considering chapter 7?

[jeslyn]

Hi. I had just written a really long post but apparently the server timed out and I lost it!

I will paraphrase:

I have approx $17k in cc debt- currently in "debt management program"- monthly cost is too high- I fibbed to get acceptance.

I have approx $22k in school loans. Most in forbearance with Sallie Mae, one in repayment (Perkins through the school- no choice but to repay NOW), one that just went into default b/c I couldn't pay demanded amounts and they wouldn't work with me (I offered $30/month but it was not acceptable).

I have a car loan that is paid up this September. I have never been late with a payment.

My credit is so scarred that I cannot get any more cards. I cannot afford to get my car fixed, go to the dentist, buy my prescriptions because I have to make that cc pmt. I sit and eat tuna. There has to be an easier way.

Some have advised Chapter 7- does this sound like a viable solution for me?

PLEASE HELP.

Also, if it is a viable solution, should I pull out of cc pmt program now? OR wait? I just feel like I'm throwing the money at them but the balances won't go down. I have been on the program over a year and I won't be paid up until 2008! It seems I could be back on track faster by filing...

I also want to mention my credit is scarred because of around $10k med bills that insurance wouldn't pay...my school loans have been rocky- they are reported as being late (before the forbearance, etc)...

[jamntmo]

Chapt 7 sounds like a great solution for you - at least that is what I think. I am in the process of filing. I have $30K in credit card debt & I can't even afford the min payments for them. So far I haven't had any late payments but I no longer have the funds to pay for them. I also have a student loan at about $12K. I can afford to pay that - but from what I understand, you can't file student loans for bankruptcy - some law against it.

I researched those debt consolidation places before considering chap 7. The good thing about it is that your cards will be paid off sooner than if you weren't in the program. The bad thing is that the monthly payment is pretty much the same if not more than the min payments on the cards. Also, if any of your cards are at 9% interest or less, there is no point in consolidating them since the consolidation companies (the ones I researched anyway) can't get anything lower than 9 or 10%.

Chap 7 bankruptcy sounds great for you. As long as you don't plan on buying a new car or house or anything like that for the next 7 yrs, you will be ok. You won't be able to get any new credit cards until like 2 yrs after you are discharged & those are usually secured cards. But eventually you will be back on track w/good credit.

[jeslyn]

Thanks for your input.

I know that my school loans can't be wiped out, and that is totally fine with me. I just can't pay for those and the cc's- and I feel more inclined to pay the school loans.

As far as buying a house goes- well, I figure at this point I'm still young (mid 20's) and have plenty of time for that. I couldn't get approved for a mortgage now if I wanted to and it seems to me that it would take even longer to get approved if I continued paying down my debt as opposed to filing. People I have talked to about filing have said that their credit is now better than ever and there was no way that would have occurred if they continued to pay as they were before. It doesn't seem to make logical sense to me, but if that's the way the system works, then I'm going to use it to my advantage. If I am able to start fresh (albeit with a BK on my record), isn't that better than having to work my tail off for the next 5+ years to make ends meet and then start working on my credit?

Plus, my boyfriend and I are planning on getting married in the next year or so. We're both working on restoring our individual financial lives so that we can have a strong financial future together. I feel it is better for me to cut my losses now than deal with it during a marriage! That is stress enough ;)