Thursday, October 18, 2007

So What Kind of Bankruptcy Did You File?

Other than the readers of this blog, the only other person I have told about the Bankruptcy is my friend James. James has got to be one of the most fiscally irresponsible people I know in this world. He has walked away from more debt without any desire to pay any of it more than any person I know. But non the less, he is still Just James and my friend his fiscal irresponsibility aside. I called looking for a little emotional support and got ZIPPO.

James responses to my statement that I just came back from court and was declared Bankrupt was 1) How are you able to keep your house and car 2) and how much money do you now have 3) What Chapter did you file? Yikes, so much for a sympathetic ear from anyone close to me. For now, I'll keep this process a secret from my friends and just post on this blog.

Based on my application, my assets are $141,262 (this includes my house, my 8 year old car, my small retirement account and my personal property-clothes, possessions).

My liabilities are $152,267 (my mortgage, my debts, my student loans, etc). The number boggle me.

There are many types of Bankruptcy, but I'll mention the four most common types

Chapter 7: A trustee is appointed to take over your property. Any property of value will be sold or turned into money to pay your creditors. You may be able to keep some person items and possibly real estate depending on the law of the state you live in.

Chapter 13: You can keep your property, but must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. The court must approve your repayment play and your budget. A trustee is appointed and will collect the payments from you, pay your creditors and make sure you live up to the terms of your repayment plan.

Chapter 12: Like Chapter 13, but for family farmers

Chapter 11: This is used mostly by businesses. In Chapter 11, you may continue to operate your business, but your creditors and the Court must approve a plan to repay your debts. There is no Trustee unless the Judge decides one is necessary, if a trustee is appointed, the trustee takes control of your business and property.

On the advice of my attorney, I filed Chapter 7. According to my attorney, some insane amount of people default on Chapter 13 and can't keep up with the payment schedule. Any increase or decrease to your income has to be reported to your Trustee and your repayment schedule modified. I had originally asked about a Chapter 13 and my attorney told me to pursue the Chapter 7. So I did.

Most people file a bankruptcy to get a "discharge". A discharge is a Court order that states that you do not have to pay most of your debts. Some debts can not be discharged. These are

Most taxes
Child Support
Most Student Loans
Court fines and criminal restitution
Personal injury caused by driving drunk or under the influence of drugs.

The judge has the final say based on the recommendation from the Trustee to discharge or not discharge. Since the Trustee told me he concluded my hearing, I'm making the rash assumption that I will have my discharge in mid-December and be able to keep my house, my meager retirement account and my few pieces of jewelry. There are limits and exemptions and those limits and exemptions will allow me to keep my house, retirement account and hopefully my inherited jewelry.

I still have $6000 in student load debt to pay and I am current on that (as of this Friday, the payment gets mailed tomorrow). I don't owe any taxes, and I don't pay Alimony or child support.

I thought about the jewelry situation today. I dropped off the items to be appraised and I thought that despite the fact my mother gave me her wedding band, it has been nothing but bad news for me.

My parents were happily married for 27 years and to listen to my mother, you would think she was newly widowed instead of being widowed 25 years ago. She gave me her wedding ring when she thought she was dying, she wanted me to have it. It sat in my jewelry box for a number of years. I started to wear it on and off for special occasions (diamonds ARE a girls best friend). Note, these are not multiple carats of diamonds, or a huge single stone, but a small band of small diamonds and sapphires. I did notice that weird things happened when I wore the ring. It was almost as if the ring had some bad ju ju on it. If I have to sell it, I will.


Darth Schrader said...

I am 32 with a wife and 3 kids. I've been playing with the idea of bankruptcy now for close to a year. I'm just not getting very far with eliminating my debt, and instead seem to keep adding to it...not cause I'm just buying stuff but because of the high payments I have no savings. If an emergency comes up...on the credit card it goes! I just don't know what else to do at this point. I know what I did wrong in the beginning, and just want to have my life back. I believe that if I had a second chance I could make it work, but bankruptcy scares me too. I'd love to see some more updates from you if you're willing to share. I wish you the best.

undercover vixen said...
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Jaden Allred said...

Well, hiring a consultant to help in this matter is definitely a good move. It will help you manage your time and give you all the information you need to make a sound and good decision on your financial move.

Jaden Allred

Jaden Allred said...
This comment has been removed by the author.
Reginald Tucker said...

I think what matters is that bankruptcy is not the end of it all. Which is why, say, a business doesn't have to irreparably skid. After all, filing bankruptcy is more of a right, than a surrender. But it entails strategy. Choose which one will put your assets in a better position to be redeemed, and choose it well.

Reginald @ Portia Douglas