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Hi. It's been a while since I've posted to this board - not since last March 2012. To recap... I had approximately $30K in unsecured debt plus about $15K in a car loan. I was laid off from my $58K/year job November 2011 and was collecting unemployment while searching for work. Well, here we are, seven-months later, and I'm in no better position than I was back then.

My (marketing/communications) job search lead to two (2) - I kid you not - two phone interviews for jobs in my field (over a nine-month period). In June, I was advised that my unemployment would end in November. Depressed and extremely over it, I decided it would be a good time to return to school. When I did - in late August, my unemployment ended since I was no longer looking for work. I will graduate in May 2014 with a degree in the allied health field - a high-demand, decent-paying field.

Please do not advise me to keep plugging away at my debt. I have been desperately trying to do that for many months just barely keeping my head above water. The next two years will be difficult as well. My school program is full-time - I cannot work even a part-time job (no lie). I assure you, there is no time. My program is very competitive and if I do not meet the minimum grade requirements, I will be cut from the program leaving me in a more desperate situation. This is purely a financial/business decision that I (along with my husband) have made.

I am married, but all debt is in my name. We do not have any joint accounts together. The plan is for me to file for BK and then **slowly** rebuild my credit. Husband has excellent credit and is a school teacher; he doesn't make very much money, but we're getting by on his income while I go to school.

Can somebody please walk me through how to prepare for BK? I will hire a BK lawyer, but I'd like to get all my ducks lined up before meeting with one.

What will they take from me?? How will they know what I have (which isn't much at all)?

I/we do not own a home.
I have no savings (only retirement accounts).
Family jewelry? Rings, necklaces?
My engagement/wedding ring?
My car - I still owe about $13K? What if I sold it to my husband?
Clothes?
What about the furnishings in our rented house?

Again, please do not make me feel like a bad person for this. It has taken me a long time to come to the decision. Any insight on how I could keep my possessions would be greatly appreciated. I'm in VIRGINIA

Also, I know that they cannot touch my retirement accounts and that my student loans will not be discharged.

Thank you!
BrokeBrokeBroke
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lastly... I am still current on all my payments, but this may be my last month of on-time payments.

I was thinking of sending a certified letter to creditors advising them of my situation, but I'm not sure if this would be a good idea or not. Thoughts??
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Since you've already decided to go through with this, and plan on hiring a lawyer pretty soon, I think you will be best served by saving all these questions for that lawyer.

xtn
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See the lawyer before contacting your creditors. Do it soon.
You need to have cash to pay the lawyer. Since you are serious about filing bankruptcy, keep the cash to pay the lawyer and not make further credit card payments.

Your state determines what you can keep through bankruptcy.

Do not change title on anything. It is too late, and could annoy the bankruptcy court. Transactions near the time of filing can be reversed.

Do not go out and use any remaining available credit on your credit cards. (Acquaintances tried that one. They tried to declare bankruptcy after a spending spree. The wife forgot she had already declared bankruptcy, and they couldn't declare bankruptcy.)

1.) You don't own a home, so that not an issue
2.) Personal property
Unless you have jewelry of significant value, it is unlikely to be taken as part of bankruptcy. Regardless of what you paid for your engagement and wedding rings, they are likely worth only a fraction of that amount. Only actual value and not replacement cost is the only consideration.
3.) Equity in car is what matters. Not what is owed.
4.) Clothes and furnishings again unlikely because they just don't have much resale value.

To prepare for the lawyer:
1.) Collect the last 3 months of statements for all debts (including the car)
2.) Collect the last 3 months of statement for your bank and retirement accounts
3.) Collect information on your husband's accounts

Don't worry about normal personal possessions until after you meet with the lawyer. Only if you have something of significant value or have made a major purchase in the last year. It doesn't sound like you have.
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Do not go out and use any remaining available credit on your credit cards.

Some courts will examine spending for the months just before declaring bankruptcy. If they notice a sudden upsurge in expensive items you'll be in even more trouble, because they might consider that fraud.

Nancy
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Thank you, vkg. I appreciate the insight. I haven't made any major purchases in forever. Pretty much have just been living unemployment check to unemployment check.

Question though: Why would they need my husbands bank accounts? He will not be filing for BK since he's not on any of my accounts. Am I mistaken that my BK will not affect his credit since we do not have anything financially linked?
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Question though: Why would they need my husbands bank accounts? He will not be filing for BK since he's not on any of my accounts. Am I mistaken that my BK will not affect his credit since we do not have anything financially linked

It is just being prepared. The lawyer may tell you that they aren't needed, but having the information available won't hurt.
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Can somebody please walk me through how to prepare for BK? I will hire a BK lawyer, but I'd like to get all my ducks lined up before meeting with one.

The lawyer is the best forum to ask the all the questions you have, including what the lawyer will need from you. (That's why an initial consultation is often free.)

A forum that might be better than TMF is www.bkforum.com People there are generally either going through or have gone through BK (both Chap 7 and Chap 13) and probably have more detailed answers, at least as it applied to their particular situation. Since every situation is different, a lawyer would still be the best source.

AJ
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You might want to try and do some "informational" interviews at the types of places you would want to work at after your degree, to see if they run credit checks and if so if a BK would limit employment - just to be on the safe side. No point in declaring BK plus going into student loan debt to have major employment issues once you graduate.
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Don't forget that you are required to go through credit counseling before you are allowed to file for BK. The lawyer will explain all that.

LWW
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Can somebody please walk me through how to prepare for BK? I will hire a BK lawyer, but I'd like to get all my ducks lined up before meeting with one.

