Expert: Regan Shinski - 10/20/2010

Question
Mr. Shinski,
    Over the last 8 years, since my divorce, it's been getting harder and harder to pay my bills. This is a terrible time because I'm 60 and this is a time I should be looking to retirement, but I don't know what's gonna happen now. I have begged and borrowed from everyone and everywhere. It has now become a crisis and I have to file chapter 7 bankruptcy....and I know it's gonna kill my credit. I have 2 questions: What will disqualify me from being able to file Chapter 7? Also, what's the biggest difference because those lawyers that charge a large amount to file and those that advertise for those cheap amounts? Isn't the procedure the same?
    Thank you for taking the time to read and answer this. Paula

Answer
Hi Paula:

I'm you are in this situation.  There are several disqualifying factors for bankruptcy including many obscure ones.  The one that affects most people is qualifying income.  Your monthly debt obligation has to be a certain percentage to your income.  If you make too much, you can only qualify for chapter 13 repayment.  Other disqualifying factors are fraud, previous bankruptcy in some cases, and the type of debts.  For example, tax liens and student loans cannot be discharged - in general.

The different in attorney fees is simply market place economics.  Some can and do charge more, some do additional services, some have add-on costs, etc.  It really is just a matter of asking questions and getting a written contact to do the services you want.

I will say that a large percentage of my questions are people that have really been messed over by poor bankruptcy filings.  You need to ask a lot of questions and gauge the expertise level of your counsel.  Obviously get references and check with the ABA, BBB, etc.

I must throw in a few short words about not filing bankruptcy.  I know there are many cases where it is needed, so I'm not one that is dead set against it.  However, another option to consider is to selectively letting your debts go.  You stop paying them and deal with them through a series of delays, credit repair, settlements, and other factors.  In the interim, you can either save up money or pay off the other debts.  Once it gets to collection agencies, you can send letters to stop the collection phone calls.  The idea here is that it obviously saves your credit a little and saves a lot in attorney fees.  You are also protected that you can file bankruptcy if it gets to the point that you are being sued.  The reality is that is it likely some of the debts will simply be written off and never pursued.  Other may go to a collection agency and you have options there to fight back, delay, settle for pennies on the dollar, or - again, file bankruptcy as a worst case scenario at that point.  It's just something to consider.

In ANY case - bankruptcy or not - you are going to need to complete significant credit repair.  You should start this immediately if you have late payments reporting.  Remember the goal of credit repair is to clean up your credit by highlighting the violation of federal law.  These violations are punished by monetary compensation to you.  In credit repair, we use those violations to delete the account and OFFSET the debt!  This is often why bankruptcy is not always needed.

Go to WWW.FICOFIGHTER.COM for more information.

Good luck in whatever path you choose, I hope this helps.

Regan

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