Filing for Bankruptcy.....questions for those who have been there (funds, pay)
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My husband and I are very proud people and we do not even consider the aspect of bankruptcy lightly. We have been painfully paying down a $40,000 debt and just not getting ahead much at all. The cost of living is growing rapidly and despite the fact that both of us are gainfully employed, we cannot seem to break free of the shackles that imprison us.
Thinking that if we had a chance at a fresh start, our life would be infinitely better. It would give us a chance to *start* some kind of retirement fund (we are both in our 50s) and also have enough money to repair and improve our property (which is starting to need it pretty badly). If we continue to pay our monthy payment on our debts, we will not be able to save ANYTHING for a very long time and much needed repairs will go lacking.
I have not approached this idea to my husband yet because he DETESTS people who evade their financial responsibility by filing for bankruptcy when, in fact, they simply do not have the discipline or desire to pay back their lawful debts. He is proud beyond reason. But I am thinking that bankruptcy was created for a reason, and that when every penny you make goes toward paying debts and in seriously impairs your quality of life, then maybe, just maybe it is worth considering.
My dh and I live a very frugal lifestyle (for those of you who don't know me). We make about $28,000 per year which is "average" for this area. I make $10 per hour and I am right at the top of the pay scale for jobs in this area. We do not have television, we do not go to movies. The only expenses we have other than food are our cell phones (no land line) and my internet access, which is my only real form of entertainment and news.
We do not have a mortgage payment or car payments. But we just cannot seem to get ahead.
Now then, before you chime in with advice...Let me add the following:
We cannot get better paying jobs. Don't think I haven't been trying for the past five years or so. I have gone from $8.50 per hour in January to $10 per hour today. However, this area is LOW PAYING. There are precious few jobs in the $25,000 per year category, let alone higher.
We cannot move. We have a 26 acre homestead where we have been working hard to develop it into a nice future retirement home. Moving is not an option. Also, my very elderly mother lives near by - I am an only child and she will need my help in the not-too-distant future.
I could drive to the "big city" (35 miles) but there does not seem to be much in the way of higher paying jobs there either. In fact, when I was making $8.50 per hour I was working there and commuting.
There is really no place left in our budget to "trim the fat". We really do not spend much money on discretionary purchases. All of our time is spent working or growing our garden/improving our property, so we do not have much time to spend money on other things.
Can I get an honest assessment of what life is like after bankruptcy? I am wondering if it is really as BAD as it seems. We have pretty good credit now (we have never missed a payment on anything), and my husband is proud of that. Does having bad credit really hurt you?
Any advice or information is very much appreciated.
It's best to see an attorney * while * you both have jobs so you can start a payment plan.
You are making $ 28,000 a year and your debt is $ 40,000. If at the end of the month you cannot pay all your bills then you already are * bankrupt *
Thats what BK is for. A non-judgemental fresh start granted by the U.S. Bankruptcy Court.
You ask " How can I pay the Attorney " ? You pay the attorney instead of the debt you are drowning in. You stop paying your credit cards and that money is sent to your attorney. It can take you many months to pay him so if you both decide , get started now. They may take as little as $ 200 retainer fee. The average cost is $ 900 and the court filing fee is around $ 295 so your total cost can be around $ 1,200.
You pay your attorney steady and slow. When he is paid off then he files for you.
Meanwhile, your creditors will call. You notify each as the bills come in that you have an attorney. You give the creditor all the info, name address ect. , of the attorney.
Don't make the mistake of waiting too long and one of you loses a job. It will be even more difficult to pay your attorney.
You can only do BK because your are destitute : Broke. You can't do BK because you want a new roof or plumbing.
If the court can prove you can pay your debts you won't get a Chapter 7 , but maybe a Chapter 13.
While post BK your credit will be checked it depends on the nature of what you do. If you were a Bank Teller it might be harder with a BK as opposed to a Deli Worker....
You need to learn how to live on cash. Once you start the BK process you will learn to use cash. You will have no choice. And don't be in a hurry to rack up more debt by getting new cars and new credit cards....You don't want to repeat another BK.
