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Bankrupt and Disability

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CancerSurvivor

Junior Member
What is the name of your state? Kansas.

my wife and I are going to have to file bankruptcy. I was diagnosed with Cancer last December and the surgery has left me disabled. I lost my good paying job and was awarded disibility. Although I have not recieved any money from disability yet we have been fighting for it almost a year now. my family consists of 5 people and we are living on just what my wife is bringing home. We had to stop paying on anything that wasnt a necessity (Rent, Car, insurance, utilities, fuel) we havent paid a bill in months(after taxes my wife brings home about $1255) this has totally ruined our credit and no way to pay these bills off.
Disability will be sending me a lump-sum of backpayed disibility. If we file for BK will the court take the Disibility money ? I have always trield diligently to pay my debt, but I see noway out of over $1000,000 in medical bills. Should I keep the money out of the bank so I dont show it? (if thats illegal I wont do that). Just confused as to how the bankrupcy works.
 


Ladynred

Senior Member
Its not a good idea to hide assets, but disability money is generally untouchable. Your best bet is to confirm this with a bankruptcy lawyer.

This site has some good information on bankruptcy, the process, your exemptions, etc.

http://www.thebankruptcysite.com
 

anabanana

Member
You are practically a text-book case of the sort of person the bankruptcy code is meant to protect. Get a lawyer and look into a Ch. 13. It will give you lots of flexibility, TONS of protection, and you'll have the satisfaction of knowing you made an honorable effort to repay your creditors. Check out a few different lawyers so that you find one who will treat you decently. Some BK lawyers are used to dealing with jerks just trying to get out from under debts they incurred indulging themselves, so it makes the lawyers kinda demoralized and mean. You don't want that kind of headache. Good luck to you, and feel better soon.
 

CancerSurvivor

Junior Member
this shows my ignorance abour BK. Waht is Chapter 7 and Chapter 13? I have also heard of chapter 11, is this more fore business debt?

Thank you for your responses.

Its been so hard. We rent and was about to try and buy a house right when I was diagnosed with cancer. I am afraid now that buying a home is going to be out of the question. :(
 
CancerSurvivor said:
this shows my ignorance abour BK. Waht is Chapter 7 and Chapter 13? I have also heard of chapter 11, is this more fore business debt?

Thank you for your responses.

Its been so hard. We rent and was about to try and buy a house right when I was diagnosed with cancer. I am afraid now that buying a home is going to be out of the question. :(

Chapter 7 is a NO ASSET bankruptcy filing.
Chapter 13 is for people who have many assets or make a lot of money.
Chapter 11 is for businesses
 

anabanana

Member
Interesting characterization.

Chapter 13 is called REORGANIZATION. It's for people who believe they are obligated to pay the debts they incurred, but are having a hell of a time with it.

Your level of assets or income has NOTHING to do with it. You don't have to have lots of assets or lots of money. It requires a regular income, which your wife has, and a desire to pay your debt, which I believe I understood from your post. Some people want to get out from under all their debts and don't give a crap who it screws. Other people would rather die than go bankrupt because they think it means something about their integrity. It doesn't. There's a reason this protection is there. Chapter 13 offers a happy medium for people who have some ability to pay some portion of their debt.

So I inferred from your comments that you were a person who had always made good on his debts and the inability to do so was hurting your dignity. I feel for you. I suggested Ch. 13 because, rather than asking for a pass on everything, you basically go to the court and say, I never intended to stiff anyone, I'd like to do my best with these, but I need time and protection. You can get a plan with as little as 20 cents on the dollar. That's a lot of relief, and you have a LOT more flexibility and protection in a Ch. 13 than in a Ch. 7. I don't know that all lawyers charge differently for a 13 than a 7.

And another thing... either bankruptcy is going to stay on your credit for 10 years, but since you'd like to get a house someday, check first with some sub-prime lenders and see how they view a Ch. 13 as compared to a Ch. 7. An effort to repay gets a little more respect. Ask around. But talk to a lawyer about your case specifics. Chapter 7 might still be more appropriate for you, and you may just have to swallow your pride. Your kids are still counting on you, and you have to do what's best for the family. Good luck, Dad.
 
CancerSurvivor said:
this shows my ignorance abour BK. Waht is Chapter 7 and Chapter 13? I have also heard of chapter 11, is this more fore business debt?(

Chapter 7 is a liquidation, where a trustee collects all your non-exempt assets and sells them, distributing the proceeds pro-rata amongst your creditors. In most states, the relevant exemptions are determined by state law, and only a local bankruptcy attorney can give you reliable advice about what they are.

Chapter 13 is a wage-earner plan, where you pay all of your disposable income for a period of three to five years to a trustee, who pays your creditors according to a plan you have filed with the court. The usual reason why people choose to file under 13 is that they are behind on their mortgage and want to keep their house. The US Trustee may force someone into 13 (instead of 7) because he thinks the debtor has enough disposable income to fund a feasible plan.

Chapter 11 is a reorganization that is USUALLY appropriate only for businesses. Individuals may file under chapter 11, too, but the usual reason for doing so is having too much debt to qualify for 13.

Chapter 12 is like chapter 13 for family farmers, but without the debt limits. Congress keeps temporarily renewing chapter 12, and it's currently in force for another brief period.

No matter what chapter you file under, most liens and other security interests will survive. This means that you can avoid the personal obligation to pay certain debts but may still face foreclosure on the collateral. There are procedures for avoiding and stripping certain kinds of liens that a bankruptcy attorney can explain based on your particular facts.
 

CancerSurvivor

Junior Member
Thank you all for your help. I had always took pride in trying to pay my debt and honestly until recent events looked as people filing BK as deadbeats. I was proven wrong, I see how easy it is to get in a perdicament with no way out except Bankruptcy. To those people I appologize.
 

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