Ask Me Help Desk - Not sure what to do

I am getting ready to file bankruptcy since I have about 30k in debts, and growing every day in interest. If it weren't for the fact that I have another 60k in private student loans that I have to start paying on this September, even though I am not yet graduated, I would try to pay the 30k. I just do not have the money to pay it all. My husband also has about 8-10k in unpaid medical bills. I am trying to figure out if it would be better on our credit for him to file as well. He never has had good credit, and I think it will take us forever to pay 8-10k since I will have about a $500 a month student loan payment starting this September. Does anyone have any idea if it would even make a difference on his credit score if he files bankruptcy? I have been told that we should not have a problem getting a mortgage after we both file since we will not be able to file for another 7 years. We would like to get a house soon since we are currently throwing our money away in rent. Any input would be greatly appreciated.

My advice... Do NOT do it!

Be tough. Pay what you can and do not pay the rest. Everyone visiting this forum is dealing with the same problem. All bankruptcy does is keeps you from being bothered by the collectors. If you want to preserve your credit (though it will be a little hurt by negative marks) just try to work out payment arrangements with your creditors on your own... I've made the mistake of using credit counselors too... they stink, and cost even MORE money.

Bankruptcy is about the WORST thing you can do for your credit. It's the nuclear bomb of credit destruction.

If you're like me, I'm 34 and still renting. I hate it, but I'm waiting for one more major mark to fall of my credit later this year and we have a bank that will give us a loan. We could get one now, but I refuse to accept a loan from the people that take advantage of people like you and me to charge us twice the interest.

I didn't file for bankruptcy, but my brother did. Our situations are different. My brother's case was more like you; he had student loans, medical bills, car payment, credit cards, etc.

I STILL would not have filed, even if I was him. I was carrying almost $50,000 in debt... I"m down to around $15,000 now. It does take awhile, but I seriously suggest to pay what you can and just don't get an ulcer over the rest. You just "don't" pay it. It's that simple.

Chances are you'll be bothered by collectors and may eventually get sued, but if you take the time to read this thread, we've all pretty much been through this. You go through the motions and just deal with the phone calls (I recommend caller ID or a phone service with call block - makes life a little easier).

I really would think twice (or even three times) about filing bankruptcy. You'll get a lot more mercy as a person that couldn't pay two or three bills, as opposed to a person that filed bankruptcy to get out of ALL your bills. I don't think you can get out of student loans with bankruptcy, so you'll still have to pay those, but prioritize your list and remove the creditors that are less willing to understand your situation and work with you.

If they give you the old crap like, "you need to pay your bills", then mark them for non-payment. If they're pretty cool and they say, "well, what CAN you pay", that's a good sign that they'll help you through the rough times and work with you to repair your credit after the fact (if you still cannot make even smaller payments on time).

Good luck... we're all happy to help when we can. Ask away.

My $ .02 worth though... DO NOT file bankruptcy, but you'll also want to be prepared for a little bit of pesky calls once in awhile. Unfortunately, most Americans feel OBLIGATED to answer the phone when it rings. :)

Ever try ignoring the phone just to revolt against the knew jerk instinct to jump up and grab the call? Try it! It's harder than you think. ;)

Quote:

Originally Posted by bretb

My advice... Do NOT do it!

Be tough. Pay what you can and do not pay the rest. Everyone visiting this forum is dealing with the same problem. All bankruptcy does is keeps you from being bothered by the collectors. If you want to preserve your credit (though it will be a little hurt by negative marks) just try to work out payment arrangements with your creditors on your own... I've made the mistake of using credit counselors too... they stink, and cost even MORE money.

Bankruptcy is about the WORST thing you can do for your credit. It's the nuclear bomb of credit destruction.

If you're like me, I'm 34 and still renting. I hate it, but I'm waiting for one more major mark to fall of my credit later this year and we have a bank that will give us a loan. We could get one now, but I refuse to accept a loan from the people that take advantage of people like you and me to charge us twice the interest.

