcy.. we are about 2 years into it. We are paying 100 percent of the debt. It feels great:
1]Because we are paying back what we owe.
2]No more annoying late payment calls.
IMO, a chapter 13 is good because you are paying back some, if not all the debt. Chapter 7, if you qualify for it, eliminates most of the debt so you may owe little to nothing. Both have court and lawyer fees.
Anyother "free" route to go is a consumer counseling service. Clark Howard has a link to them on his web site:
»clarkhoward.com/
This guys are located in Atlanta GA, but might be able to help you find a simaler service in your area:
»www.cccsatl.org/
--
I want Obama money. "wheres it comming from?" I dunno, his stash. I don't care, I just want obama money. Shows the lack of education and the greed of people. Hand outs from the government comes from your pay check and wallet. Think about it. | |
kba4
join:2001-10-23
Canton, OH
·RoadRunner Cable
| reply to kba4
Thanks so far for all the discussion.
The way I see it, I can try to pay the debt off. It'd probably take a lifetime to get through the interest as it accumulates, however. I can also consider different types of bankruptcy. Seems to me no matter what I choose, I will lose my 'good' credit, if I even have that anymore.
I've looked into the various BK types and so far have concluded that ch.13 is probably the best because it allows me to keep most if not everything I've gotten so far using my credit. If it's all the same (meaning I lose my credit no matter what), I'd probably like to keep my car and anything not stated on a CC bill (ha ha the way I've done this is to pay cash for almost everything so there is no paper trail really!) and just try to start anew, albeit with my TV and stuff I got when I moved here.
Under ch.13 as I understand it, I negotiate payment terms with my creditors and pay off the bills. With interest outnumbering the value of anything I have purchased using this 'money' by a factor or 2:1 or even more, what incentive to I have to go this route, unless it keeps my credit score unchanged, even if it has dropped from say ~730 where I know it was this past Feb. to say 650 or so. Since I figure my score is most likely in the 4-500's it's probably pointless, eh?
--
"I saw Matlock in a bar last night; the sound was off, but I think I got the gist of it..." | |
pandora
Premium
join:2001-06-01
Outland
·ooma
·Future Nine Corpor..
·Comcast
|  reply to kba4
Young people, can get into a lot of trouble with credit cards. The credit card companies make this way too easy.
With an income of $80,000 you may not realistically be able to pay off $30,000 in credit card debt, particularly if the card companies add new fees and increase the interest payments.
You'll need to speak with an attorney. An initial consultation should be free. My guess is an attorney will advise you to discharge everything that isn't secured. It will hurt your credit rating, but will also get rid of your crippling debt.
Immediately you'll be able to open a secured credit card. I strongly advise you to look around locally for a credit union. IMO a credit union is the best way to bank.
Your attorney will provide the best advise. IMO a discharge of debt is better than a payoff. Either one will savage your credit, but with the discharge you come out of court largely debt free.
--
"People demand freedom of speech as a compensation for the freedom of thought which they seldom use." | |
LittlePiggie
Premium
join:2009-09-11
| reply to kba4
Claim Bankrupcy and your credit is crap for 10 years.
Bankrupcy is setup now that you have to pay off your debts anyway so why bother going that route?
If your credit card company starts to charge for non-use drop it and take a small hit on your FICO scores.
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ThunderDawg
join:2002-11-05
Lake Worth, FL
·AT&T Southeast
·Comcast
1 edit | reply to kba4
Max out those cards and stash that money away.
Then move to Florida, which has the most lenient state bankruptcy laws in the nation.
Wait at least a year.
In that year, the Congressional Bleeding Hearts will reform the Bankruptcy Code.
Your Chapter 7 will be discharged three months after you file.
You won't lose your house, your car, or anything really.
You will owe nothing, and can immediately start rebuilding your credit.
But the best advice I can give is to stop using credit. It's not fucking worth anymore...
said by LittlePiggie :Claim Bankrupcy and your credit is crap for 10 years. Bankrupcy is setup now that you have to pay off your debts anyway so why bother going that route? That's not true. As soon as a bankruptcy is discharged, credit card companies fall over each other offering you new credit, which cannot be written off since you can't file again for ten years (7 in some states).
And as I mentioned, Congress will be changing those laws very soon.