Besides the course that LWW mentioned, you will need to inventory everything that you own. If you file a Chapter 13, you will need to itemize your income and expenses. If you file a Chapter 7, you will be allowed to keep a limited number of assets. The rest will be liquidated (or repossessed.)

What will they take from me?? How will they know what I have (which isn't much at all)?
They can demand tax returns, bank statements, paycheck stubs. If they think you are hiding something, they will dig deeper.

I have no savings (only retirement accounts)
IIRC, your retirement accounts are sheltered... But don't think about adding chunks to them - They will see right through that.

Family jewelry? Rings, necklaces?
My engagement/wedding ring?

These are not titled assets, but if you get caught trying to hide them, you'll wish that you hadn't. Have you ever used them to secure a loan at a pawn shop, for example? Were they bought on a layaway plan? Were they listed in a will?

My car - I still owe about $13K?
If you're upside down in the loan, I'd probably let the finance company repo it.

What if I sold it to my husband?
There is no better way to incur their wrath. If you want to get your BK thrown out of court, that is one good way to do it.

Clothes?
Probably not a big deal. Unless you have a really killer wardrobe, used clothes don't go for much - Be conservative in valuing them.

What about the furnishings in our rented house?
You will have to itemize and value them. I took photos and clipped used furniture ads, to make it easy on them.

Again, please do not make me feel like a bad person for this. It has taken me a long time to come to the decision.
No problem - Unfortunately, unexpected things do happen.

Any insight on how I could keep my possessions would be greatly appreciated. I'm in VIRGINIA
A Chapter 13 should allow you to keep your stuff - Since BK is a Federal matter, I think the laws are pretty consistent, except perhaps for some exemptions that may apply from State-to-State if you file Chapter 7 - But, you really need to talk with an attorney!! They shouldn't charge you to discuss your options, and their fees. You should be able to talk with several, if you like, at no charge for the interview, and maybe a few backup questions that you might overlook during the initial discussion.

Also, I know that they cannot touch my retirement accounts and that my student loans will not be discharged.
I didn't catch this comment earlier, when you mentioned your retirement accounts - I'm pretty sure you are correct.

Bob
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Don't forget that you are required to go through credit counseling before you are allowed to file for BK. The lawyer will explain all that.

LWW



Yep. You can get the federally required counseling free of charge. The certificate of completion might cost you $5 - Here's 1 source:
http://www.consumerbankruptcycounseling.info/ I did mine online - no classroom, mo instructors, no charge, other than a modest filing fee. I forgot the provider that I used.
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Once your attorney petitions for filing a bankruptcy, some of your creditors might call you to make a deal. Chase offered to let me repay just 20% of what I owed them, for example. The problem with that is that all of your creditors need to be treated equally in a bankruptcy, and some of my creditors, 1 in particular that I owed a significant sum to, wasn't willing to negotiate, other than to reduce the interest to 10% APR. The particular creditor had themselves filed bankruptcy, so they may have been subject to some court ordered stipulations.

If you file a Chapter 13 and you get a job, you may need to evaluate how you have income tax withheld. Any tax refund I may receive over $750 goes to pay creditors, over and above what I must repay under the plan.

Also, if you file a Chapter 13, any loan you might apply for, until you finish paying out the plan, needs to be approved by the court. I need $4000 to $15000 for some pretty urgent dental work and I really should have some polyps removed, as they are prone to turning to cancer, which would probably cost another $4000, if the polyps aren't cancerous. My health insurance has a $9000 deductible - best I could afford, and I am around 1 1/2 years away from Medicare. I am, pretty much, stuck between a rock and a hard spot. I am trying to work through it as best as I can. Yesterday the ignition switch on my 1992 Ford Escort that I use to get back and forth to work went outs, another $237 expense to repair it that I didn't need to fall. I also am around $5000 behind in what I owe the IRS for 2012.

It's getting closer to crunch time, believe dat.

Bob
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But, you really need to talk with an attorney!! They shouldn't charge you to discuss your options, and their fees. You should be able to talk with several, if you like, at no charge for the interview, and maybe a few backup questions that you might overlook during the initial discussion.

I only talked with 1 attorney - She previously worked for the judge who presided over the case after she graduated with honors from law school. It was a pretty routine matter for her to handle. I would recommend using an attorney who specializes in bankruptcies and has a respectable reputation in that field. This is the attorney that I used. Her fee was about the same as I found elsewhere:
http://www.thebankruptcycenter.net/law-firm/shannoncook.html...
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NoIDAtAll,

You wrote, IIRC, your retirement accounts are sheltered...

I thought I'd point out that in some cases IRA accounts may not enjoy the same protections as other retirement accounts. Virginia (the OP's state) for instance does not exempt all IRA assets. See:

http://www.racklaw.com/pdfs/Law_Library/estate-planning/IRA%...
http://moranknobel.com/news/State_Laws_Protecting_IRAs.pdf

On the other hand this probably doesn't affect most people filing bankruptcy. But they shouldn't assume protections will be automatic because there may be limits imposed and there may be motions their lawyer must make in a timely manner to shield retirement assets. They need to be aware of these issues, ask questions and make sure their attorney stays on top of the necessary filings.

And if anyone here has specific questions, they should seek the advice of a bankruptcy attorney licensed to practice in their state. This board is hardly the place for that advice.

- Joel
Who is not a lawyer...
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And if anyone here has specific questions, they should seek the advice of a bankruptcy attorney licensed to practice in their state. This board is hardly the place for that advice.

I very much agree.
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