22 & Considering Bankruptcy!

[tnsltwn]

Here's the facts:
22 years old
Live at home. (Have to move by Feb 09)
Leased a VW Jetta in March.
Have $2,900 personal loan & $500 LOC.
Have $22,000 in CC debt.
Have $9,000 in CC debt that's in my mom's name which I cannot include but have to conitnue to pay. It's $210 a month.
Have $1,400 owed to my grandma for the next 6 months. It's $210 a month.
Gross income of $33,000.

With the snowball effect if i pay $600 a month it would take 41 months and that's charging nothing else!

A bankruptcy is on my credit report for 7-10.

Now the reason I am considering is I had my hours cut. I am tired of this mound of debt I incurred as a result of 4 years in the making and being financially irresponsible. I am ok with filing but want to know through people that have gone through it, if I manage my money and create a budget from the day it's discharged on is it really as hard as I hear to get a loan for like a car or CC? Second how bad do you think it will hurt filing at such a young age? It's mentally frustrating and I just want the burden to go away. It's become depression! Your advice on what I should take into consideration and look into as possible alternatives are appreciated. Lastly would I be the only one to file so young?

[JRScott]

The stress can lead to depression.

You would not be alone I"m sure.

Keep in mind debts to your grandmother and mother would need to be listed as well in any bk petition. You have to list all debts, not just the ones you want to. However depending on your income and expenses I'm thinking you might be more likely to get a Ch 13 as I'm not sure you'd have enough expenses for the means test to put you into a ch 7.

[debtmonster]

Sounds like too small amount to destroy your credit over. I'd try to wait until you get at least $50-75k and then do the CH. 7.

How were you able to get such a high paying job at such a young age? I was barely able to make $6.50/hr. doing computer programming at 21 years old.

[Flamingo]

I'll let others on here advise you about the debt as I am out the door in a few minutes to head to work. I do want to tell you that at your young age, not knowing your job situation now but if you file, during your 20's which are basically your formative years in the job market, you will have a BK hanging over your head for 7 to 10 years which could have a big negative effect on your future hiring, depending on your field. It will also have a huge effect on any credit or loans you will need to obtain over those years, plus you state you have to move out early next year - it could also affect your rental ability.

I am sure others will help you out as to your debt situation; I do have a few things to say but may not be able to get back on here until later this evening.

Best of luck to you...

[debtmonster]

Yes, I think it is unwise to file BK at such a young age. That's one of the reasons I never did. I remember filling out job applications and having background checks done on me. One company that started me off at $63k did a credit check. I asked why and they said, "We're checking for bankruptcies."

I don't know why that is any of their business. It had absolutely nothing to do with the job they were hiring me for... but it was just another reason to turn somebody down. I did have a ton of bad credit otherwise and they still hired me. As a friend of mine says, "Man, your credit report is like a Christmas tree."

[NowImDownInIt]

Okay. I'm 22 and 3 months into a 36 month plan Chapter 13. I had less debt than you do (sort of, it's a little complicated) and I make more than you do. I was 21 when I filed.

I would suggest doing it. The debt isn't going to just go away. If you want to pay for 41 months, that's great, but don't rack up any more debt if that is the case. It is NOT any more detrimental to your credit to file at this age than it would be in 10 - 20 years.. I would suggest a 13, because your debt seems small enough and you may be below median, so you could possibly get a 36 month plan and only pay a percentage of your unsecured (credit card and personal loans) debt... A chapter 13 would stay on your credit for 7 year. IF you work in finances or security I would not do it, due to credit being thoroughly checked in jobs in those markets. I work in the oil and gas field and it isn't an issue.

It is a responsible choice to decide to reorganize and pay your debts. I would wait until after you move out to consider filing. In a 13 that would give you more allowable expenses and you could get a smaller payment. Consult with an attorney to see what advice they give, but take it with a grain of salt, because they want you to file, it makes them money.

[debtmonster]

Technical it doesn't go away, but it sort of did for me. You can go for years and not pay these people. I had over $100k in debt racked up in my 20's.

What I found out is that they may never seem to do anything... but the second you get any kind of asset with equity, they will come out of the wood work and snatch it from you. If you ever get a nice car and finally pay it off or a house, a boat... whatever the case may be. If it's public record, they probably have some automated way of finding it.

I never had any assets paid for. But now I finally own a home and I don't want this looming over me now. I could simply ignore all of these creditors like I've done for the past 20 years and wait for them to go away, but then I can never have anything.

