I am on Social Security Disability due to a mental condition which will most likely be declared "permanent" by my doctor. In the past, when I was able to work, I accumulated $80k in credit card debt with the intention of paying it all back. I haven't worked since 2004 due to this condition, but did not have it properly diagnosed and file for disability until 2006. From 2004 to 2006 I lived off my credit cards as I was unable to work. The last payment I made on the CC's was in 2006. I was approved for disability in October 2007 which will be retroactive to when I applied in December 2006.

I rent a place to live, I own a 1998 car that may or may not fall under my state's bankruptcy allowance. I am unable to work and the only income I have coming in is my disability. I have $120k in student loans hanging over my head that I have not been able to pay down and understand that my disability benefits CAN be garnished by my student loans if I default.

That is the background information. My question is, should I file for Chapter 7 now or can it wait? I know I am eligible for Chapter 7 but do not have the money to pay a lawyer at this point. I receive letters from the collection companies regularly, but have not received a summons. Should I wait until I receive a summons before contacting an attorney to file Chapter 7? If I do not, what kind of judgment can a credit card company have rendered against me as all I have is an old car and disability benefits? Will they put a lien on my car? Because of my condition, I *know* I will never be able to pay this debt off and feel horrible about the whole situation. I just don't know what to do. To file for bankruptcy or not?

Thank you in advance for any help.

Personally I would wait. Often once it is in court they will agree to a much lower amount than they are demanding now and they can not garnish social security money (except for government debts and student loans). I am sure others here can give you better advice on what they can and can not do as far as your car, bankruptcy and so forth.

Thank you for the quick response. I'm so nervous about waiting on the bankruptcy because I don't want to do the "wrong" thing in the eyes of the law, whatever that may be. But at the same time, I don't have the $$ to declare bankruptcy right now and would rather wait if at all possible.

Your state Colorado has a six year statute of limitation which means that from the last payment you made they have six years to try and collect more. After the six years from your last payment to them they can still try and get money out of you but wouldn't be able to actively go after you for it.

You may be able to discharge student loans, also; the test used to be whether repayment would constitute an undue hardship; don't know if that's been modified or not. You should spend some time getting all of your creditors' names, addresses, and amount owed to each. Also, is there any possibility of you inheriting property? If so, your portion most likely will wind up paying your debts.

For student loans you can do hardships and deferments stalling payments due.
But I do not know if you can totally get out of paying.

No chance of inheriting property I'm afraid. I sent away for my credit report several months ago, so that should reflect my creditor's names, etc, but now I have different collection agencies contacting me for the debt. By collecting the creditor's names, addresses, and amounts are you referring to the collection agencies or to the original credit cards?

Thank you!

For student loans you can do hardships and deferments stalling payments due.
but I do not know if you can totally get out of paying.

They can be discharged for people who are "permanently" disabled and once that application is filed there is a 3 year waiting period before the loans are discharged. I will be pursuing that later if I am eligible. Right now I am more concerned about being taken to court for my CC debt.

It is good practice to list both creditors (including account numbers) and collection agencies.
The bankruptcy discharge is something like this: Under certain circumstances you can discharge your obligation to repay a student loan in bankruptcy. The criteria is set out at 11 U.S.C. 523 (a) (8). Currently your loan may be discharged only if the first payment became due on the debt at least seven years before the bankruptcy was filed.
There may be a separate dischargeability law or rule for disabled persons, without filing bankruptcy: All student loans authorized by Title IV of the Higher Education Act can be canceled if you die or become permanently and totally disabled [but you cannot be considered disabled on the basis of a condition that existed when you applied for the loan unless it has substantially deteriorated, 34 CFR 682.402 (e)].
More info at : Defaulted student loan (http://www.washoelegalservices.org/student.htm)

This information is very helpful. Thank you, George. I meet both criteria, so perhaps it is in my best interest to declare bankruptcy sooner than later. Sooner meaning in the next year. I really can't do it any sooner than that. I'm going to have to beg, borrow, and steal (well, not steal. Sell stuff maybe) to get the $$ to pay a lawyer.