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Like is this something that people do successfully? I made a lot of mistakes and now it looks like all of my net monthly pay will go towards paying bills and debt, so I'd be buying food for myself on credit. My monthly auto loan is $400, whereas I'm paying over $1,000 a month on credit card debt and only making minimum payments. This is before considering rent and utilities.
I read that I can reaffirm my auto loan and continue making payments as usual, but that a judge has to approve? I'd really like to get rid of my credit card debt and still make payments on the car.
Edit: And if I simply stop making credit card payments, will the credit card companies eventually offer me a lump-sum settlement? I would like that.
Last edited by Mighty_Pelican; 11-22-2015 at 02:33 PM..
Like is this something that people do successfully? I made a lot of mistakes and now it looks like all of my net monthly pay will go towards paying bills and debt, so I'd be buying food for myself on credit. My monthly auto loan is $400, whereas I'm paying over $1,000 a month on credit card debt and only making minimum payments. This is before considering rent and utilities.
I read that I can reaffirm my auto loan and continue making payments as usual, but that a judge has to approve?
As long as none of your credit card holders issues a challenge.
Quote:
Originally Posted by Mighty_Pelican
Edit: And if I simply stop making credit card payments, will the credit card companies eventually offer me a lump-sum settlement?
No.
You need to discuss with a bankruptcy attorney to be clear on the concept.
You cannot file a Chapter 7 unless you meet certain requirements, namely your State's income guidelines.
That leaves you with a Chapter 13 where you pay on your debts for 5 years (60 months) and the balances are discharged.
If you stop paying on your credit cards, then by law after 180 days your accounts will be charged off and closed. Your accounts will be turned over to a collection agency or collection attorney, who may file a lawsuit to garnishee your wages. If not, then your account will eventually be sold to a junk debt buyer who will attempt to collect, probably through legal action.
You can certainly try to negotiate a settlement on your credit cards.
File the bankruptcy to use as leverage, then withdraw the bankruptcy once you have succeeded.
Note that in accordance with IRS rules, any forgiven debt is imputed income for which you will receive a Form 1099C and have to declare it as income and pay taxes on it.
Car payment can't be extreme (though $400 is below what the limit was)
Chap 7 vs 13 is based on debt to income ratio. They have a specific formula to dictate which route you have to take.
Chap 13 pays a portion of the debt back with your leftover income (after basic bills are paid).
Credit cards- Collection agencies may or may not sue you. They will make you offers to settle but usually want the money in 90-120 days and then they will bang you with a 1099 on the unpaid balance. In some states the debt becomes uncollectable in 3 years, some states it is up to 10 years. Statutes of limitation for credit card debt collection, all 50 states
Also, if a lot of the debt is recent, the judge may deny the bankruptcy altogether, in order to avoid having people run up a bunch of debt, and then file bankruptcy just so they don't have to pay. From what I've heard, it is getting a lot more difficult to file bankruptcy, because too many people were using it just because they didn't want to pay for what they bought. Bankruptcy is meant to be a tool for those who have unfortunate life events (medical issues, divorce, death of a spouse, etc). Not for those who bought too many electronics and clothes and then discovered that they actually had to pay for them later.
Also, be aware that if you stop paying on your credit cards, your rates on your car, home/rental, and medical insurance policies may increase, as many insurance companies factor in your credit score when figuring your rates.
As Mircea said, it is much better to try to negotiate lump sum settlements or lower interest rates with the cardholders.
Sell the car and buy a clunker, eat P&J sandwiches three meals a day, get a second job, do whatever it takes to pay off your debt, you made it, you're responsible for it. Unless of course you can live with yourself knowing you're a deadbeat...
You will respect yourself more if you do the honorable thing rather than trying to figure out how to beat the system.
I went through it many years ago, hitchhiked to work, lived on P&J, sacrificed and suffered. I learned a lot by doing it the hard way. I learned to respect money and now have enough saved to live a long happy, carefree life.
Very poor decision making lead me here I do not deny it. I just found out that wages cannot be garnished in Pennsylvania for credit card debt so that is a relief. I read they can garnish a bank account though, but what if there is only $1 in it?
Like is this something that people do successfully? I made a lot of mistakes and now it looks like all of my net monthly pay will go towards paying bills and debt, so I'd be buying food for myself on credit. My monthly auto loan is $400, whereas I'm paying over $1,000 a month on credit card debt and only making minimum payments. This is before considering rent and utilities.
I read that I can reaffirm my auto loan and continue making payments as usual, but that a judge has to approve? I'd really like to get rid of my credit card debt and still make payments on the car.
Edit: And if I simply stop making credit card payments, will the credit card companies eventually offer me a lump-sum settlement? I would like that.
Hi, my entire brand new car payment with insurance is around 300, I pay 180 a month for a brand new car and about 120 for insurance. Maybe I should wash it at some point.
In a bankruptcy, they sell you personal assets to pay off the debts, so your car is worth more then 5k, they can sell it off.
There is a number of things you can do. One of them is where the cc company closes the cc and freezes your interest.
You are asking for advice that is: unethical, immoral and illegal!
Bankruptcy law has a history in our legal system that goes back to before this country was founded. There is a reason that it exists, and not everyone that declares bankruptcy is a crook. In fact, most people that do so aren't.
Also, in most of this country, you NEED a Car, and while selling it and buying a beater while getting out of debt isn't a bad idea, it might not be a viable option.
OP might not need to declare bk if he looks at his budget. People describe it as similar to divorce; traumatic and painful but in some cases very necessary.
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