Timing of Filing Chapter 7

[ooogha]

My question involves bankruptcy in the state of: California

My spouse and I are both out of work and have our second mortgage coming after us for about $13k. We have seen a lawyer but haven't retained him yet and I didn't get to ask everything I wanted to. We've only missed one credit card payment and they are calling already and I know the others will too (altogether we pay about $240 to cc's a month). So, is it okay to wait another month or two to actually file the bankruptcy? Is the worst that can happen is that the creditors harrass you? I have a few weeks of severance pay that I can only get if it is direct deposited and it will inflate my bank account for the next month or so. After that, I will only be getting unemployment unless I can land a job. I am applying like crazy! Thanks in advance for the response....

[Mr. Knowitall]

Get together with your lawyer and form a strategy. You can expect to have to go through credit counseling as a prelude to your Chapter 7 bankruptcy, so you would benefit from working out timing issues with your lawyer.

[Moise]

OK, the earliest you should file BK is 90 days after the last time you used any one line of credit. This time is so that people don't "Rack up a ton of credit then file the next day". We have all heard of people doing that. If you file before 90 days, the lines of credit that you used in less time than that may be exenpt from discharge.

NOW with creditors harassing - Yes they have a habit of that. They will make scary calls, they will send scary looking letters, they will threaten to sue, report to all three credit bureaus, etc...
They waste no time harassing. DO NOT let them intimidate you.
ANYone can create a scary looking letter if they have a computer and a word processor. Heck I can do that with my old rickety, noisy, oil-leaking, overheating computer. (it even fails emissions tests)
OK humor aside -

here is the harassment cycle -
1) you are late on a line of credit.
2) the next bill of course has late charges and maybe a threat
3) Some guy from some country in the mid-east calls and says, "...so let us go ahead and set up a payment over the phone..."
4) It gets sent to a collections dept (usually within the SAME company) and they send out scary letters.
5) That guy from the mid-east calls again....
6) They eventually give up and don't call as often, if at all.
unlikely but also -
7) An actual American man may call and talk to you about your delinquent payment, he will deepen his voice and sound scary and pushy. You will imagine some huge brute guy with a .45 at his side. But this guy is probably some pencil-neck nerd. ANY man (and yes some women) can make their voice sound scary.

Lady, look, I cannot say this enough - DO NOT let them intimidate you! Even if they WERE to take you to court, it would have to be for some high amount, AND it would take months or years.

Here are some things that are scarier than "Collection agencies" -
Bed bugs, chihuahuas, mosquitoes, the "check engine" light on your car, the thought of a world without the tangy zip of Miracle Whip (that stuff is GROSS)...

Look lady, when I was 19, I fell behind on payments to Columbia House. yes, some old company that sold records/tapes/CDs. they sent me a scary letter once cause i owed like $50. I never saw a letter like that before. So I was imagining the swat team and the US Army's airborne ranger unit hunting me down, arresting me, pointing M-16's to my head, and putting me in prison where I would then have a tracking device implanted and labeled a national threat.

whispers - "none of this ever happened! I am alive and well 17 years later! no tracking device, no prison, no broken bones no vivisection, nothing!"

Quit worrying about NOTHING! Even if you DID run across an aggressive creditor about suing, that would take longer than 90 days, probably much longer.

[KeyWestDan]

In the real world, a Chapter 7 is only justified when debts are over 350k and you have little in assets. A Federal Bankruptcy court will likely not allow you a Chapter 7, they will convert it to Chapter 13. You are NOT going to walk away free and clear.

BK is a big step and many times it is not even necessary. I would be in no hurry if I was you. Wait until you are sued, they get a judgment and then want to execute the judgment. Check your state law and see what your exemptions are. Here in FL you keep your house regardless of equity. If you have no Homestead then you get $4K of property exempted, plus $1K statutory. You also get $1K for a vehicle.

So, then they are looking at going after what is over 6k. Unless you have something they can identify of particular value, they are not going to bother with household goods.

If anyone threatens you just tell them you are both out of work, all your assets are below the statutory exemptions, and if they want to waste their time and money, bring it on. Otherwise, you will be happy to start paying again when you have some income.

Now, a trick few people mention is the advantage of having a big judgment against you which they make no effort to collect on, or perhaps they called you to a debtor examination once and discovered it was not worth the trouble. So, then if someone gets a judgment against you later on and they want to execute on it, just inform them of the other judgment and the legal fact that the new creditor has to notify the previous judgment holder they are going to execute. Then if there is anything, the original judgment holder gets it, up to the amount of their judgment. The one who did the work and expense gets nothing. Translation, they will not do anything and will go away.

A bankruptcy attorney makes money doing bankruptcy. Not really the best person to give you alternatives. There is lots of online info on how to handle creditors.