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Bronze Conversationalist

Re: Getting out of debt

643 Views
Message 21 of 59

One thing that I strongly recommend is to sell, donate to Goodwill &/or give to charity as much clutter that you can keeping only those items that you actually use &/or need.  When my wife died I went through our closet, 75% of which was hers.   More than half of her dresses still had the price tags attached.  She had purchased large candles & placed them on all the tables in the living & dining rooms.  None of them were ever lit.  I have given a LOT of items to the veterans She had purchased about 5 different coloured dining room table cloths.  How many table cloths do you need for one dining room table?  We had three different sets of kitchen silverware for only two mouths.  I gave 2 sets to my Masonic lodge.  The more clutter that you get rid of the better you will feel.

Richard I. Pigott
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Info Seeker

Re: Getting out of debt

631 Views
Message 22 of 59
List all credit cards by balance/% finance charge from the biggest to the smallest. Pay minimum on all but the smallest balance. Decide a figure per month to put on credit card debt. Put the minimum payment on all but the smallest balance. Put everything else you can afford on the smallest balance first. When that card is paid off, move up to the next one. I did this and got out of $60,000 worth of debt. You get a feeling of getting somewhere when you can scratch that smallest card off your list. Move on to the next....continue until you have NO DEBT left. It takes a good strategy like this to get it done. But it is so rewarding after. But be careful cancelling too many cards at once. The Credit Bureau will tear you up.
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Re: Getting out of debt

618 Views
Message 23 of 59

Freemason,

You make the statement that bankruptcies, as in all, remove a mortgage payment and result in foreclosure. My house was rolled into my chapter 13 and payments were made just like normal. At the end of my bankruptcy, both vehicles were paid off (yes, we rolled two vehicles into our bankruptcy in NC) and credit card debt was no more other than the debt acquired in the last few years. The student loan debt was placed on hold if we chose not to pay it, although it resumes after the bankruptcy was discharged.

The only person who can give you absolute facts about a bankruptcy in your state is an attorney who practices bankruptcy law. I can say that there are good attorneys and bad, everywhere. When we went to court to file our bankruptcy, along with dozens of others, we were asked who our attorney was. After giving his name, a comment was made that it would be done right. That was comforting coming from someone who deals with the bankruptcy attorneys every day.

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Bronze Conversationalist

Re: Getting out of debt

610 Views
Message 24 of 59

If you continue to make your mortgage payments after having declared bankruptcy then there is nothing that the bank or other lending institution can do as you are still making payments.  If you stop making any payments then they can forclose.  If you choose the former be prepared that every time you call the agent he will preface his comments by stating that as you have declared bankruptcy you are no longer obligated to pay the mortgage, however, the bank still has a lien against your property which means that they can foreclose.

 

I speak only from my experience having declared Chapter 13.  Legal representation will occur when you declare.  Every state is different in their laws.  I live on Long Island, New York

 

 

 

 

 

 

 

 

 

Richard I. Pigott
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Re: Getting out of debt

599 Views
Message 25 of 59

Hi, Richard--You're right that every state is different on one part of the law regarding bankruptcy, and that refers to exemptions (the stuff, including real estate, that you can keep).  The boring stuff: the federal exemptions are found at 11 U.S.C. (United States Code, searchable online) Sec. 522 (d) and, unless your state disallows you to use the federal list, and provides its own exemptions which you must use, then you can use whichever (your state or the federal list) is better for you.  For example, the federal list has a "wild-card" exemption for half of the $15,000 real estate exemption (so, $7,500) if you don't need that exemption.  So, if you don't own real estate, you can exempt/keep more cash or more equity in a car, etc.  BUT, my state allows a real estate exemption of up to $500,000, so home owners, even with modest equity, should choose the state list.  The exemptions are the only part of bankruptcy law which differs state to state.  The rest of the statute is uniform among the 50 states, Puerto Rico and territories, in terms of the chapters available, the requirements on who can be a debtor, the plans under chapter 13 or chapter 12 (for family farmers).  Worth researching for sure with a specialist attorney.

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Re: Getting out of debt

597 Views
Message 26 of 59

Hello Richard--

 

A couple of comments to your detailed post about bankruptcy, and to make it clear, I'm reposting your note, with my comments underlined.  Hopefully, here goes:

 

 

There are six matters that I forgot to mention.  There are two types of bankruptcies-Chapter 7 which is where you make payment schedules with all of your creditors; Chapter 13 where the slate is written clean as I stated in my previous response.  Regardless of your choice, be it Chapter 7 or 13, it is still going to show on your credit report. (True, that it will show on your credit report, for up to 10 years.  Chapter 7 is called a "liquidation bankruptcy" and takes about 4 to 5 months, from the date of filing, vs. Chapter 13 which can take three to five years.  In a chapter 7 case, you list all your property, and if it's all exempt under the federal or your state exemption list, you keep it all.  The bankruptcy trustee declares that there is no distribution to your creditors, the property all reverts to you, and a few months later, the court issues a discharge, which means the debt is dead and gone; there is even a "statutory injunction" which imposes damages and attorney's fees on creditors who later file a collection lawsuit.  Chapter 13 (or Chapter 12 for family farmers) is different.  If you're over the median income for your state, you can be pressed into 13 (or choose to file under that section) and then you have to meet two tests to have your plan approved.  The first is the "best effort test" which means that all of your extra income, above certain living expenses and secured debt payments, has to go to your Plan.  The second is the "best interests of creditors test", which means that an unsecured creditor in a chapter 13 plan, must receive as much over the life of the plan as he/she/it would receive under a chapter 7 liquidation.  SO, if all your property would be exempt in chapter 7 (nothing taken and sold to pay creditors), you can propose a plan that pays as little as 1% to that creditor in Chapter 13; this is important, particularly, if much of your plan payment is going to repair a mortgage arrearage over the 3 to 5 years.  Finally, in a chapter 13 case, you get the discharge at the end of the plan payments (three to five years, with the same statutory injunction at the end)).

