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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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We have about $30,000 in debt and were to the point of not

Resolved Question:

We have about $30,000 in debt and were to the point of not even being able to make the minimum payments. We were on a "hardship" plan for a year which lowered the payments to a point we could make them but that is ending now and they are telling me it can't be restarted for several months. We haven't used credit cards at all for about three years now. We have tried to get a loan to pay off the debt so the interest would be lower but the bank said our debt to income ratio was too high. We keep trying to save money, but every six months or so all kinds of things happen like the dryer goes out and the car needs brakes and we are down to nothing again. I'm not sure if we should try for a loan again since my husband did get a small raise this year but I've heard the more you apply for credit it hurts your credit score. Our credit has been good but the hardship plan probably hurt that as well.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 5 years ago.

WebLaw :

*Due to rules of your state bar or mine, nothing herein is intended as legal advice, only intended as general information to better help yourself.*

WebLaw :



So sorry to hear of this dilemma. If my answer is not clear to you, please ask me for clarification by using the reply button.

You may want to consider a chapter 7 bankruptcy. I will explain.

As an individual, there are two types of bankruptcy available. A Chapter 7 and a Chapter 13. There are distinct differences in between a Chapter 7 and a Chapter 13 bankruptcy.

A Chapter 7 bankruptcy could discharge (erase) all of your unsecured debt such as credit cards, judgments and personal loans. It would be an opportunity for a fresh financial start. However, you may have to surrender assets, if any, that exceed your exemption.

A Chapter 13 bankruptcy is a repayment plan for an individual. It may require that you repay some of your unsecured credit card debt over a 3 -5 year period. However, you may retain assets that exceed your exemption.

Here are the exemptions for Nebraska:
http://www.bankruptcyinformation.com/ne_exemp.htm

WebLaw :


Please use the REPLY button if you have any questions concerning my answer. Otherwise please click ACCEPT so that I am paid by the site for answering.

Customer:

Do you really think bankruptcy is our only option at this point? We are perfectly willing and able to pay this off if we can get the interest lowered!

WebLaw :

It is unlikely that the credit credit card companies will reduce the interest on a permanent basis absent a bankruptcy.

WebLaw :

a chapter 7 would immediately eliminate most/all credit card debt

WebLaw :

a chapter 13 bankruptcy would allow you to pay a portion of the debt over a five-year period and have the balance discharged

Customer:

How badly will our credit be affected?

WebLaw :

Your credit is likely already poorly impacted by the hardship plan. A bankruptcy will be a negative impact on your credit however most people find that they are able to reestablish good credit within 2 years after filing a chapter 7 bankruptcy

Customer:

I'll look into it. Thank you.

Ellen and 4 other Bankruptcy Law Specialists are ready to help you