Financial suicide or a wise option?

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Financial suicide or a wise option?

Unread postby Tht1Guy » Thu Oct 05, 2017 7:50 am

Just started venturing out from one room here and found this finance section.

We are in the beginning stages of divorce. Current TRO in effect where children are with me and in the house.

Problem lies in survival. She has a large financial backing by her family where I’m on my own. I know it looks best for the children to be in the home so I’m struggling to carry a full house bill alone whereas before we split the rent.

I went to a Bk lawyer and not qualify for Ch7. So it’s either Ch13 or just quit paying credit cards ($35k) and ride the collections into the sunset. Then, when I can, contact each debt collector one at a time when I’m can and settle for a fraction of the debt. At least that way, I’ll have bad credit but without a Bk to put the cherry on top.

I’m not sure, I should prob wait as I don’t know her debts/assets and I can always file Ch13 after divorce whereas a Ch7 you can’t, depending on what she’s racking up right now before the divorce.

This is all new to me, so any advice helps.
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Re: Financial suicide or a wise option?

Unread postby Campfire » Thu Oct 05, 2017 1:08 pm

If you're considering stopping payment on the credit cards, why not stop paying the mortgage?
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Re: Financial suicide or a wise option?

Unread postby Tom Kirkpatrick » Thu Oct 05, 2017 1:20 pm

Tht1Guy wrote:Problem lies in survival.
A typical strategy of the other side is to bleed you into submission. I can see that it's working.

In this game, there are no second chances. Financing divorce must take priority over everything else.

Implement austerity measures. Cut expenses into the bone. Cut off both legs if necessary. Settle finances (assets vs debt) when divorce is finalized.

Tht1Guy wrote:She has a large financial backing by her family.....
Did you know??.....In some cases, depending on how much and/or how frequently, and depending upon jurisdiction, and depending on your attorney's litigation prowess, her family's financial backing has potential to be imputed as income?? Have you talked to your attorney about this??

Tom
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Re: Financial suicide or a wise option?

Unread postby Tht1Guy » Thu Oct 05, 2017 4:01 pm

Camp: we rent.

Tom: yea, I hear you. To fund the attorney fees, I have to cut paying cards for a while. They are eating all of my available extra cash in interest. I’m just a number to the big credit banks and will be just fine without payments for a few months. Right now we need a lawyer paid, roof over our head, and food on the table until this divorce thing is finalized.

I read this which leaves Ch13 as a serious issue. It’s like the icing on the cake from already bad credit.

Check this out, which is scary not knowing your financial future with divorce. A post-divorce hiccup under a Ch13 and they come after your cars and any other asset you have.


It says:

“Bankruptcy Reality #7. Missed Payments Under Chapter 13 Can Be Personally Devastating

If you fail to make payments in a Chapter 13 bankruptcy, the trustee in the case will either convert the bankruptcy to Chapter 7 bankruptcy liquidation, or the case will be dismissed altogether. Either option is disastrous.

If your bankruptcy is converted to Chapter 7, all of your non-exempt property -- family heirlooms, bank accounts, investments, second cars and vacation houses, just to name a few -- will be sold and distributed to your debtors. If the case is dismissed, you will lose all bankruptcy protection and go back to square one, still liable for all your debts.

The Investing Answer: Bankruptcy is not something to take lightly. There are thousands of people who have successfully emerged from bankruptcy, but it is vital to be informed of all the risks and benefits. Don’t let a bankruptcy filing take you by surprise.”

“Bankruptcy Reality #4: Filing Is Expensive for Those Without Money

You file for bankruptcy because you don’t have enough money to pay for mounting bills and debt. The problem is, a Chapter 7 or Chapter 13 declaration requires extensive legal representation, and the services of a bankruptcy lawyer aren’t cheap.

Rates vary by location, but a Chapter 13 bankruptcy filing can take as long as three to five years to settle, with attorney fees costing anywhere between $2,200 and $3,200 (link is external). Filing for Chapter 7 bankruptcy is slightly less expensive due to the attorney's smaller role, but will still cost anywhere from $800 to $2,500 depending on the area.”

http://www.investinganswers.com/persona ... uptcy-3544
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Re: Financial suicide or a wise option?

