by, 12-01-2009 at 06:48 PM (784 Views)
There are two forms of that dirty word floating around for personal filing. There is a chapter 7 and a chapter 13. There is the choice to file single, or joint. I filed a chapter 13.
There are some laws that may vary by state however the point is universal, to wipe debt and in some cases work out payment plans.
Chapter 7 is a liquidation of all assets. A chapter 13, is retaining and reaffirming your payments on specific items such as a home or vehicle. A home is not considered to qualify unless you live there. A second home or third vehicle (if you file jointly) is not considered necessary in order to earn income and provide for your family.
A chapter 7 sells off all your property that is considered attainable from you providing it meets certain guidelines. A chapter 13 will make interest modifications on what is owed, and have you recommit to paying on what your considered allowed to have in order to continue to provide for your home. For example, both spouses work, the limit is 2 vehicles.
If you just bought a new car, it is considered easier to get rid of the car and get a cheaper vehicle. You may not be allowed to keep it. Either forms of bankruptcy will split up debt between what legally has to be paid and what is allowed to be wiped.
Any debt that is wiped is not wiped from the record. It is considered not your problem to pay, but it is still on record that you cannot pay and it is a bad mark on your credit for up to 10 years. There are also laws on what type of bankruptcy you can file if at all if you ever filed in the past to prevent the system from being abused.
I decided debt consolidation was rediculous, and did not want a loan, nor did I want to lose my home. I sat down with almost a three feet of paperwork to figure it out. I went through every grocery reciept, bill, collection notice, utility, mortgage payment, gasoline reciept, everything and anything I could get my hands on. I went online and signed up and had my 1 free credit report per calender year provided to me and I demanded my husband provide me with his through the same method. He did.
I compiled everything of data that I had and came up with an actually debt amount. We were in debt for over 162,000 dollars. According to everything I had. Once I accessed our credit reports all of the old critters on it started adding up thousands at a time. Stuff showed up from decades before we even knew each other. It was overwelming.
It took over 6 months to file for bankruptcy. He initially did not want anything to do with his, for fear his credit would be shot forever. My response was, 'hun. . . I looked at your credit report, it was 16 pages long. ITS SHOT NOW. What are you planning on doing with it anytime soon? It's already bad and so is mine. Why not file?" After showing him some information on bankruptcy online, he eventually wasn't against it.
We filed a chapter 13. We had tens of thousands wiped from credit cards, medical bills, old accounts, and bills that followed us around and even from out of state. We ended up keeping our home, keeping both of our cars, and it all was straightened out after I retained employment again and was able to make money again.
Instead of paying per month: 200 in credit cards, 550 truck payment, 250 various medical accounts, 200 back mortgage dues, 150 month loan payment with 4 years left on it, I was able to get it to 550 a month to cover every expense listed above, for 5 years. Did I mention the 250 a month medical bills were based on paying it off with a duration of 12 years. I owed 6,000 in back mortgage dues. It would have taken forever considering the predatory loan I am in is over 630 per month.
I have less stress, shop frugally, underwent mandatory credit counseling, budget monthly, and view my bank account spending weekly. I have 4 yearsand two months left, for my bankruptcy. I had my name printed in the paper for 1 day because of it and I swear I slept soundly knowing things would clear up ( and no one recognized me and called me about it).
Half a decade in payments to the tune of clearing up tens of thousands of dollars, is worth every bit of it. I never plan to do it again, and I am a better person from it.
I have turned being responsible for money, into a past time and not a chore.