Should he file bankruptcy?
My brother is 23 and makes about ,000 a year and has over ,000 in credit card debt. I don’t know how it happened, but it did. He still lives at home with my parents. Right now, with his level of debt, he can’t afford to live on his own. He wants to move out and get a place of his own though. Should he file for bankruptcy to help him out of this? Or should he stay home until it’s paid off, which will take many years.
Posted September 4th, 2010 in Bankruptcy Q And A. Tagged: bankruptcy, brother, credit card debt, parents.
I am a bankruptcy lawyer and if he can pay off his debt by working, even two jobs, by living at home with his parents, he should do so. Someone who gets into $20,000 debt with only $30,000/year in income is not responsible enough to live on his own. Just because bankruptcy would solve his immediate problem does not mean that it would solve his underlying problem, which seems to be some psychological need to spend more than he has. If he were to file now, he would repeat this behavior and in all likelihood seek bankruptcy relief again in the future. And now, he is limited to doing so only once every 8 years.
Cut up those cards now. Pay more than the minimum balance on all of them every month. Concentrate payments on the highest interest rate card first. Negotiate lower interest rates with every credit card if you can. Be persistent, they may not agree at first. Tell them brother is seeking a repayment plan outside of bankruptcy. Later, they may offer him a lump sum settlement. So he has an incentive to pay these down and to save some money as soon as possible.
Brother has to establish a budget. Brother has to live only on cash in his pocket. Someday, when he is more responsible, he can use a debit card. Brother has to cut out things from his life he doesn’t absolutely, positively, need.
Brother can also get credit counseling which, in his case, might help, as well as financial education, which in his case, definitely would help.
September 4th, 2010 at 9:24 amMom & Dad should take his paycheck, give him an allowance and pay off his debt with the rest. If he files bankruptcy, it will haunt him for the next ten years and make it harder for him to get credit again. He needs credit counseling.
September 4th, 2010 at 9:24 ami completely agree with other responder–filing for bankruptcy will haunt him many years to come and it is never a solve-all. He is better off enrolling in a debt program, consolidate credit card payments…it will be rough for some time but paying it off is the way to go and you learn from your mistake in the process. Another small but effective tip is to have his employer direct deposit his paycheck, perhaps even into a joint account that can be monitored.
September 4th, 2010 at 9:24 amNo
September 4th, 2010 at 9:24 am