Big Debt-Big Problem

[funder]

What is the name of your state? MI

This is not me, so any disparaging remarks will roll right off. However, found out a family member is in bad shape. Single person in their late 30's. Has been in debt long time, trying to make it by refinancing, borrowing to pay installments. Recently was scammed out of approximately $40,000 over a period of 18 months. Yes, dumb. But what's done is done. Several credit card and or unsecured accounts. Money/services went to others.

Person owns duplex worth around $90,000 with zero equity. Lives in one apt and rents other for $550. House is for sale. Owner incapable of maintaining and things will be breaking down. Debt of over $40,000 in unsecured debt. Person has a 10 year old car with 150,000 miles free and clear. Some living room furniture and that's it.

I will accompany to see bankruptcy attorney. Debtor makes a little over $30,000 year with high medical costs because of diabetes and additional problems. I realize this person does not need any "good credit" in fact needs to be unable to get credit and live off income. Any thoughts of a chapter 7 or 13 either preferable? Again, no equity in house.
Debtor has called for appointment with bk atty and is awaiting callback.
Thanks much, Funder

 

[bigun]

Always file a Chapter 7 if at all possible. It's over in 120 days with the stroke of a pen.
You don't want to be in a 13 and making payments for 5 years.

 

[funder]

Appointment on Monday

Relative in discription has an appointment on Monday with an attorney. I will accompany to make sure everything is covered. I did not make the appointment, they did.

I'll write a short report of our findings. This forum is very helpful. Thank you.

 

[funder]

Info

Will be a Chapter 7, including the house.

Papers being worked on, cost roughly $1,200 including most costs. Debt counseling session needs to be completed. This little blurb is for info only for those reading.

 

[funder]

Update--11-2006

While thinking about it, I thought I'd update this thread. One reason for doing so is there is apparently much misinformation since the new bankruptcy laws went into effect.

I accompanied my younger relative to the bankruptcy "hearing" last week. I went for moral support. There was a small room off a larger, crowded waiting room. They held "conferences" for filers with the door open, so all the other people could hear. This was very unprofessional. I practically knocked a lawyer sitting waiting blocking the door from being shut over while insisting the door be closed when we went into the room. I also made it so people going in after us would be afforded the same privacy.

The judge/trustee (not sure which) asked the filer a few basic questions like "keeping the house, is the house up to date.? The answer is no to both and a few more questions about personal marital status and with or without children and it was good-bye. The whole thing took approximately 5 minutes.

I'm assuming there will be a date set further down the road (120 days?) for the finalization/discharge of the bankruptcy. I'll try to remember and come back when things are finalized and report any problems/findings.

 

[moburkes]

Just to let you know: My 341 meeting was nothing like what you are describing. While the door was open, there was noone crowded around the door listening. They did, however, have about 3-4 petitioners in the room with me. I liked it, because then I could gauge what type of questions the trustee would ask. I was nervous, but when my turn came, I was the only person in the room. I wasn't nosey enough to "care" about the people in front of me, but, like I said, it was helpful to know what it would be like when it was my turn. In and out of that room in about 12 minutes. My turn took about 3 minutes start to finish. My discharge was just over 30 days later.

 

[bigun]

Glad things went well. Creditors have 60 days from the date of the 341 to file written objections. Very few do so.
Be sure your relative gets the debt managment certficate filed in a timely manner.
Sign up for pacer {8 cents a page} and follow the progress of the case.

http://pacer.psc.uscourts.gov/

 

[Ladynred]

Unless there are objections from creditors, there will be no more meetings - your relative is done, the mandatory 341 is over. FYI, the person asking the questions is the Trustee, judges don't sit in on 341 meetings.

 

[funder]

What is utterly absurd is the bankrupt person is already getting mail for high-rate and bad-credit type loans.. Totally despicable. Seems as soon as one files bankruptcy, the crappy creditors are out like hawks with offers of loans. I am lending moral support (and more if necessary) so my person doesn't have to be tempted by them. Can you imagine the regular run of the mill person needing a car,a washer and dryer,..anything...and jumping at those? Bam, right back in, quick as heck.

