draggar
12-07-2008, 02:37 PM
My wife and I know several people (~10) who are filing for bankruptcy - some chapter 7 and some chapter 13.
For those of you who don't know:
Chapter 13 - You keep everything. All of your debts (private debt, mortgage, car loans, student loans etc..) are piled into one account and you pay a fraction based on what you make and how much you can afford. On average - the people we know are paying roughly 10%-25% of what they are paying now to pay off the debts.
Chapter 7 - All private debts are erased (credit cards, personal loans, etc..). Bank accounts are not touched unless there is a large amount in there. You do not lose your home as long as you pay your mortgage and if you owe more than what your car is worth then you keep that, too (as long as you keep on paying the payments). Each person is allowed to keep $1000 worth of stuff (resale value) for clothes and other needed equipment (computer, small appliances, etc..).
Now, these people have reduced their monthly expenses significantly - some people are even saving over a thousand dollars a month now. They now have this extra cash - even if they save half of that, they still have several hundred dollars a month to spend, thus now helping the economy.
Yes, you do take a big hit on your credit for 7-10 years but with that extra money saved, you'd be able to put a much larger down payment on a house or car. Some of the people who did it earlier in the year started to get credit card applications ("pre-approved") within 3 months and a good rate (15%-20% - even better than most of mine now).
Sure, people can say that the banks are taking a hit on this but the government is giving them anywhere from $700 billion to $7 trillion while their executives still take six figure (company paid) vacations.
So what do people think about this? With the government trying their hardest to save banks and large corporations, people file for bankruptcy to save themselves?
For those of you who don't know:
Chapter 13 - You keep everything. All of your debts (private debt, mortgage, car loans, student loans etc..) are piled into one account and you pay a fraction based on what you make and how much you can afford. On average - the people we know are paying roughly 10%-25% of what they are paying now to pay off the debts.
Chapter 7 - All private debts are erased (credit cards, personal loans, etc..). Bank accounts are not touched unless there is a large amount in there. You do not lose your home as long as you pay your mortgage and if you owe more than what your car is worth then you keep that, too (as long as you keep on paying the payments). Each person is allowed to keep $1000 worth of stuff (resale value) for clothes and other needed equipment (computer, small appliances, etc..).
Now, these people have reduced their monthly expenses significantly - some people are even saving over a thousand dollars a month now. They now have this extra cash - even if they save half of that, they still have several hundred dollars a month to spend, thus now helping the economy.
Yes, you do take a big hit on your credit for 7-10 years but with that extra money saved, you'd be able to put a much larger down payment on a house or car. Some of the people who did it earlier in the year started to get credit card applications ("pre-approved") within 3 months and a good rate (15%-20% - even better than most of mine now).
Sure, people can say that the banks are taking a hit on this but the government is giving them anywhere from $700 billion to $7 trillion while their executives still take six figure (company paid) vacations.
So what do people think about this? With the government trying their hardest to save banks and large corporations, people file for bankruptcy to save themselves?