Do I file for bankruptcy?
Let go from my f/t position and am now working p/t, but not making any money! I am currently 5 months behind on my mtge and have over 30k worth of debt that I can no long afford to pay. I have checked my credit score and it is 578..just 5 yrs ago I at 800. I am seriously considering filing for bankruptcy(chpt 7)…at this point I feel as though I will have nothing to lose. What impact will this have on my life?? Will I be able to purchase another home within the next 7 yrs or will my credit be ruined forever?? Will I even be able to get an apt or should I begin looking into shelters for myself and my 10 yr old son. LIFE!!! HELP!!!!
Thank you to everyone that took the time to answer my question. I was able to feel the sincerity and effort in your answers!! Again, thank you for giving me a different perspective. Ugh…LIFE!
I agree with the previous post that you problem is an income problem and not a debt problem. But I think I can help you answer the questions that you have and at least give you some things to consider. I am sorry to see that you are in this situation. Financial worries are some of the most difficult that individual face, especially if you have children. The constant worry and blame can greatly reduce the quality of your life. This bad economy doesn’t help.
First, you likely don’t need to file bankruptcy yet. You may be able to escape bankruptcy all together depending on how your creditors work with you. Let’s start with your home: Right now banks a doing everything they can to keep people in their homes. You stated that you are already 5 months behind. If you haven’t already, you need to do what you can to have your loan modified through the bank. If they refuse to work with you, then eventually you will just move out of the house and let it go. Make the bank deal with it. But still this isn’t bankruptcy. The bank would be stuck with the home (which they agreed to take a collateral for the mortgage) and then the bank would be forced to sell it, likely for less than you owed them. They would then need to come after you for the difference by filing a claim against you. But still, you would not pay it. Then they would need to try to file a suit to claim it, and then you still would not pay it because you would file bankruptcy at that point. This could takes years and be a large expense to the bank. Of course, they also know that your out is bankruptcy and will likely not come after you. But you see, until all that happens, you don’t have to file bankruptcy. You do have to deal with the constant calls from the creditors. But the way see it, if you don’t have money, there isn’t anything they or you can do about it. Times are tough, and banks, who were bailed out, just need to learn to deal with it as well.
Your credit cards (which I assume is the 30K) is basically the same situation. I would pay my mortgage over any credit card because the credit card is unsecured debt. Once again, the credit card company knew there was a chance you could default. They would also have to file a claim against you and then try to collect. You would, of course, file bankruptcy if it ever got to that point.
Regarding credit: Yes, all of these things will impact your credit score and it can cause problems for you down the road. Even obtaining car insurance can be difficult if you have bad credit. But bankruptcy isn’t the end of the world, but the chance to start over. And frankly, once you file bankruptcy, you should learn to live on cash and not worry about even having a credit score.
You would be able to purchase another home in the event of bankruptcy, but you may pay higher interest rates and you wouldn’t be able to borrow as much. But again, isn’t that a good thing? Don’t borrow at all and rent…the housing market is going to be down for next decade not the next year. Owning a home isn’t as great of an investment as people think when you factor in repair, interest, upkeep, and taxes. You WILL be able to get a apt for your son and you should you need it and yes shelters are an option as a last resort.
Don’t be afraid of bankruptcy, but I don’t think you need to file it just yet. See how this plays out and wait until they push you into bankruptcy. Also, if you don’t see your income improving anytime soon, save your money as best you can for you and your son. Remember, food, shelter and clothing, always comes before anything else, like credit card bills. Pay what you can on your mortgage so that you can extend the time that you remain in the home. Most banks will now work with you if you can make some payments, but the credit cards can just wait for now.
Good luck,
August 22nd, 2010 at 4:37 amStephen
No.
Even if you file bankruptcy, you still have little to no income. You still can’t eat, pay utilities. Only now you dropped an atom bomb on your credit.
You don’t have debt problem – you have an income problem.
You are working part time. If you can’t find a full time job then you need to get 2 more part time jobs. In the mean time, spring is coming – put out flyer’s offering to do yard work, cut grass. If you are "handy" put out flayers offering to be "rent a hubby" and do small repairs/chores. If you are a member of a church, advertise in the church news letter.
You own a computer – so type up a flyer. Print it off. You don’t need hundreds, just a few to post around the neighborhood, maybe post in the grocery store. Probably 20 is all you need- no more than 50. If you don’t want to print them off your computer, would your church let you make copies of it there? Can a friend make copies at their job? If push comes to shove a black/white copy at Office Max or your local library is not expensive.
You can usually run an add in the church news letter for free.
Look around the house, what can you sell? Hold a garage sale. You get some extra money and get some of the clutter out of your life.
It’s time to start thinking out of the box. What can you do, legally, to get more money coming into your home.
Bankruptcy does not get money coming in. All it does is get rid of the debt you have, and it won’t do anything for the mortgage. But you will continue to accrue debt because you don’t have money. So, a year from now…you’re in the same boat you are in now only now you’ve declared bankruptcy and completely destroyed your credit rating. And with the changes in bankruptcy law in 2007, you can’t declare bankruptcy again for quite some time. This law was put in place to stop serial filers.
As it is, focus on paying for necessities – food, clothing, shelter, insurance. If you don’t have enough to pay the credit cards, don’t pay them. Eventually they will sue you – but hopefully you’ve been able to increase your income by then and can go back and straighten out the mess.
You may want to check out Dave Ramsey. He has several books and a radio program. You can go to his web site and find out what station in your area has his radio show. Listening to his radio show is free. You can get books from his web site, or heck, call into his radio show – maybe he’ll give you one. You can try to check out his book (The Total Money Makeover) from your local library. There is no quick and easy answer here. You’re going to have to cut your expenses and get your uncome up. http://www.daveramsey.com
August 22nd, 2010 at 4:37 ami don’t agree with MSDA, because even to make flyers you need money, i do understand the situation i’m the only one working at home, my husband holds an ac and contractor license, he can’t find any work either, i’m ready to file for bankruptcy but attorneys want $1500, i don’t have it. Your credit? who cares? it is already ruined; when i called banks i tried to ‘work a deal’ because i knew i wasn’t going to be able to continue paying, due to interes hikes, they said my credit history was good, but it didn’t influence on the payments i was supposed to made. screw good credit, in the end the only one who benefits is the banks not us, plus once you are ‘debt free’, you will be ready to start again, and never apply for a creditcard again,
all it does is ruin your live and the ones you love
August 22nd, 2010 at 4:37 amYou need to earn more money. That solves the problem. How does filing bankruptcy do that?
August 22nd, 2010 at 4:37 amIf you have to ask the question, then the answer is probably no. Bankruptcy should really only be considered if you are absolutely certain that you have to (not merely should) file.
Bankruptcy ruins your credit for 7 to 10 years. Even after that time, you will still not have good enough credit to obtain a new mortgage; you will merely no longer have a bankruptcy on your credit report. To get a mortgage, you need to have good things on your credit report, and you cannot get those things while the bankruptcy is still on your credit report, so you need to allow several additional years to build up good credit after the bankruptcy is removed.
You will be able to get an apartment, just not one owned or managed by someone who runs credit checks. You will need to find an apartment somewhere that does not check credit. And where you can afford the rent.
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August 22nd, 2010 at 4:37 am