I can say that with my relative's actions of redoing loans, refinancing etc just prior to the bankruptcy, not one credit said "wait a minute." In another lifetime, I was a debt counselor (before all the new flock of mostly shams started) and I just couldn't believe they gave her a loan of $15,000 with a 10 year old car as collateral. Car is worth $1,200 max. Can you believe this? There was a flurry of activity in the year prior and if just one creditor had said "no" , maybe some of this would have been prevented. It was all there in black and white, but they didn't care. Sign here. Too bad, because the person has been taught different and spent years trying to work her way out of a lot of debt. It just didn't work. I am sickened that businesses are sending credit applications already. How low can they go? I know the average Joe or Jane just has to have the sense to police themselves. I do and have. However, I've not experienced any bumps in life that knocked me off my feet. I hate bankruptcy**************...and I hate creditors who prey on people who are dumb and in need of "stuff."

Thank you all for your comments.

 

[moburkes]

What is utterly absurd is the bankrupt person is already getting mail for high-rate and bad-credit type loans.. Totally despicable. Seems as soon as one files bankruptcy, the crappy creditors are out like hawks with offers of loans. I am lending moral support (and more if necessary) so my person doesn't have to be tempted by them. Can you imagine the regular run of the mill person needing a car,a washer and dryer,..anything...and jumping at those? Bam, right back in, quick as heck.

Don't make assumptions. I filed. I needed to buy a car. With bad credit, I didn't have many options. However, I have already refinanced my vehicle, and I have obtained to good interest rate credit cards. I have not used either one. I don't plan to either, unless there is an emergency that I cannot satisfy with my meager savings that I am building up. And, no, other than my uninsured medical bills, I AM NOT "right back in". Every one of my bills is paid on time every month.

 

[funder]

Goog job--

MOburkes, congratulations for a job well done. However, with 12 years as a credit counselor for a not-for-profit agency in the 1970's and 1980's, I know just how hard it is for people to be able to stay clean. When the mail comes.....sometimes it's the very moment they NEED something. NOW. Perhaps there are better ways to go about finding credit than answering mail soliciters. Or, the commercials on tv screaming "we take anybody."

My point was that the banks and agencies sending out credit aps before a person is even done with bankruptcy is WRONG. If you need a car, you know how to look in the yellow pages to know where to go. You know how to ask friends or relatives. Your average person is very vulnerable just out of bankruptcy and "thinks" they have to turn to anyone offering them anything. Not everyone has your, or my, good sense.

Besides, who needs all this junk mail? Who wants all this junk mail? Probably someone wanting credit when they can't afford it.

 

[moburkes]

I'm not looking for any type of Congrats, but, thanks. If a person doesn't want to receive junk mail, its my understanding that they can "opt out" with the credit bureaus.

I just don't take the mind set that every person is suspectible to a piece of mail. Sure, its tempting. I don't make a whole lot of money. I'm a single mom of 2 kids. I could use "extra" money in the form of credit cards. However, I realize what COULD happen. I realize the "trouble" that could start.

I just think that people need to be responsible for the things that they do. People need to be proactive consumers, and not blame the credit card company for sending out those flyers. It has always been my understanding that direct mail advertising nets less than a 4% response rate. So, that many people do not fall prey to this.

I don't think, either, that the blame falls on the credit card companies. We, as a society, want to have the new car, the big house, the designer clothes, etc. I don't need any of that. Sure, its nice. But I've learned that if I cannot pay cash for it (with the exception of my house and car), then I don't need it. Others can learn the same thing.

That's all.

 

[funder]

Debts discharged 1/30/2007

The discharge date of this bankruptcy was January 30, 2007. I believe the relative has 6 months to vacate the house from that date. The bank is getting a house in good shape, recently up to code and newly remodeled and should be able to break even with a sale.

The relative will move to a rented unit when necessary. Money is being accumulated for security deposits, first and last month rent etc. Her car is more than 10 years old and hope that will continue to run.

Thanks to all on this board for their advice and opinions. Unfortunately houses are at a standstill in our state and she had been unable to sell the house, unable to rent the other unit and kept going in a deeper hole after many years trying to keep things afloat. I am not making excuses, as I am very saddened by this event, as is she. Good luck to all.

Funder