Should we file for bankruptcy for $40,000 in debt or pay it?
My hubby makes ,000/year, but over the past 3 years, over 60% of his income has been going towards debt payment alone, meaning we have been living EXTREMELY TIGHT for 3 years now. We are now only down to ,000 and my husband is thinking about filing NOW, after all we have already paid off! Is filing worth it?
We will be talking to a Bankruptcy attorney about this on Wednesday, but I just want to know now, if anyone has any ideas.
Thank You!
Posted August 26th, 2010 in Bankruptcy Q And A. Tagged: 3 years, bankruptcy attorney, debt payment, hubby.
$75,000 * 0.60 = $45,000
So, I’d say stick with it for one more year, since the debt should be paid in full.
Afterward it is paid off, don’t charge anything, and only buy what you can afford to pay for in cash. Also make sure to set aside $16,500 in a 401K if it is available to you, and another $5,000/yr. for each of you into a Roth IRA. After all, you’ve been extremely tight for 4 years by that time, and that will still leave you with an "extra" $18,500/yr.
August 26th, 2010 at 9:25 amHonestly, I would say it depends on what you plan on doing in the next 5 years. By no means is bankruptcy the end of the world but it can make getting credit difficult for a few years. If you’re regularly late paying your bills and don’t think you’ll ever pay them off, filing bankruptcy may not cause much more damage to your credit score.
The attorney would be the best person to speak with but I suggest getting more than one opinion and reaching out to a non-profit org that provides financial coaching.
One of the main things you need to understand before filing bankruptcy is how you got into so much debt, and would you repeat those actions if those circumstances present themselves again. It’s easy to say no but you need to be really honest about your spending habits.
Also, I read your question about your lease. I would speak to your landlord to see if you could break the lease under agreed upon terms (get them in writing). If you aren’t able to, you could break your lease and file for bankruptcy after your landlord has charged you the fees related to breaking the lease. Then, include those fees in your bankruptcy filing. I think it’s good to be upfront with people. I’m sure your landlord will understand your situation and may just require 30 days notice.
Btw, you’ve only made reference to your husband’s salary. Do you work? If not, is there a way you can take on a p/t job so you can contribute to the bills?
August 26th, 2010 at 9:25 amIf your at the point of filing for bankruptcy, you could try calling your bank or your debtors’ collections and ask for a settlement plan.. or once you have filed for bankruptcy they have agencies and departments that handle payment restructuring to further ease your payments.. I used to work for washington mutual, and they can provide you with payment plans depending on your situation..
August 26th, 2010 at 9:25 amBreaking away from bankruptcy clouds can be quite difficult for an average debtor. Indeed you can find it pretty difficult to repair credit post successful filing of bankruptcy chapters.
However you should seek for ways to close down your credit proceeds using apt debt consolidation or debt refinancing solutions. It should be noted that a due debt can lower your credit score and reduce your chances in future for availing a competitive base of loan on the go in a seamless manner.
Learn more about bankruptcy on http://counselingdebt.info/category/bankruptcy/
August 26th, 2010 at 9:25 amHow long will it take for you to pay off all of your debt? If longer than 3 years, and you qualify for Chapter 7, then the Bankruptcy is potentially the better way to go. The mere fact that you have filed a bankruptcy can appear on your credit report for 10 years, but realistically no one will care after 3.
August 26th, 2010 at 9:25 am