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Advice/Opinions

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  • Question: Advice/Opinions

    Hello everyone.

    I've been reading many of the posts on here and have gained some very helpful information. I have a question that I'd like to get advice and/or opinions on if I could.

    A little background:
    I've recently had to go through a divorce and have been left in very bad financial shape. I've had to stop paying all the credit cards that I was left with in the divorce and have been late on a few house payments. The sale of the house is set to close within the next couple weeks so I've begun leasing a place for myself and my 2 daughters to live.

    Knowing that much information, I'm curious whether my best option is to file Chapter 7 or try to make arrangements to repair everything with all my creditors. Which looks best to future creditors; several months of late (or stopped payments as with the credit cards) or a bankruptcy?

    I'll be happy to share as much information as anyone wants. Thanks in advance for any advice.

  • #2
    We need some financial details. How much debt are we talking about and income for starters?

    Comment


    • #3
      Gross income is about $56k/yr and total credit card debt is around $30k.

      Several of the cards have already gone to collections as well.

      Comment


      • #4
        Given that set of numbers, I'd suggest you file. $30K is just pretty insurmountable while trying to support 2 kids.

        Comment


        • #5
          I really appreciate the opinion.

          I guess I have been thinking the same thing but worried about the "unknown" of filing. My thoughts automatically go to the normal questions of "How long will it be before I can buy a house and stop leasing?" and "Will the lack of credit after filing make life miserable for years afterward?"

          I know there's nothing wrong with having to file Chapter 7 because that's what it's there for when people need it. I've just always been able to do things financially when I wanted to and the thought of not being able to use my credit afterwards for a while is kind of scary.

          I know this may sound crazy, but those kinds of thoughts are intimidating.

          Comment


          • #6
            The only problem I see here is if, as part of the property settlement agreement and/or final decree of dissolution (of marriage), you were ordered to pay the debt, then you may not be able to discharge the debt in a bankruptcy. You should be able to discharge the house debt without any issues, unless, again, your spouses name is on the debt and you are responsible as per the final decree or settlement agreement.

            (A Chapter 13 may be able to address non-DSO related responsibilities. A Chapter 7 would probably not relieve you of any of these responsibilities.)
            Last edited by justbroke; 03-26-2013, 05:32 PM.
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog


            I am not an attorney. Any advice provided is not legal advice.

            Comment


            • #7
              Originally posted by CreditWoes View Post
              and the thought of not being able to use my credit afterwards for a while is kind of scary.
              You have stopped paying your credit cards, so your credit will soon be terrible if it isn't already and the accounts are going to be closed. I am not sure exactly what you mean by "arrangements to repair everything", but my understanding is that debt repayment plans, settlements and lawsuits are just as damaging to your credit rating as filing BK. Also, it is unlikely you will be able to make satisfactory arrangements with all of your creditors.

              Many people are able to obtain credit soon after their Chap 7 discharge. But, that isn't true for everybody and the terms will not be good. Your credit score will improve over time. Your ability to get credit later shouldn't be your concern right now. You need to learn to live without relying on credit anyway.
              LadyInTheRed is in the black!
              Filed Chap 13 April 2010. Discharged May 2015.
              $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

              Comment


              • #8
                LadyInTheRed:

                I agree with your point about living without credit and I have absolutely no issues with that. Honestly, that would be just fine with me anyway.

                My only negative thoughts about not having good credit for a while is the fact that I won't be able to buy a house and will have a hard time getting a halfway decent auto loan. Those are really the only things that I'm concerned about regarding credit.

                I would much rather pay for things instead of finance them.


                justbroke:

                I'll re-read my divorce decree but I'm pretty sure that I'm not held responsible for the debt as far as the divorce goes. It was determined within the decree that we would each take responsibility for any debt in our own names. Yes, the credit cards were in my name but we had both used them over the years. So, I don't think the divorce decree will come into play, but that was a great point that I had not considered at all.

                Comment


                • #9
                  Originally posted by CreditWoes View Post
                  I'll re-read my divorce decree but I'm pretty sure that I'm not held responsible for the debt as far as the divorce goes. It was determined within the decree that we would each take responsibility for any debt in our own names. Yes, the credit cards were in my name but we had both used them over the years. So, I don't think the divorce decree will come into play, but that was a great point that I had not considered at all.
                  I am very happy to read this!
                  Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                  Status: (Auto) Discharged and Closed! 5/10
                  Visit My BKForum Blog: justbroke's Blog


                  I am not an attorney. Any advice provided is not legal advice.

                  Comment


                  • #10
                    If your car is shot now... and if you have too much equity in it to exempt... and if your credit isn't too horrible yet... it might be a good time to buy a car. Maybe.
                    If you have to buy a car later, and finance it a high rate, you may be able to refinance it at a future time at a lower rate.
                    As far as jumping into buying a house again... that will probably take a few years no matter what.
                    What's the story with your house sale? Will it be a short sale?

                    Keep On Smilin'

                    Comment


                    • #11
                      How long ago did you stop paying the credit cards? From my experience the closer you file BK to stopping those credit card payment the lower hit your credit score takes. The cc companies really don't have enough time to react and then you've filed. Then after you are discharged you can concentrate on rebuilding your credit.

                      How bad of condition is the car in? Do you think you'd be better off trying to get a car before filing? I did receive quite a few offers after my discharge from dealerships wanting to help me rebuild credit so you shouldn't have a problem getting an auto loan, it's just the amount of interest you are willing to pay.

                      Good luck to you.

                      Comment


                      • #12
                        The house is not a short sale. I priced it to just break even and it's supposed to close next week.

                        Comment


                        • #13
                          ksgirl38,

                          I unfortunately had to stop making payments on the CCs about 6 months ago. I just absolutely couldn't make those payments and be able to feed myself and my two kids.

                          I was left with the entire house payment on top of everything else so I chose to make the payments on the things that were priority. This was very difficult for me to do but I had to be sure we had food, transportation and a place to live. I cut everything else.

                          Comment


                          • #14
                            keepsmiling,

                            How do I determine if I have too much equity in my car to keep it?

                            Comment


                            • #15
                              Originally posted by CreditWoes View Post
                              keepsmiling,

                              How do I determine if I have too much equity in my car to keep it?
                              You need to know how much equity your state allows you to have.

                              Comment

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