I didn't file for bankruptcy, but my brother did. Our situations are different. My brother's case was more like you; he had student loans, medical bills, car payment, credit cards, etc.

I STILL would not have filed, even if I was him. I was carrying almost $50,000 in debt... I"m down to around $15,000 now. It does take awhile, but I seriously suggest to pay what you can and just don't get an ulcer over the rest. You just "don't" pay it. It's that simple.

Chances are you'll be bothered by collectors and may eventually get sued, but if you take the time to read this thread, we've all pretty much been through this. You go through the motions and just deal with the phone calls (I recommend caller ID or a phone service with call block - makes life a little easier).

I really would think twice (or even three times) about filing bankruptcy. You'll get a lot more mercy as a person that couldn't pay two or three bills, as opposed to a person that filed bankruptcy to get out of ALL your bills. I don't think you can get out of student loans with bankruptcy, so you'll still have to pay those, but prioritize your list and remove the creditors that are less willing to understand your situation and work with you.

If they give you the old crap like, "you need to pay your bills", then mark them for non-payment. If they're pretty cool and they say, "well, what CAN you pay", that's a good sign that they'll help you through the rough times and work with you to repair your credit after the fact (if you still cannot make even smaller payments on time).

Good luck... we're all happy to help when we can. Ask away.

My $ .02 worth though.... DO NOT file bankruptcy, but you'll also want to be prepared for a little bit of pesky calls once in awhile. Unfortunately, most Americans feel OBLIGATED to answer the phone when it rings. :)

Ever try ignoring the phone just to revolt against the knew jerk instinct to jump up and grab the call? Try it! It's harder than you think. ;)

Well, bankruptcy not only will make the creditors leave me alone, that will also be less I have to pay. I am already ignoring the collectors, and have been for about a year. I do love that caller id. I also know that I cannot ignore them forever. I either have to pay them or file bankruptcy. I cannot pay them. I have 60k in private student loans with a high interest rate, not to mention, by the time I am done with school I will have an additional 30k in federal student loans, and the 30k in credit card debt, and a repoed car they still want me to pay for. I cannot handle all of this. I know I am stuck paying these student loans, and it scares the out of me to think that I am stuck paying on these for at least 20 years. That is a LONG time. I have to forget about the credit card debt so that I can concentrate on the student loans. I refuse to pay approximately $800 a month for at least 20 years! As far as my husbands credit goes, I don't know what to do. He has never had good credit, and has two judgements on his credit. I am thinking that filing bankruptcy couldn't do much more harm to his credit than already has been done, but I am not for sure.

Also, I did try and do a debt settlement program. That was a waste of $1200! All that did was get me sued. As soon as Discover card saw that I was trying to participate in this program, I was served with a summons. Now I have a judgement against me. It is a mess!

Quote:

Originally Posted by Miranda

Well, bankruptcy not only will make the creditors leave me alone, that will also be less I have to pay. I am already ignoring the collectors, and have been for about a year. I also know that I cannot ignore them forever. I either have to pay them or file bankruptcy. I cannot pay them.

I am thinking that filing bankruptcy couldn't do much more harm to his credit than already has been done, but I am not for sure.

Well, you may want to get some more opinions on this. I think, that bankruptcy will make your credit MUCH worse. You say that you cannot ignore the collectors forever and that one day you'll HAVE to either pay them for file for bankruptcy... Who told you these were your only two options? (a bankruptcy attorney by any chance?)

I did not do either. I refused to file bankruptcy and did not pay the collectors. They say the balance is over $30,000 now for one credit card. They sued me and call about once a week. I have AT&T Callvantage service so I can block the call (send it immediately to voicemail without ringing the phone) so it makes it much easier to deal with.

Obviously, bankruptcy is YOUR decision to make, but I feel that you'll likely regret that decision, if you make it, in about five to six years when the negative marks would ALMOST be falling off your credit, but since bankruptcy stays on for ten years, it will be much longer.