You are not a failure for filing BK. In many cases its more dumb to hang onto the debt that is drowning you. Thats why the law made it possible to get out of a hopeless situation.
People who are gainfully employed and who have never missed a payment on anything before can file bankruptcy? What is this world coming to?!
I thought bankruptcy was an absolute last resort, not an option to use if you just can't get ahead.
I see your point. But we have to think of the future too. We don't want to lose everything when we are no longer able to work. If the debts are not gone by then, we could end up on the street.
As proud as your husband is and with your combined will, you cannot convince me that there aren't ways to make more income and that sacrifices can't be made.
Where is the 40K in debt from if you have no mortgage and paid for cars?
You can always purchase another piece of land, maybe its time to sell what you have.
But I do understand how hard it is. Even at your current income and at your age, saving enough to retire comfortably is going to be a challenge if you don't decide now to develop some new skills.
So if you make around 10 dollars an hour, you bring home around $1550 per month. If you paid just over 600 per month for 5 years, that 40K would be gone. If you and your husband could raise your income and work for another decade or so, you could possibly put away a decent nest egg.
What does your husband do for income?
You're not broke, you just want a way out. If you and your husband are of strong mind and body, you can develop a marketable skill within five to ten years and make a whole lot more money. It's not easy, but doable.
I know a person who became a nurse at your age after years in sales. It can be done.
Make sure to speak to an attorney in your state. You say you have no mortgage or rent but a 26 acre homestead. When you go to file bankruptcy, some assets will be "exempted"-ie the creditors could not take them. Typically a small amount of cash for daily living, older vehicles/vehicles with no equity etc. Other assets could be taken however-in your case, if they could get at the homestead.
Thats the key : If you have sizeable assets , the BK court will go after them and any BK attorney worth his salt will look at what you own and tell you right then and there to file or not to file ie; and to sell some of your property to pay your debt.
If the attorney does not catch it , the mandatory credit counselor WILL. They ask you everything about what you own. Do you own a boat ? Property ? Multiple cars ? They will tell you to sell what you can and pay your debt.
If you are dirt poor and own nothing , no problem.
If you own some things, the pressure is on.
You are usually allowed to keep your home and one car. Everything else is up for grabs by the BK court.
If you have savings, money market accounts , CD's , you are expected to pay down your debt.
Its back taxes that get most people. The feds will not give up, you can't wish away that with anything other than making a deal...settlement. The saving grace about owing the Feds is once they file against you, all other debt gets put on the back burner, including judgments, seizures,garnishments, etc. A payment plan can be set up with them, and in many cases they will settle for 50 cents on the dollar. It helps to have the funds to make a lump settlement.
This advice may not apply here , however , the number of folks in this venue usually do not want to talk about it....and or , have not paid their taxes ( or reported their actual earned income) , for years.
As proud as your husband is and with your combined will, you cannot convince me that there aren't ways to make more income and that sacrifices can't be made.
I agree with this.
At times when I'm hard up for cash, I find things I can sell online, such as an old treadmill that was passed down to me from a friend. That was a quick $40. Or, that old, unopened makeup kit my mom gave me--$10.
If you have internet access (which you do), and extra time (which it sounds like you do), there are ways to make extra cash online. It may not be much, sometimes only $150 or so a month, but it adds up. I spend a few hours every week answering questions from consumers through a text-voicemail service, and last month I made $160 in 2 1/2 weeks. There are ways to get extra $$$!
Make sure to speak to an attorney in your state. You say you have no mortgage or rent but a 26 acre homestead. When you go to file bankruptcy, some assets will be "exempted"-ie the creditors could not take them. Typically a small amount of cash for daily living, older vehicles/vehicles with no equity etc. Other assets could be taken however-in your case, if they could get at the homestead.
The homestead is in an LLC. We did not create the LLC to hide the property, we created it for tax purposes. It has been in effect more than a year. So my understanding is that it would not be subject to any bankruptcy. Of course, I would make certain of this with an attorney.
20yrsinBranson
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