Can someone please explain how bankruptcy works to me.

[brivers222]

you have to go through a "means test" which each state has different numbers that determine whether you go chapter 13 or Chapter 7... as stated above before 2005 bankruptcy was rather easy to come by. But now you have to jump through a billion hoops and attended court appointed online credit counseling classes before they even let you file.

Usually a good rule of thumb is that if you have an income over $30,000 you will be going chapter 13 and have to pay back a good chunk (roughly 67%) of your debt. Which when looked at, much of that extra money is from the outrageous late fees and raising of APRs to loan sharking amounts.

My disney chase raised their rates to 63% APR before I filed...


And yes the three big factors which usually lead to bankruptcy are Divorce, Loss of Job and Medical Bills.


in the OP case, there is a big chance that the DH filed seperate from the current wife (which would allow her to keep her money) but If he has a good paying job i find it odd that they would have passed the means test to allow them to do Chapter 7 (total liquidation) instead of the 3-5 year Chapter 13.

In a chapter 13 they do allot you living expenses and you do keep your house and car if you want. You are left with next to none disposable income and your tax returns are giving directly to the trustee. I have 4 years left on my 13 plan and once its over I will be in a great place financially with my decent paying job... My ex wife is the reason i had to file (before you judge me ) and right now my fiance and I are keeping all of our money and stuff seperate until after my bankruptcy is concluded

 

[Planogirl]

you have to go through a "means test" which each state has different numbers that determine whether you go chapter 13 or Chapter 7... as stated above before 2005 bankruptcy was rather easy to come by. But now you have to jump through a billion hoops and attended court appointed online credit counseling classes before they even let you file.

Usually a good rule of thumb is that if you have an income over $30,000 you will be going chapter 13 and have to pay back a good chunk (roughly 67%) of your debt. Which when looked at, much of that extra money is from the outrageous late fees and raising of APRs to loan sharking amounts.

My disney chase raised their rates to 63% APR before I filed...


And yes the three big factors which usually lead to bankruptcy are Divorce, Loss of Job and Medical Bills.


in the OP case, there is a big chance that the DH filed seperate from the current wife (which would allow her to keep her money) but If he has a good paying job i find it odd that they would have passed the means test to allow them to do Chapter 7 (total liquidation) instead of the 3-5 year Chapter 13.

In a chapter 13 they do allot you living expenses and you do keep your house and car if you want. You are left with next to none disposable income and your tax returns are giving directly to the trustee. I have 4 years left on my 13 plan and once its over I will be in a great place financially with my decent paying job... My ex wife is the reason i had to file (before you judge me ) and right now my fiance and I are keeping all of our money and stuff seperate until after my bankruptcy is concluded

63%?!!!! I didn't even know that was legal.

Wow, I wish you well. Be sure that your credit reports reflect discharged accounts when you are done with this. Some creditors "forget" to report that.

 

[taximomfor4]

Before the Bankruptcy Reform Act which took effect in 2005, anyone could run up their credit card debt and take out as many unsecured loans as they could, then just file Chapter 7 and wipe all the debt out. Then they could start over with no debt. The really egregious cases would get looked at by courts if creditors complained and those cases would get thrown out. The impediment to keep most people from doing that at the time was the humiliation associated with filing bankruptcy. As time went on, the humiliation factor seemed to become nonexistant and the number of bankruptcy filings skyrocketed. It was no longer seen as a bad thing to do - it was smart to legally get away with obtaining all that credit and not having to repay it. Many creditors complained and lobbied for a fairer system. The Bankruptcy Reform Act was enacted and did away with those types of filers. However, like anything else, the bankruptcy laws do not and can not account for those who hide assets or money without getting caught. I would say that bankruptcy is incredibly helpful and needed for those who have encountered those life changing experiences or situations (health issues, job losses) which are not their own fault.

what did the Reform actually change? I have heard about it, and know 2 people who had filed years ago (before the reform), and know 1 person who filed after. Their experiences seem awfully similar.

Also, what IS the means test? The 1 who filed recently was telling another friend (who was laid off 2 yrs ago, and can't find employment still) that she won't be able to file Ch 7, because her dh probably makes too much. How much is too much? (They have 3 kids plus an elderly mother with no assets and live near me in Ohio.) If anything, they seem more deserving of the fresh start than the 1 friend who filed recently, yet who WAS eligible for ch 7

 

[momto4obkids]

what did the Reform actually change? I have heard about it, and know 2 people who had filed years ago (before the reform), and know 1 person who filed after. Their experiences seem awfully similar.

Also, what IS the means test? The 1 who filed recently was telling another friend (who was laid off 2 yrs ago, and can't find employment still) that she won't be able to file Ch 7, because her dh probably makes too much. How much is too much? (They have 3 kids plus an elderly mother with no assets and live near me in Ohio.) If anything, they seem more deserving of the fresh start than the 1 friend who filed recently, yet who WAS eligible for ch 7

In michigan for a family of four you need to make under 73,000.

Here is a link to the means test, just punch in your zip code and it will come up with your states means test.

http://www.legalconsumer.com/bankruptcy/nolo/

 

[brivers222]

63%?!!!! I didn't even know that was legal.

Wow, I wish you well. Be sure that your credit reports reflect discharged accounts when you are done with this. Some creditors "forget" to report that.

I forgot to make a copy of it before i handed it over to my lawyer... damn!

oh my lawyer is a real "****** bull dog" he will make damn sure that is all taken care of. He is the type that I would hate to have to be up against in the court room, but love to have him on my side. I still have one more credit cousoling class I need to take which the court will assign me when i get into my last year.

Funny thing is with the pre-filing class they list the path that usually leads to bankruptcy and the course you should take before you decide to file.... I fit it 100%

The only thing I would recommend is NEVER give any money to these Debt consolidation companies.... they are nothing but trouble and despite the flowery happy commercials, they are working with the Credit card people and don't have your best interest in mind

 

[dfchelbay]

If I may pose a silly question here...is there some reason why your friend cannot get a job? She could help out the household financially and get this $75,000 paid in full within a couple years. I would think that getting a job and helping to pay the debts would be a better option to filing bankruptcy and ruining your credit for the next 7-10 years...or longer. Even though the general rule is seven years, a finance manager can still see it on your credit report and deny you financing. It may not be current, but it still casts a shadow on your application and in the eyes of those extending you credit.