I was able to work out settlements with a couple creditors for 35% of the owed balance or less. I felt bad about that because I owed the money, but was out of work, so what can you do? One of the other credit cards I stopped paying on voluntarily while working because they double the interest rate for no reason. I don't feel bad about not paying that at all.

I just am very glad that I stuck through the tough time and was able to work out some settlements and the creditors that were hard nosed debt Nazi's, those were the one's I chose not to pay. They eventually go away, but then when the account gets sold, you'll likely hear from the new collector for awhile. I just ignore the call, or ask them to send me documentation showing it's my debt, etc. Never confess, yeah, I owe you the money, regardless.

Good luck either way. I recommend at least asking around more before filing though. Once you do that, you can't go back. Ten years of unforgiving credit destruction. I'm glad that I only had two or three bad marks on my credit. The guys that I worked out settlements with are sparkly clean now that the settlement amount was paid, but I worked that out before paying.

I explained that if I was going to pay ANY portion it was more to save my credit than to pay any debt owed. When they know that's your motive to clean the credit file, you can ask for a written agreement that once the settlement amount is paid, they'll remove the account or mark it as current.

:) Best of luck to you!

Bret, I appreciate your input. This gives me a lot to think about. Maybe I am just in a hurry to get this all past me and not have to worry about it anymore. I am extremely stressed about the private student loans. I was very young when I got them, and did not know all of the details of the loan. I think it is crap that they can rope you into a life long commitment like that at age 18! I didn't know what I was doing, and unfortunately, I did not ask for any help from my parents since I thought I was Miss Independent. Live and learn right?

Live and Learn is right, but remember, that's what we're ALL doing (even though without financial trials). I'm pretty content my trials are financial and not health related or legal/criminal. :)

Student loans (in my opinion) shouldn't be that big a deal. Do you mind if I ask what APR you're at?. or if you have elected to consolidate student loans yet? I also agree that it should not be a life long commitment. It's usually a 10 to 15 year payoff period. Because I've dealt with credit card issues and not student loans, I'm a little ignorant as to how you get into a life long commitment...

Did you work out a payment arrangement with a company or something?

My wife and I consolidated our loans into one loan we're both responsible for and locked in a 4% interest rate. At that rate, I'm willing to pay on it the rest of my life (that's a CHEAP APR), but I think it should be paid in a total of 10 years (or maybe it's 15, not sure).

A guy I work with has over $100,000 in student loans and that's his painful story, but I don't understand how he got so much debt, or why that stresses him so much either. It is a higher level of commitment because the loan is guaranteed by the federal government, therefore they pass laws to twist your arm so more people repay, but that makes more sense why it can be more stressful (like making sure your house payment is made so you don't end up homeless).

Keep in mind, regardless of how dumb we all are when we're 18, a lot of us stay dumb for many years, some of us our whole lives, so life is definitely a learning experience, but that's what it's all about... Gaining experience (good and bad - personally I learn more from bad experiences) is why we're here. Keep in mind that though we would all like to avoid bad experiences, they do teach valuable lessons and build character. :)

... sorry, got a little inspirational on you there for a sec. ;)

If you have not already consolidated your student loans (or refinanced as is sometimes referred to), I'd like into taking some action like this (if it is an available option). This can allow you to lock in a better interest rate and lower your payments (though it is by starting the payoff period ALL OVER again). If you can do that, it may free up a little more money to put towards other bills, but make sure to pay secured debts first. They'll hurt more if you have to default on the loan. :)

If the student loans are stressing you the most and you cannot consolidate/refinance, then keep in mind that you cannot be reasonably expected to surrender your liveliness in order to meet your financial obligations. I'd call the creditor and attempt to work out more reasonable payment arrangements. $800 per month seems ridiculous to me. That's a house payment for crying out loud! (well, almost)

Explain to the creditor that you're unable to continue to pay that amount each month and see if you can work out a better payment arrangement (example: $600 a month for 18 years instead of $800 for 15 years) or something like that. They should be OK with that since the longer you take to pay it, the more you'll end up paying in interest. It spread the pain out over a longer period so that it's not so concentrated.

