Legal Question in Bankruptcy in California

Chapter 7--to file or not to file?

My husband and I currently owe $40K on our credit cards. We are current on all accounts but recently have been coming up ~$500 short at the end of the month. We are back-sliding and foresee major problems. We have 5 yr old twins, rent, have 2 13+yr old vehicles, and are just scraping by. We just visited a Consumer Credit Counseling Service and they told us to eliminate $500 from our living expenses and call them again.They suggested we stop contributing to our savings and retirement plans (currentlly $375 total/month from $3400 total takehome pay) and pay the credit cards instead. Is this wise? We have not yet seriously tried but there's not much to cut. I don't see much difference in filing Chapter 13 and going the CCCS route. It would still mean more hardship than we're experiencing now with no chance of saving anything for 5 years. Are we candidates for Chapter 7 or would such a filing be immediately dismissed because we are not yet behind on payments, don't owe any taxes, or anyone else--yet?


Asked on 3/05/98, 3:39 am

2 Answers from Attorneys
Ken Koury Kenneth P. Koury, Esq.

A typical Chap. 7

First, a chapter 7 is not dismissed if you are not behind in payments. Dont worry about that. You are correct in that there is little or no difference in a 7 or a 13 as far as the effect on your credit. 40k is near impossible for most people to pay back if it is credit card debt with the kind of interest involved. Your case is a very typical chap. 7 that we handle all the time. i would say that you are good candidates for it. the only difficult part will be learning to live without the credit cards which is necessary so you dont end up in the same mess all over again. A Chap.7 can only be filed once each 6 years.

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Answered on 3/05/98, 9:26 am
Mark Markus Law Office of Mark J. Markus

Chapter 7--To file or not to file

There is no requirement that you be behind in payments to file a Chapter 7. In your case, it sounds like a Chapter 7 might very well work for you. A Chapter 13 is also not out of the question and might not be as expensive as you think. In any event, you need to have your situation analyzed. If you would like to explore this further, I invite you to visit my web page and give me a call. I will be happy to assist.

Best wishes,

Mark

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Answered on 3/05/98, 11:33 am


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