Unread postby TJinCA » Thu Oct 05, 2017 4:58 pm

Campfire wrote:If you're considering stopping payment on the credit cards, why not stop paying the mortgage?


Maybe because the credit card companies won't come and take your < feces >, but the mortgage lender will come and take your house and if you stop paying rent the landlord will kick you out.

To OP, it doesn't sound like you've got any great options but stopping payment on unsecured debt (credit cards) and hoping to clean that up later may be the best one. Among other things, simultaneous divorce and BK is not a good mix so you wouldn't really be able to do the BK until the divorce was done--and it doesn't sound like you've got that kind of time.

If you've got the divorce papers filed, she's moved out and has resources and you have the kids, get her tagged with child support ASAP. She's as responsible as you are for keeping a roof over your kids' heads and food on their table.
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Re: Financial suicide or a wise option?

Unread postby Tht1Guy » Thu Oct 05, 2017 8:16 pm

Ok, so I was stressed out and now have a plan. Stay in the house, default on a few cards for a bit until the child custody is established. Then I’ll have an idea as to when/what I need to stay afloat as we don’t know what’ll happen as of yet in terms of custody time, etc. Once we have the TRO hearing they’ll grant a temporary custody situation followed by child custody court/mediation for the official. So, I guess I need to take a deep breath, pay bills up to the TRO hearing and plan from there.

In the mean time, planning on taking care of my lawyer so he’s financially set and has everything he needs to prepare for the case.
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Re: Financial suicide or a wise option?

Unread postby grandet2 » Fri Oct 06, 2017 9:18 am

Consider a low APR Credit Card from a credit union. at 6% or so, better to carry at this apr
Get this quickly before the debt piles on.
Get 2 from 2 different CUs, not in the same week though.
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Re: Financial suicide or a wise option?

Unread postby TJinCA » Fri Oct 06, 2017 10:14 am

At first the notion of getting more credit cards when you know you're in financial straits sounded to me like terrible advice, but given desperate times it's probably not a bad idea to get as much credit headroom as you can before your credit rating heads south and you become ineligible. And hope that you can get financially stable (through support and/or employment) quickly enough that you can make everybody whole within a reasonable period of time.
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Re: Financial suicide or a wise option?

Unread postby Tht1Guy » Fri Oct 06, 2017 10:40 am

Well, unfortunately I have pretty much hit the ceiling on cards due to debt/income ratio and high balances pretty much at their max. I’d prob only might be able to pick up a few nasty ultra high with annual fee cards. I see your reasoning though. It’ll be something to buffer in the event I’m pressed against the wall.

I have a few that are paid off but haven’t touched them in a long while, not much available though. The next thing is once the time comes around to negotiate and settle, I don’t want more cards to settle than I can handle as I may not file BK.

I thought about paying them for this billing cycle and then after this month, I’ll have a better idea of we’re support, etc lies.

I have 1 credit union card which has a lower interest and really want to hang on to that one as it’s connected checking accounts, etc and if the card goes south, then they go after my checking accounts. So, unless I go BK13, that one is a keeper.
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Re: Financial suicide or a wise option?

Unread postby Jesus Christ » Sat Oct 07, 2017 11:41 pm

[quote="Tht1Guy
You file for bankruptcy because you don’t have enough money to pay for mounting bills and debt. The problem is, a Chapter 7 or Chapter 13 declaration requires extensive legal representation, and the services of a bankruptcy lawyer aren’t cheap.

Rates vary by location, but a Chapter 13 bankruptcy filing can take as long as three to five years to settle, with attorney fees costing anywhere between $2,200 and $3,200 (link is external). Filing for Chapter 7 bankruptcy is slightly less expensive due to the attorney's smaller role, but will still cost anywhere from $800 to $2,500 depending on the area.”
[/quote]

My chapter 13 attorney wrapped his 3500 fee into the total that I owed to the court. So out of pocket was zero.
People get the justice they can afford.
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