Filing Chapter 7 : (

[Markwallace]

So I have decided to declare chapter 7 bankruptcy. Please, I know the ramifications… I realize the after effects of making such a decision. I know it should be the last alternative.
That aside, I was wondering if you guys could help with a few questions I had.

All of my debt is in the form of credit card debt. Around $15,000 or so. I have 5 cards total and most of the debt was personal products and supplies for an ill fated business I tried to get off the ground. I make 9.00 an hour now and no way can I continue these payments… its just futile. I pass the means test easily.

My question is this though, I have some money left on several cards. Meaning I haven’t reached my limit on at least 3. A couple thousand I believe. If I am filing for chapter 7, and aside from the ethical assertions, would it not be prudent to use that money while I can? I mean, I am going to be free and clear irregardless by the end… why not take advantage of it. I have nothing they can take in form of assets to recoup(no house, no car).

Also, could I do a cash advance on the funds? So I have cash to be used to pay a bankruptcy lawyer among other things. Again, if it’s all going to be washed what is the point of leaving it on there? I’m sorry but I simply lack compassion for the folks at Bank of America and Chase… believe it or not I think they are going to be just fine in the end.

[marla]

Originally Posted by Markwallace

My question is this though, I have some money left on several cards. Meaning I haven’t reached my limit on at least 3. A couple thousand I believe. If I am filing for chapter 7, and aside from the ethical assertions, would it not be prudent to use that money while I can? I mean, I am going to be free and clear irregardless by the end… why not take advantage of it. I have nothing they can take in form of assets to recoup(no house, no car).

This is not a question that you can answer "aside from the ethical assertions" in my opinion.

[Markwallace]

Curious. You seem to insinuate some sort of compassion for a company like Bank of America... I find that inexplicable. I don't even know how to defend my side of that argument. They are a juggernaut of gouging low income families across the country, they are glorified loan sharks. Their executives make millions a year... use private jets for personal vacations.. I can't even go on(you can, simply google what a bunch of scumbags they are). I could care less what they are stuck with, it is the one silver lining I can say I am truly happy about in all this.

That said, I posed the question that way for a reason. I wish not to talk about whether anyone thinks it is right or wrong, simply whether there might be any unforeseen ramifications.

If it helps alleviate your sensitive conscience, lets call it hypothetical then.

[marla]

Originally Posted by Markwallace

Curious. You seem to insinuate some sort of compassion for a company like Bank of America... I find that inexplicable.

Not at all. It's an ethical question for yourself. You know it's not right or you would not have said "aside from the ethical assertions" since if you thought it was ethical there would have been no reason to include this. That means that it's impossible to make the decision without considering the ethical assertions.

[Hypersion]

Why even declare BK. Just stop paying on the CC. At $9 an hour you are judgment proof.

[marla]

If you think it's the right thing to do and there is nothing wrong with it, then why are you concerned with this question at all?

[Markwallace]

Who cares whether it is right or wrong or whether I think it is right or wrong. I said that so people like you wouldn't start some moral debate. who cares.

Did you read my post? I am wondering if it might impact me in any way I am not anticipating. For example some sort of red flag when final discharge is being considered.. such as I purchased(HYPOTHETICAL) 10 pinball machines or something... that something might come back and affect my judgment where they might say that less then 30 days from declaring bankruptcy I purchased 10 pinball machines.

I don't know, which is why I am asking. My assumption is that nobody will know or care, anything in the range of 15,000-20,000 doesn't matter to companies like that(remember its split between five..so like 4,000-5,000 each).

[terry1156]

same question as Hypersion. Why bankruptcy if it is all credit card debt? Just stop paying.

[Markwallace]

Originally Posted by Hypersion

Why even declare BK. Just stop paying on the CC. At $9 an hour you are judgment proof.

I misread your comment. Please see the response below.

[Markwallace]

Originally Posted by terry1156

same question as Hypersion. Why bankruptcy if it is all credit card debt? Just stop paying.

what do you mean stop paying?

I never considered that. What does that mean. So I stop paying, and they start boosting fees and interest... and I still dont pay. It goes to... collections then? I'm not sure. Then what.

Figured bankruptcy was the only option at that point... that they(collections companies) might sue me or try to garner my wages or something I guess.

[Markwallace]

Found this on another forum

"Well, I can tell you from working in Banking for over 7 years now, that they will find you, maybe not today or tomorrow but they will find you.
First of all anytime you open an account (be it savings and/or checking) you are usually checked by what is called Chexsystems (they report previous financial account history). Second anytime you open an account you are checked by OFAC and or FinCin (IE: the government). Third when they sue to garnish your wages or they place a Levey on your account they will send a legal document to ALL banks and credit unions in your area. The financial institution must then check to see if you have any accounts with them and respond via their legal representation. Fourth anytime you work for someone and use your social security #, it is another way for them to track you down.

As I said eventually they will find you."

Seems everyone is saying they will garnish your wages. If my credit is going to such garbage at that point wouldnt it be better to just go chapter 7 and be done with it?

[terry1156]

if you stop paying then they will send to collection. When that happens you can try to negotiate a settlement of the debt. You'll have to pay something back, but probably not the entire amount. In fact, you can go to them now and try and negotiate the debt down to something that you can afford to pay.

It's important to remember that if they forgive some of the debt, you can be taxed on this money as income (although you should be able to right it off as a loss to your business since that is what you used it for).

have you tried to negotiate with the credit card companies yet?

[Seeker]

Originally Posted by Markwallace

So I have decided to declare chapter 7 bankruptcy. Please, I know the ramifications… I realize the after effects of making such a decision. I know it should be the last alternative.
That aside, I was wondering if you guys could help with a few questions I had.

