Credit Advice

FIrst, bankruptcy is an important decision to make, so be sure to talk with a trained professional before you decide it's right for you. Second, if you go down this path, you'll need to hire an attorney and he can map out the process in detail, but basically you'll have to fill out a lot of paperwork and go through what's known as a "means" test to determine if you qualify for Chapter 7 or Chapter 13 BK.  If you Qualify for Chapter 7, your debts will be discharged (besides those you re-affirm like your auto and/or your mortgage because you want to keep paying on them).  If you only qualify for Chapter 13, you'll be put on a payment plan and make a monthly payment for a number of years to cover all your debts --- usually equivalent to 20-30% of the original amount owed when all is said and done. Again, contact a professional to see if BK is right for you....it's a serious step and will stay on your record for 7 years!

Under chapter 13, a bankruptcy trustee takes control of much of your finances.  Most of your money above and beyond basic expenses (food, clothing, etc) goes to the trustee to pay creditors.  Typically, any bonuses, tax refunds, and any extra money must be turned over to the trusee during the duration of the bankruptcy. Chapter 13 can last up to 5 years. Most student loans are not discharged.  If you want to stay in your home, you must catch up in your mortgage.  If you want to keep your car, you need to get current. Whether bankruptcy is right for you depends on your situation.

Also, I filed back in January on a chapter 13, so far 90% of my payments are going into the lawyer's fee and the trustee fee. Doesn't seem right. It is still causing my creditors that haven't received a penny in a year to complain and continue rating me slow pay and owing 12 months payments. Is that illegal? My credit score continues to fall.