I was laid off 2 years ago, and unfortunately, I still haven't found work. I do not own a home or vehicle. No stocks, retirement or savings. Pretty much all I have is some furniture and about $100 in checking. Currently collecting unemployment. I had about $15k in debt, and made arrangements with CareOne to lower payments and payoff some of the debt. Also have a Prosper loan. I have depleted my savings to stay a float, and now I'm pretty much out of money and can't pay bills. I am not delinquent on anything yet, but as of next month, I will not be able to make the agreed payments. My question is, should I file chapter 7 before I can't pay or just let everything go into default, then file?
3 Answers from Attorneys
I am not a bankruptcy attorney and you should get a consult with a bankruptcy attorney. Many attorneys give free consults and just because you get a consult does not mean that you have to file.
You generally cannot file for 90 days after your last payment was made to your creditors. From what you describe, why file bankruptcy at all? You can file at any time, even after judgment. So there is no need to rush into this.
There is nothing your creditors can do to you. They will call and eventually you will be sued and judgments entered. Since you do not have a house, that cannot be liened. Are you sure that you are not on any deeds to any other real property (like "heir property") or something? You are not working right now so there cannot be any wage garnishment. They can freeze your bank account, but steps can be taken to avoid losing any funds. However, unemployment benefits are exempt from any judgments and your case can be positioned to avoid any bank freezes.
Bankruptcy is not without consequences of its own and should not be undertaken lightly.
If you are not sure about bankruptcy, why don't you try a debt resolution as an alternative? Debt resolution is not the same as a debt management company. Beware - there are many many scam artists and disreputable debt settlement companies out there.
I provide legal services to the Georgia clients of a reputable debt resolution company. I invite you to check them out and see if this may be a viable alternative given that your debts really are not all that bad.
See a BR lawyer in your area. You can probably file now, or later if and when lawsuit start. It is not true at all that you have to wait 90 days after your last payment to creditors. That is almost never even an issue to be considered by someone filing. Obviously, your time is well spent looking for a job abd maybe you can avoid bankruptcy. There is work out there, so looking for ANY work should be a 40-50 hour a week "job."
Rachel is incorrect about not being able to file until 90 days after a payment. I do handle bankruptcy and that is rarely a problem.
As for timing of a case, 9 times out of 10 I find that sooner is better than later. Without seeing your numbers I can't really answer as to when and if you should file.
In that if creditors sue you now, they can, for years to come, go after future paychecks and savings and the like, I disagree with her answer. While you want to consider the consequences of filing, the long term consequences of not filing are sometimes worse.
See a bankruptcy lawyer to review everything.
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