All of my debt is in the form of credit card debt. Around $15,000 or so. I have 5 cards total and most of the debt was personal products and supplies for an ill fated business I tried to get off the ground. I make 9.00 an hour now and no way can I continue these payments… its just futile. I pass the means test easily.

My question is this though, I have some money left on several cards. Meaning I haven’t reached my limit on at least 3. A couple thousand I believe. If I am filing for chapter 7, and aside from the ethical assertions, would it not be prudent to use that money while I can? I mean, I am going to be free and clear irregardless by the end… why not take advantage of it. I have nothing they can take in form of assets to recoup(no house, no car).

Also, could I do a cash advance on the funds? So I have cash to be used to pay a bankruptcy lawyer among other things. Again, if it’s all going to be washed what is the point of leaving it on there? I’m sorry but I simply lack compassion for the folks at Bank of America and Chase… believe it or not I think they are going to be just fine in the end.

This may be construed as a violation of Bankruptcy Fraud, 18 U.S.C Section 152 or section 157.

You don't want to deplete assets entirely before filing for bankruptcy. That's a red flag and you'd just asking for more trouble this way.

[poundwise]

Filing bankruptcy on $15K in credit card debt is most unwise. Work 40 hours at your first job, get a second job, and stop charging purchases. Problem solved.

Also, posting questions when you obviously don't want people to answer the way you know that they will answer in the first place is also none too endearing. Of course it is wrong to charge items to cards when you have decided to file bankruptcy on them. Unless, of course, you think stealing is ok.

[sweeps]

I agree with Seeker. A judge is going to see right through what you're doing and hopefully would punish you for fraud.

I don't have any compassion for BoA, but I do have compassion for victims of theft. You're a thief if you continue running up your cards with the intent on filing bankruptcy.

[noppenbd]

Not to dogpile on but...

People who do this sort of thing don't just cheat "BofA", as in some evil monstrous corporate entity, they cheat the stockholders of BofA (which is everyone who has any money in a large company mutual fund or S&P 500 index fund), and the other cardholders or account owners who may see higher fees or rates as a results of higher writeoffs.

Don't do it.

[Markwallace]

Thanks for everyone's contribution to the topic so far.

Bankruptcy is a big deal, I get that. In essence it could ruin most peoples lives. But I asked myself, what exactly are the major ramifications. There are just a few, albeit large, considerations why people are and should be so afraid of bankruptcy. Homes, Cars, and Education.

The house I am in now, I plan on staying for the rest of my life. So I dont care about being financed for a new one. It doesn't affect me, its not in my name and I pay my share of the mortgage. Cars... I have no need for a lexus or anything else. A smart buyer pays cash and they buy 2-3 year old reliable used cars anyways.

Education. If you have kids you are destroying their chances of college if you try to help finance it with a bankruptcy settlement on your credit report. 1. I dont have kids nor do I want them. 2. I think a kid should pay for college on his own anyways.

So I am curious as to SPECIFICALLY how declaring bankruptcy is going to hurt me. I dont ever want to use credit again in my life, the first thing I read or see on TV when giving out advice for saving money is DO NOT USE CREDIT...

It will take me 5-10 years to pay off this debt(doubling up payments).. all those payments, all those finance charges could instead be going right into an IRA account and a side account for a new(used) car in the future. Instead of wasting it away and never seeing it again.

So tell me, please, how exactly is bankruptcy going to hurt me. Without using generalizations like "its going to ruin your life" or "you never know if you need credit"... specifically how is it going to hurt me. I see no downside.

I realize I can get a second job, 3 jobs.. to pay it down. But I ask you why. The ONLY thing I have distilled from the community's responses so far seems to be the moral notion of "you borrowed it, so you should pay it back"... is that the extent of it? That is the final consensus why I should not go through with the process... I am not questioning the merits of such a statement, simply whether that is the basis and core of your retort.

[sweeps]

Because it's the right thing to do.
Because you don't want Karma to bite you in the a--.
Because not just creditors but also employers and insurance companies use your credit report to determine how responsible you are.
Because bankruptcy costs you in attorney fees, and filing may not be as easy as you think. You may be required to file for Chapter 13 instead of Chapter 7.
Because bankruptcy is a cost to everyone, not just the lender. That includes you.

[Markwallace]

Originally Posted by sweeps

Because it's the right thing to do.
Because you don't want Karma to bite you in the a--.
Because not just creditors but also employers and insurance companies use your credit report to determine how responsible you are.
Because bankruptcy costs you in attorney fees, and filing may not be as easy as you think. You may be required to file for Chapter 13 instead of Chapter 7.
Because bankruptcy is a cost to everyone, not just the lender. That includes you.

I pass the means test easily. I have close to 20,000 in debt, high interest and I make $9.00 an hour working. I have no assets, car or house.

Bankruptcy costs about $450 if filing alone $900 or so with a lawyer. My case is relatively simple, no business liquidation or assets. Just an individual with outstanding credit debt, so I would be filing without a lawyer.

Basically you are confirming my initial suspicions, that it's a morality play. You use words like "Karma" and "right thing to do". I am not arguing with you, those are admirable reasons. I should say we disagree as to extent of "karma" involved though. If it makes you feel better at the end of the day to make a $40 payment to a company that makes billions in profit each year, so be it. I suppose everyone has their own moral compass they must abide and live by.

[sweeps]

Then why not just go rob a BoA bank? Seriously. Under your logic they deserve it and they won't be materially affected by your robbery, so no harm, right?

Also if you have no moral compass, if you're only interested in the money, you seem to have missed my line about employers and insurance companies (and many more) that use your credit report to determine your responsibility level. You may not get that next job; your car insurance premiums may double; you may not be able to open a checking or savings account at a bank that pulls your credit report. So yes, there is a real financial effect from declaring bankruptcy even if you truly do not need credit in the next 10 years (unlikely).