I need some information about the People Bankruptcy?

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Q. We have about $36,000 in debt (mostly Credit cards - unsecured) and as hard as we try to work things out with the companies to get a plan to pay it off, we just can't seem to do it. My wife is disabled so she does not work. We were in one of those situations where we borrowed cash against the cards because we needed it for bills, rent and the car. Well now we're in deep and thinking about what to do. I talked to one company that has you stop paying the bills, direct the creditrs to them, and meanwhile you set aside money each month towards the bills. When you accumulate enough to pay off a card, then you pay it completely off. Then this company gets 25% of what they saved you. If your debt on a card was $5000 and they get it reduced to $2000 and you pay off the $2000, then they saved you $3000 and they get $750 (25% of the savings) - Does this sound right to you out there ? I am also seriously considering Chapter 7 or 13 bankruptcy - so we can start fresh (Chapter 7) or work out a payment play (Chapter 13) What is the suggestion out there ? I don't want to lose my property in Chapter 7, and I knwo there are exemptions that can protect our stuff and then we can start fresh.

A. >We have about $36,000 in debt (mostly >Credit cards - unsecured) and as >hard as we try to work things out with the >companies to get a plan to >pay it off, we just can't seem to do it. >My wife is disabled so she does not work. > We were in one of those >situations where we borrowed cash >against the cards because we needed >it for bills, rent and the car. If you file bankruptcy, you are going to have to list all the credit cards and banks to which you owe money. Probably, the debts will be discharged, but then the accounts will be closed. In other words, you will have to figure out how to live without them. >Well now we're in deep and thinking about >what to do. >I talked to one company that has you >stop paying the bills, direct the >creditrs to them, and meanwhile you set >aside money each month towards >the bills. When you accumulate enough >to pay off a card, then you pay >it completely off. Then this company gets >25% of what they saved you. >If your debt on a card was $5000 and they >get it reduced to $2000 and >you pay off the $2000, then they saved >you $3000 and they get $750 (25% >of the savings) - Does this sound right to >you out there ? I don't know. However, while you are "paying off" these credit cards, you probably aren't going to be able to use them. What seems most important is for you to start planning how to get by without credit cards. Some people who work with these companies in good faith in order to pay off their debts, still find that it is hard to come up with the amount each month. >I am also seriously considering Chapter 7 >or 13 bankruptcy - so we can >start fresh (Chapter 7) or work out a >payment play (Chapter 13) >What is the suggestion out there ? I don't >want to lose my property in >Chapter 7, and I knwo there are >exemptions that can protect our stuff >and then we can start fresh. That might not be a bad idea--depending on how feasible it is for you to be able to repay $36,000 and still be able to get by each month. Each state has different exemption rules and some allow you the option of taking the Federal exemptions. So the state in which you reside has a great bearing on how much of your personal belongings will be protected. >I need a quick reply as I want to act soon >on this. >BTW - We live in Florida - so I know the >bankruptcy laws are screwy. You cannot claim the Federal exemption in Florida, so, yes, you are stuck with the state rules. It seems to me that, in Florida, one can keep ones house, but the personal property exemption is only a thousand bucks--very low. Your car, if over a thousand in value, won't be exempt, either. I see a "wild card" exemption (some item you could claim as exempt), but it doesn't specify the amount of the "wild card"--so that may not be much good. Maybe you should consider moving to another state that allows the Federal exemption if you are a renter and have personal property that you wish to keep. The Federal exemption allows $15,000 in personal property (residence) and $8,000 in household goods (with no particular item exceeding $400). There is an exemption for a thousand in jewelry and Wild Card of $7,500 for any unused portion of the property exemption.

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