--
The first time history repeats itself, it is a tragedy. The second time, it is a farce. | |
Network Guy
join:2000-08-25
New York
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| reply to LittlePiggie
said by LittlePiggie :Claim Bankrupcy and your credit is crap for 10 years. Bankrupcy is setup now that you have to pay off your debts anyway so why bother going that route? If your credit card company starts to charge for non-use drop it and take a small hit on your FICO scores. Wrong.
Depending on your income and the state median income limit, you can still get a full debt discharge via Chapter 7. In New York state, the median income is $45,000. Yes, that's laughable considering the astronomical cost of living here.
If your income ends up above state median, the court requires a very pointless, but very thorough income/expense questionnaire, or what's called a Means Test. The court adds up your income for the past six months and measures it against your monthly payables to determine whether you can still file a chapter 7. If the formula comes up with a positive disposable income number, you have to do a Chapter 13.
What's good about repaying under a Chapter 13 is that the monthly payment is determined by the Means Test, and in my opinion it worked out to a very fair and manageable payment. And what's even better is that this monthly payment is scheduled for 60 months only, after which the rest of the debt is discharged. For me, instead of repaying $43,000 to the douchebags, I'm only paying back roughly $16,000. And about $5000 of that goes to the court. Yes, knowing the banks were only getting $10,000 back from me made me smile. Fuck them. | |
pandora
Premium
join:2001-06-01
Outland
·ooma
·Future Nine Corpor..
·Comcast
|  said by Network Guy :In New York state, the median income is $45,000. Yes, that's laughable considering the astronomical cost of living here. WHO are they kidding? $45,000 as median income for New York? What's next $16,000 median income for California? I thought the bankruptcy means test numbers were supposed to be serious?
I hope they repeal this idiotic reform. $45,000 in most of New York won't get you a decent apartment.
--
"People demand freedom of speech as a compensation for the freedom of thought which they seldom use." | |
Loco
Premium
join:2002-11-09
So Cal
·RoadRunner Cable
| reply to kba4
Why people are in so much credit card debt is beyond me !
The solution is simple. If you don't have the money, you don't buy it....period.
And that goes for rims, tires, 'net purchases and what ever else people charge on their credit cards.
I don't feel sorry one bit for anyone buried in credit card debt. It's their own fault.....they did it to themselves. | |
Network Guy
join:2000-08-25
New York
·PHONE POWER
·Broadvox Direct
·Verizon Online DSL
| reply to pandora
said by pandora : WHO are they kidding? $45,000 as median income for New York? What's next $16,000 median income for California? I thought the bankruptcy means test numbers were supposed to be serious? I hope they repeal this idiotic reform. $45,000 in most of New York won't get you a decent apartment. I researched the Means Test online before going to a laywer. I laughed when I saw it online, and laughed again when the lawyer confirmed the New York median income guideline.
This state senate is full of knob-polishing tards.
$45,000 income will get you a studio apartment in the ghetto, and you get to shop at Family Dollar Value for everything you'll ever own. | |
kapil
The Kapil
join:2000-04-26
Chicago, IL
| reply to ThunderDawg
Re: when bankruptcy makes sense
said by ThunderDawg : Florida, which has the most lenient state bankruptcy laws in the nation. Bankruptcy laws are Federal statute- they apply uniformly in all States. States cannot regulate/legislate bankruptcy laws...although they can regulate other aspects of the creditor/debtor relationship.
said by ThunderDawg : As soon as a bankruptcy is discharged, credit card companies fall over each other offering you new credit, which cannot be written off since you can't file again for ten years (7 in some states). Again, the 7/10 year thing is NOT regulated by the states.
You cannot file chapter 7 or liquidation type bankruptcy more than once every seven years. You can file chapter 13 or reorganization bankruptcy as often as you want.
The reason people get confused about 7/10 years is because the FCRA allows CRAs to report public record information for 10 years, while a regular old negative account can only be reported for 7. Again, this is a FCRA thing, that has nothing to do with the bankruptcy code.