 

Secondly, when you declare Chapter 13 none of your real property (i.e. furniture, car, clothes, personal items) are taken from you.  You permitted to keep only one vehicle, whether it be a car, SUV, motorcycle, etc.  Therefore, should you have two forms of personal transportation you will have to sell one of them.  You cannot declare Chapter 13 for 7 years following your initial declaration for if you do then your creditor(s) can take any or all of your personal items & real property. (I agree that no property is taken in chapter 13.  However, 11 U.S.C. 522 (m), in a joint filed case (spouses) doubles the exemptions (other than the real estate exemption, in Massachusetts), so a chapter 13 case in Massachusetts could exempt two vehicles (and if there is no equity, either because the loan exceeds the car value or the car is leased, the car wouldn't need to be exempted at all).  Once you've been discharged, you cannot be a chapter 7 debtor for eight years, but the time restrictionfor being a chapter 13 debtor is only four years).

 

Third.  Bankruptcies absolve you from having to pay a mortgage(s) in that you are no longer required to make monthly payments, however, the bank(s) still have a lien(s) on your house(s) meaning that they can force foreclose(s).  That usually takes between 1-3 years before you are required to be out of your home.  Banks then sell the foreclosed property(ies) in a short sale meaning that they settle for what they can get for the property.  That amount is usually a lot less than the real value of the property.  Once a foreclosure action is started it cannot be stopped.  (A bankruptcy discharge gets rid of the note, but the mortgage is still good.  However, Chapter 13 allows a debtor to strip off an undersecured second or third mortgage or a secured judgment (called an Execution on a Judgment, here) and treat that creditor as unsecured and only pais a lesser proportion of their debt.)

 

Four.  it is highly advisable that if you are unable to keep up with your monthly mortgage payments to nortify your bank(s) IMMEDIATELY meaning today...not tomorrow.  Banks are not in the real estate business.  Thus, every house that they foreclose on they still have to pay property taxes, HOA common charges, etc all of which are liabilities to banks.  Very often banks will settle for owe  an amount that is a lot less than the total amount of your mortage as they dont want to pay for the aforementioned liabilities.  The only institution that I know of who will not settle for a lower amount is Beneficial as the institution is owned by a group of investors.  The lower amount is a one time offer meaning that should you want to pay it you have to pay it IN FULL!  Like the Cash Advance Balances the mortage interest is spread over 365 meaning that interest accumulates daily, so the quicker you pay off the mortgage the lower amount will you have to pay. (Chapter 13 requires that a debtor make post-filing mortgage payments directly to the creditor, along with a portion of missed payments to the trustee.  If you miss payments, either to the mortgage holder or the trustee, the case can be dismissed by the court).

 

Five.  Unless I am mistaken you are paying interest ONLY for the first ten years of your mortgage before any of your payments are applied to the principle amount of your mortgage. (I'm unsure of whose mortgage this applies to, but it may be a home equity loan/HELOC which are often written this way.  My recommendation, if a person can do it, is to always pay extra to principal every month, so that the balance declines before that date when principal and interest payments are calculated for the balance of the loan term).

 

Six.  Educational loans can be forgiven upon proof recieved from Social Security of a permanent disabiity that prevents you from working in any capacity.  This means that you have been receiving Social Security Disability payments, however, should you return to work then you are liable for the payment in full of any & all educational loans.  (These types of loans can be forgiven by the U.S. Dept. of Education if their criteria are met, but in a bankruptcy case, the Bankruptcy Court can include an educational loan in the discharge, in what is called an "adversary proceeding", if paying the loan back would be and "undue hardship".  A factor bearing on that determination could be health, age, family factors (e.g. caring for an elderly spouse/parent/disabled child, etc.  This is definitely something that needs the help of a specialist attorney).

 

I declared Chapter 13 in 2015.

 

 

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Info Seeker

Re: Getting out of debt

588 Views
Message 27 of 59

As I read the comments, the question is what can this person do to earn more income.   But, this person didn't say what they can do and indicated they are limited.   Therefore, hard to answer the question.   

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Bronze Conversationalist

Re: Getting out of debt

580 Views
Message 28 of 59

Let me preface my comment saying that I never professed to be a Mr Know It All.  My statements are based solely upon my own experience declaring bankruptcy.  I am not offended by anyone's coments.

 

Regarding my comment on work; if you are, like myself, on Social Security Disability then there are limitations to how much money you can make in a year but not on the type of work that you may do.  You must contact The Social Security Administration for clarification.

 

Second.  I had an educational loan for $15,000 financed by the U. S. Department of Education which was excused on the basis of the disability information that they had received from the Social Security Administration.  If I suddenly return to work, the income of which is taxed, then the loan will be activated not by me but by the government meaning that I have to pay it as I  am working.  For clarification please see The Social Security Administration & the U.S. Department of Education.

Richard I. Pigott
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Treasured Social Butterfly

Re: Getting out of debt

578 Views
Message 29 of 59

SIRTOFF wrote:

As I read the comments, the question is what can this person do to earn more income.   But, this person didn't say what they can do and indicated they are limited.   Therefore, hard to answer the question.   


Right, and this is why the answers are what they are: people's opinons and experiences with debt. Smiley Happy

 

"The key to success is to keep growing in all areas of life - mental, emotional, spiritual, as well as physical." Julius Erving
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Conversationalist

Re: Getting out of debt

606 Views
Message 30 of 59

Someone struggling with health and financial issues does not need your shaming.  Yet you felt it necessary.  

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