Should I file for Bankruptcy? OR try to pay off my debt?
I’ve recently been contemplating filing for Bankruptcy (Ch. 7) because I am in so much debt it hurts my brain to even think about it!! I am currently over k in debt. Most of the accumulated debt I owe is from past bills I ran behind on due to some unnecessary circumstances. Right now I am attending school full time and working part time making a measly 20/month as my take home pay. With my salary I pay for all the usual bills: rent, utilities, wsg, car insurance, car note, and use whatever I have left over to pay down my debt. For the past year and a half I haven’t opened any new credit accounts and I’ve been on a tight budget. I take full responsibility for all of the finanical debt I put myself into but am stressed and afraid that some of the creditors I owe will soon take legal action (as some have stated in their threatning letters). I’ve attempted to set up payment plans and have tried to negotiate a reasonable payment plan with my creditors but even with some agreeing to this others are not as willing. I am just seeking some advice because my credit is already horrible and even if I decide to paydown my debt it will take well over 5 years relinquish. I figured if I file for Chapter 7 it will stay on my credit just as long as if I tried to paydown all my debt on my own.
Big T: THank you very much for the advice and the many suggestions. I have been trying to stay optimistic about the whole ordeal and I have to give it up to you because I understand first hand how hard juggling work and going to school full time can be. I understand my debt is nothing compared to others but it is still a debt I have to take care of. I appreciate the encouragement and will look into other wage earning opportunities and try other ways to cut back!
Barnaby J: Thank you, I didn’t really factor in my wage earnings after college because they are still unbeknowest to me. (maybe if I looked into a crystal ball I’d know for sure..lol) But, since you have mentioned it I am predicting my salary wages will increase quite significantly after college which will help me drastically in cutting my debt!! However, I am not trying to rely entirely on those predictions! Thank you!!
If you have a house and if there is equity you can lose the house as creditors go after any asset that is not exempt in bankruptcy. Your other property that is not exempt can also be liquidated.
The exemption amount is based on the laws of your state.
If you have modest assets or make over $45,000 a year, also go see an asset protection attorney for advice.
Bankruptcy is the most serious financial move one can do, and I would not do anything without legal consultation first. Many BK and asset protection attorneys do FREE initial consultations.
See my prev posts on this related question: There are a ton of links from my posts below for BK FAQ that can help educate yourself about this process. But still go get a free legal consultation.
Bankruptcy or consolidating?
http://answers.yahoo.com/question/index;_ylt=AqohgqBgHfrN9UbefDextKHty6IX;_ylv=3?qid=20080424115045AANNszM&show=7#profile-info-q6b38ZN8aa
How does bankruptcy work?
http://answers.yahoo.com/question/index;_ylt=AqPgRngYO4igq4juN1zxJdLty6IX;_ylv=3?qid=20080424103308AA5zjMm&show=7#profile-info-3J2HG4SJaa
Good Luck!
July 1st, 2010 at 2:12 pmDon’t do either! Just avoid Collector’s Calls for eight years and your credit will be back to normal.
July 1st, 2010 at 2:12 pmPersonally, I’d declare Ch. 7 and be done with it. You declare Ch. 7 and all your unsecured debts will be wiped out and you can move on with your life. Don’t worry about your credit rating either. If you have a ton of delinquencies, a BK won’t drop your score that much.
It’s also important to note that BK is not the dark cloud people say it is. If you do your planning, you can have decent credit within 1-2 years of filing. I know people who have done a Ch. 7 and financed cars and homes with pretty good rates in that timeframe.
But bottom line is that you can move on with your life after a Ch. 7, rather than spend the next several years trying to pay off these debts.
July 1st, 2010 at 2:12 pmin all honesty i’m a debt collector … i work with a debt collection agency ..
July 1st, 2010 at 2:12 pmno collection company or agency can take LEGAL ACTION against you .. in my company we tell that just to make debtors feel the pressure and pay off the debt asap ..
well i can help you if you want to get away from your debt but firstly you have to let me know whats the name of the debt collection agency thats harassing you ..
I want to start this off by telling you not to file for bankruptcy!
It is never a good idea to file for bankruptcy, especially with around 15k of debt. That is such a little amount of debt. You could pay that off in no time. Creditors are going to call and threaten you. It will be a little bit before they actually take any legal action. The best thing to do is keep the communication up. Let them know you intend to pay off your debt, you just need a little time.
Now I currently work a 40hr full time job, a 25hr part time job, and I go to school between 6-12 hours a semester. I mean if anyone should be stressed it should be me. You may need to pick up a little bit more work in order to keep your self out of court. (but keep in mind, court is not all that bad. The worst thing that could happen is your wages get garnished by 10%)
I recommend getting more hours or a part time job. A good job for students is working part time for a Hotel as a receptionist. Most of the time you can work on home work while waiting for guests. Any extra work would help keep you out of court though. Another thing is to cut back on your monthly budget. Examples: buy cheaper groceries, cut eating out, use less utilities ( turn electronics off, cut back on long showers…etc), cut back on unneeded driving… i am sure you get the point.
Another good idea for you is to visit Dave Ramsey’s website. He is a debt counselor, and I believe he could give you some great advice. There are also inspirational stories about people climbing out of 200k worth of debt. There is also a link on the website to listen to his show.
Hang in there and fight your way out!!
July 1st, 2010 at 2:12 pmYour school debt (loan) cannot be wiped out. 15k is a number that you should be able to overcome. Will your earnings potential increase when you finish school? What will you make? Have a hard look at this.
Also, contact your creditors, don’t wait for them to come to you. Tell them you simply can’t afford your current payments and you would like to work out a plan where you pay them an agreed amount every month that you can live with. Good luck.
July 1st, 2010 at 2:12 pmIt is my understanding under the newer bankruptcy bill they don’t allow you to file Chapter 7 so easily and they work to force you to pay it back if at all possible.
You could find if you file they will dock your pay to pay the debt and you lose any control. The court process will control you.
Best to go talk to a bankruptcy professional and learn your options and the effects of your choices. It is not like you can just file and get a free ride on the debt.
But first there is debt counseling that may have more success at working out payment plans. They have more influence. The service is free and funded by lenders and the government. (Avoid similar ones that charge a fee). I don’t know the number but check it out.
Good Luck, and kudos for admitting your responsibility for it.
July 1st, 2010 at 2:12 pmIn response to Thor’s answer….it is not true that getting a chapter 7 is extremely difficult. The truth is that in the first 6 months of this year, over 900,000 bankruptcies were filed, and nearly 60% are Chapter 7’s. The figures are available no the net. So please ignore the responders who pass on this incorrect information.
Also, I just love it when people say $15,000 isn’t a great deal of money. But when you are on a very tight budget and struggle to find $200-$300 to cover bills, it is a huge hurdle! And as you point out, it’s very difficult to get all of your creditors to work with you.
What I advise people is this. Sit down and create a very severe budget. No dining out, entertainment or frills. Cancel the phone and cable TV. Find every possible way to save money.
Then contact all of your creditors and work out the best settlement offer. See if you can get them to freeze the interest and late fees and possible spread out payments over 5 years.
Yes, pretend you live in the Land of OZ and everything is just a rosey color!
The problem is most people rarely get this cooperation. If you can’t pay off your debts within 5 years after all of this, then you need to consider bankruptcy.
But I really do hate to see people file for only $15k. The legal fees alone fill cost around $1000-$1500.
July 1st, 2010 at 2:12 pm