[PoorGrammyinBK7]

Hi and welcome!

Don't get mad at me -- as you did ask for opinions. So here's mine. If I were your age, I would do everything in my power not to file BK - I even did it at my age (50's) and we were doing that successfully until we had a very unusual circumstance that forced us into BK.

If your hours have been cut, can you possibly get a 2nd job? My husband worked 3 jobs at one time when he was about your age (not to pay debt, but to save for a down payment on a house - this was before we even had credit cards).

Also, if you have paid $210 a month to your mom and grandma within the last year, the BK trustee is probably going to go after that money - possibly sue your mom and grandma for it - because it may be considered a "preferential payment" to an insider. So if you do decide to go BK, you probably should stop the payments now and wait at least a year (maybe 2 years). Maybe a more enlightened person will chime in on this...

Bankruptcy is not the easy way out - it can be very intimidating, complicated and drawn out for reasons that, quite honestly, make no sense to most of us, but are in the bankruptcy law.

Now, I am NOT a lawyer, so don't take my word for it. Ask a lawyer - many will give you a free consultation - just don't let them push you into filing right away, without several consults. Investigate whether you can file a Ch 7 or have to file a CH 13. Either one will be on your record for many years and CAN have a very negative effect on job-hunting, and apartment-hunting, etc.

You are young and hopefully healthy and should have the energy to work and get this debt paid off yourself. It won't be easy, but neither is bankruptcy. If you find you HAVE to do BK, please read all you can and get all the info you can before doing it, because it WILL effect your life for a long time.

[debtmonster]

We need more contributors like the above. PoorGrammy should be a paid contributor to this forum!

Excellent advice.

[Tbornetun]

Okay. I'm 22 and 3 months into a 36 month plan Chapter 13. I had less debt than you do (sort of, it's a little complicated) and I make more than you do. I was 21 when I filed.

I would suggest doing it. The debt isn't going to just go away. If you want to pay for 41 months, that's great, but don't rack up any more debt if that is the case. It is NOT any more detrimental to your credit to file at this age than it would be in 10 - 20 years.. I would suggest a 13, because your debt seems small enough and you may be below median, so you could possibly get a 36 month plan and only pay a percentage of your unsecured (credit card and personal loans) debt... A chapter 13 would stay on your credit for 7 year. IF you work in finances or security I would not do it, due to credit being thoroughly checked in jobs in those markets. I work in the oil and gas field and it isn't an issue.

It is a responsible choice to decide to reorganize and pay your debts. I would wait until after you move out to consider filing. In a 13 that would give you more allowable expenses and you could get a smaller payment. Consult with an attorney to see what advice they give, but take it with a grain of salt, because they want you to file, it makes them money.

Why are you suggesting a Ch. 13? If they are below the median, why would they want to pay back the creditors and have the next 3-5 years of their finances scrutinized by a trustee. If they are going to file, I would file a Ch. 7, easy, painless, and quickly over with. Filing Ch. 13 in this case would not make any sense to me.

[debtmonster]

My attorney told me that a Ch. 13 is almost 3x the cost of a Ch. 7. Is that true?

[HHM]

I don't think you are a BK candidate yet. The debt burden is not huge, you are employed and with your youth and energy, go get a part-time job (any part-time job) to make-up the shortfall. Also, put your self on a budget, figure out your fixed expenses, and cut what you can to make your credit card payments.

[debtmonster]

With the snowball effect if i pay $600 a month it would take 41 months and that's charging nothing else!

I'll also trade you for the $740/mo. payment on my BMW that I have another 60 months payments on.

[ready2puke]

I worked 2 jobs for 13 years when I was your age. Try waitressing.It pays well, but make sure you work for a rest. that has class and your tips will be terrific..No BK just do get a 2 nd job....or work cocktails...

[Flamingo]

To the OP - I reviewed your initial posting - since you are still at home why not sit down with your parents and go over your situation and see if it is possible for you to still stay there (you mention you have to move by 2/09). That, on top of getting additional work as other posters have suggested should help you get a handle on your situation and get some of the debt down. I don't know what kind of relationship you have with your parents (how close you are) but if you are still at home, I am assuming it is good. I would sit down with them, go over things, stop spending as much as you can and get the debt down. Hand the CC cards to your mom and tell her to lock them up. You'll be surprised what you can do if you put your mind to it. I would NOT suggest filing BK if at all possible due to what I state in my post from this morning.