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»www.VoIPTrunk.com | |
Hollow
join:2009-06-12
2 edits | reply to LittlePiggie
Re: when bankruptcy makes sense
said by LittlePiggie :Claim Bankrupcy and your credit is crap for 10 years. No it's not. Chapter 13 is only on their for 7 years max. Even a Chapter 7 can be removed off your credit reports before 10 years.
said by LittlePiggie :Bankrupcy is setup now that you have to pay off your debts anyway so why bother going that route? Bullshit. A no asset chapter 7 requires nothing if your under the income guidelines and exemptions.
said by LittlePiggie :If your credit card company starts to charge for non-use drop it and take a small hit on your FICO scores. Bullshit again. Closing any line of credit can greatly reduce your FICO because of the debt/available credit ratio. | |
cmaenginsb
Premium,MVM
join:2001-03-19
Palmdale, CA
| reply to Loco
said by Loco :Why people are in so much credit card debt is beyond me ! The solution is simple. If you don't have the money, you don't buy it....period. And that goes for rims, tires, 'net purchases and what ever else people charge on their credit cards. I don't feel sorry one bit for anyone buried in credit card debt. It's their own fault.....they did it to themselves. Not always, at least some people are that way due to medical bills and other "emergencies" that are actual emergencies.
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CCNA, Comtrain Certified Tower Climber | |
ThunderDawg
join:2002-11-05
Lake Worth, FL
·AT&T Southeast
·Comcast
| reply to kapil
said by kapil :Bankruptcy laws are Federal statute- they apply uniformly in all States. States cannot regulate/legislate bankruptcy laws...although they can regulate other aspects of the creditor/debtor relationship. All states have bankruptcy laws, which do not supersede federal laws, but supplement them.
For example, in Florida, an individual's "tools of the trade" are exempt, whereas other states may seize such property to be auctioned off, literally on the courthouse steps. Also, the exemption for a Florida homestead is unlimited, which it is not in most other states. That may change next year. Yes, the Federal Code takes precedence, but the states have the right to codify exemptions as well as set up procedural rules.
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The first time history repeats itself, it is a tragedy. The second time, it is a farce. | |
disconnected
@snet.net
| reply to pandora
said by pandora :said by Network Guy :In New York state, the median income is $45,000. Yes, that's laughable considering the astronomical cost of living here. WHO are they kidding? $45,000 as median income for New York? What's next $16,000 median income for California? I thought the bankruptcy means test numbers were supposed to be serious? I hope they repeal this idiotic reform. $45,000 in most of New York won't get you a decent apartment. Heck, that's about ten times more than I earned as a videographer this past year. I have never earned more than $20,000 a year at a full-time job before I retired.
Nowadays, with the difficulty of earning a living self-employed, I find that my property taxes are the only expense I cannot cut---I've cut everything else to bare bones.. we don't eat out, I haven't bought any new clothes in 20 years, anything I DO improve at home is from the sale of hard assets and poured back into the house.
Our income has steadily declined since 2004, yet taxes have exponentially risen. We even looked at selling our home, but with the problems we have with the property, no realty agent will list it. I'm stuck cleaning up and doing the repairs myself, over a span of a decade.
We never carried a balance on credit cards before now. Last summer, we wiped out what little money we had left in savings and ended up paying the balance of the tax bill with a CC. Now we're at the end of the interest-free period and with December's tax bill coming up, very little prospects for new business, it looks like we're heading down the road to tax delinquency. The greed of local government will be our undoing.
Credit only makes living possible where taxation has robbed the standard of living right out from under us. People just want to live. But the government takes so much, there is only credit left to give the illusion of prosperity. | |
LittlePiggie
Premium
join:2009-09-11
| reply to kba4
I was partly right and partly wrong.
Charter 7 can't be used by people that have a high income, they have to use charter 13 and repay the debt.
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Restricted Eligibility for Chapter 7 Bankruptcy
Under the old rules, most filers could choose the type of bankruptcy that seemed best for them -- and most chose Chapter 7 bankruptcy (liquidation) over Chapter 13 bankruptcy (repayment). The new law prohibits some filers with higher incomes from using Chapter 7 bankruptcy.
How High is Your Income?
Under the new rules, the first step in figuring out whether you can file for Chapter 7 bankruptcy is to measure your "current monthly income" against the median income for a household of your size in your state. If your income is less than or equal to the median, you can file for Chapter 7 bankruptcy. If it is more than the median, however, you must pass "the means test" -- another requirement of the new law -- in order to file for Chapter 7.
»www.nolo.com/legal-encyclopedia/···8BF.jvm1
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And charter 7 stays on your record for 10 years and charter 13 for 7.
»www.daveramsey.com/the_truth_abo···html.cfm
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