All in all, try to take life with a grain of salt. Stress is truly self inflicted as it's triggered by the way that YOU REACT to life's trial as opposed to be triggered from the trial directly.

100% of us CANNOT control what happens to us, but we're judged by the way in which we REACT to the stimuli around us. Whether we're born into a weathly family, dirt poor, born blind, or without a leg... No matter what "hand" life deals us, we have no control nor accountability over that, but how we react to the "hand" life deals us THAT is what defines us and what we're accountable for.

Think, you've made some poor choices regarding finances, while some guy with perfect credit and who has always paid his bills, might never have purchased life insurance and when he's killed in an auto accident on his way home from work one day, leaves his wife and three kids with no means of income.

We all make poor judgements in DIFFERENT aspects of our lives all the time. Human nature is to think that everyone else has control of their lives and are doing everything so perfectly, when in reality, we're all going through similar experiences though they're subtly different.

Try to focus on the positive aspects of your life. I know very little about you, but perhaps good health, a dependable car, loving family, faithful friends, nice clothes or just good communication could be the things that are right in your life.

In this forum, most of us have found ourselves in financial hardship, but someone posting on here, maybe 10 times the father I could ever be, or twice the manager I could ever be. Don't beat yourself up. This life is the time to make mistakes and more importantly to learn and experience from them. Whenever I'm going through a particularly stressful time, I think, "cool. This is why I'm here. There's some reason I'm going through this, though I may not know immediately what lesson I am to learn, hind-sight in a lot of cases reveals a lot of what we've learned from our experiences."

In about 10 or 20 years, you'll look back and think, "gosh, I got so stressed during that dark period of my life." But you'll be glad it's over, that you survived it and you'll likely truly value the experience and lessons learned. Especially, as you, in turn, lend hand to others who may have reached THEIR turn to go through those trials that you will understand so much better, having lived them. This empowers you to be a rather valuable helper to such an one in that situation. :)

Ok, I need to step down off my soapbox and get into work here soon.

Chin up! ;)

Thanks for your words of wisdom Bret. If you look at it that way, I guess things could be worse. As far as my student loans go, private student loans are different than federal student loans. My apr is 10%, and I was able to get the loans based on my credit (I used to have good credit) Now that I do not have good credit anymore, I cannot consolidate into a lower payment or apr. The reason you were able to consolidate your student loans into such a low apr is because they are probably federal student loans. If mine were federal I would not be so worried. Also, I have to pay the loans on their terms, or they can bump my apr even higher since I did not keep to the terms of the contract. This puts a lot of pressure on me to not screw this up. I have a plan in place to pay them off quickly, but now I worry about what I will do if my plan fails. I think I may be better off to leave the country and not come back;) Anyway, thanks for your time. Good luck with paying off your debt!

Bret hhas given you good advice, but there is one other aspect to this that needs to be considered. That is the ethical one. The credit card companies didn't just throw money at you. You signed an agreement with them that OBLIGATES you to pay them back. If you accumulated debt beyond your means to pay it back, that's not the cc company's fault. When you get debt charged off in a bankruptcy that increases the lendor's expenses which are just passed along to everyone else.

So, aside from the damage to your credit rating, there is also the damage to your sense of ethics and word of honor.

Quote:

Originally Posted by ScottGem

Bret hhas given you good advice, but there is one other aspect to this that needs to be considered. That is the ethical one. The credit card companies didn't just throw money at you. You signed an agreement with them that OBLIGATES you to pay them back. If you accumulated debt beyond your means to pay it back, that's not the cc company's fault. When you get debt charged off in a bankruptcy that increases the lendor's expenses which are just passed along to everyone else.

