How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask cfortunato Your Own Question
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
14232603
Type Your Bankruptcy Law Question Here...
cfortunato is online now
A new question is answered every 9 seconds

I lost my job 1 1/2 years ago after 24 years. I had excellent

This answer was rated:

I lost my job 1 1/2 years ago after 24 years. I had excellent credit during the 24 yrs. During the time I lost my job, I defaulted on my mortgage and credit cards, due to lack of income. I was able to secure a loan modification on my mortgage 14 mos later.
Now I am trying to fix my mistakes with my credit cards. I have every debt collector after me, which is understandable. However, I have one that is actually suing me. I have tried to work with ALL (including lawsuit) to work with me, to no avail.

Is it in my best interest to file BK, and start over? Or should I try to work with debt collectors and pay monthly payments on lower amounts owed?

cfortunato :

Hi - my name is XXXXX XXXXX I am a Bankruptcy and Consumer Protection attorney here to assist you.

cfortunato :

In the overwhelming majority of cases, it is far more advantageous to file a Bankruptcy when one is struggling to pay one's bills, than to try to negotiate with one's creditors.

cfortunato :

This is because there is no advantage involved with negotiating with one's creditors - as one's credit rating will dip substantially if a creditor agrees to negotiate - and once there is a judgment involved (as there will be because of the lawsuit), one's credit dips even further.

cfortunato :

Whereas, filing a Bankruptcy results in a gradual increase in one's credit score, and discharges any judgments already on one's credit report, and prevents any judgments that have not already occurred.

cfortunato :

Additionally, when there are a number of creditors involved, there will often be at least one creditor who will not negotiate - leaving a debtor will at least one potential judgment.

Customer:

Sorry for the late reply. Your answer would not show up, until today. If I do file BK, what options available? I know there is a 7 and 13. 7 wipes out debt and 13 sets up a payment plan. How does the lawyer determine which one is best for the debtor? I'm sure it is a individual case by case basis, but does one provide more protection than the other? Does a BK have the potential to hurt you with your job?

cfortunato :

Thank you for your response.

cfortunato and other Bankruptcy Law Specialists are ready to help you
Customer: replied 3 years ago.

If I do file BK, what options available? I know there is a 7 and 13. 7 wipes out debt and 13 sets up a payment plan. How does the lawyer determine which one is best for the debtor? I'm sure it is a individual case by case basis, but does one provide more protection than the other? Does a BK have the potential to hurt you with your job?

It is against the law for any employer to discriminate against any employee or potential employee based on the fact that the employee filed a Bankruptcy.
Chapter 7 is the preferred Bankruptcy, as, in general, with a Chapter 7 debts are discharged without paying anything to creditors, and with a Chapter 13 payments have to be paid every month for up to 5 years. (Both Chapters provide the same amount of protection.)
However, there is an income limit for filing a Chapter 7. In other words, you cannot file a Chapter 7 if your income is over a certain amount. If you answer the following, I can let you know whether or not you qualify to file a Chapter 7 Bankruptcy:
1) How many are in your household?
2) What is your gross (before taxes) total monthly household income?
Customer: replied 3 years ago.

9


AGI = 118,000

Thank you again for your response.
You are very close. The income level to file a Chapter 7 Bankruptcy if $116,156 for a family of 9 in California.