So, aside from the damage to your credit rating, there is also the damage to your sense of ethics and word of honor.

Yea, I agree that when you borrow money, I have a moral obligation to pay the money back. However, if you do not have the means to do so, what are you expected to do? I tried to work with my creditors, and they were not willing to work with me. They basically told me that they have the right to sue me, and I also have the right to file bankruptcy.

So they sue you? If you don't have assets or income, what are they going to do?

Quote:

Originally Posted by ScottGem

So they sue you? if you don't have assets or income, what are they going to do?

They can prevent me from ever owning a home, being in debt for the rest of my life, etc... What is the difference? If I don't file bankruptcy, I still will not be able to pay them. Unless I hit the lottery, nothing is going to change that.

Not true. Getting a judgement against you is less onerous then declaring bankruptcy.

Well, I wouldn't feel bad about it then if you tried to work it out and they refused. If you don't have money to pay them, there's nothing to sue for. :)

Don't worry about that either. I've been sued twice. It's a vain threat that as soon as you respond to it, they drop the suit. I bet they hope to strong arm you into bankruptcy. I hear they hate it when you just don't pay and they can't force you into bankruptcy to insure that you get a punishment THEY feel you deserve.

Hmmm. That does make sense that they would rather me file bankruptcy than to just not pay. It seems like by not working with me at all, they are leaving me with no choice but to file for bankruptcy. I already have the one judgement against me from Discover card. I did not try to dispute it since I do owe them money, and I am sure they have the original contract. For now, I have closed my checking account so that they cannot sneak in and wipe out my checking account. I am wondering how long it is going to take them to start garnishing my wages.

Quote:

Originally Posted by Miranda

Yea, I agree that when you borrow money, I have a moral obligation to pay the money back. However, if you do not have the means to do so, what are you expected to do?

Hello Miranda:

I believe you should pay your debts. However, this isn't about what I believe - it's about the law. In this country, we believe that if you've made a mistake, you should be given a chance to overcome it. That's what bankruptcy is; a second shot. There aren't too many times in life when we get a second shot.

In most cases, I advise against bankruptcy. Not yours. YOU and bankruptcy were made for each other. I don't mean to be flip, but it's so. YES, your husband should do it along with you, because YOUR bankruptcy WILL affect his credit score. Plus, HIS bad credit WILL stop you from getting your home loan after you go bk.

If you were old, I wouldn't suggest the same thing. But you're young and just starting.

I believe you can overcome this hurdle without bankruptcy. But, the law is designed to give you a second chance. Why not take it?

excon

I have gone through bankruptcy about 4 years ago and as far as credit goes its like it never happened. I had 40,000 in debt, and I tried for years to pay and keep up, because I felt I had to. Tried to have companies stop fees so I could catch up, but they didn't care. I was worried about credit and bankruptcy, but I have felt no ill effects. I refinanced my house for some improvements and about the only thing is a couple percent higher interest. I have one credit card for emergencies and all is fine. At the time if my wife had any debt I could have added her on the bankruptcy for no extra cost, so add your husbands stuff on there too. I say do it. If you don't can you defer loans for a year and pay bills instead?

You Can Purchase A Home One Day Out Of Bankrupty. But You May Do Better To Get Some Out Side Advice This Is Tricky From State To State. I Work With Mortgages Try To See If Some Way You Can Conslidate Before Filling Bankrupty.

If you file bankruptcy which one are you doing Chapter 13, 0r 7?

Chapter 13 will only allow you up to 5 years to repay all that is owed.

Chapter 7 is liquidication of all you assets to repay your debt.

If you file it the bank will take a long hard look as to why you did, the amount owed, and might not consider you application for a mortgage.

Bankruptcy is never the answer, only proper planning will work.

I am planning on filing chapter 7. If I am going to file, and ruin my credit, I may as well go all out!