Bad decisions...

[FlexBaud]

I am a 23 (24 in Oct) year old male living in Florida. I currently own a home (Got it last year for $55,000) and make $31,200 a year. I live about 30 miles (one way) from my work and spend around $250 a month on gas. I also own a 2003 Ford Escape which I owe $12,500 (11% interest, still have payments for another 3 years, 5 year loan) which is worth around $5500 due to the miles on it.

I currently have around $12,000 in credit card debt between 12 cards. My interest on most of them is around 25%-30% due to missed payments and being over limit (due to late charges, etc) I have tried getting a loan to combine them all, but it hasn't worked out because of my credit score.

Either way, I am just barely staying afloat right now and about a month and half ago I was laid off from my company for about 3 weeks due to the company reorganizing. I was called a couple weeks ago and offered a job in another department which of course I took as I was still out of work and was unable to find anything that pays higher than $8 an hour.

Most of my credit card debit is from making bad decisions when I was younger. Also, a lot of it was also from when I was in a bad relationship. She lost her job and was living with me at the time so I had to let my credit cards slide to pay most important bills. Some of my debit is from buying my house, and some of is was from a hurricane a few years ago.

Right now, my job is very unstable. They are still doing layoff's and are closing offices down. They also have cut out bonuses out so that was extra income ($2400 extra a year) that was helping me.

I am seriously considering bankrupcy but I would really like your input. I plan on keeping my house and I'm not past due. I am still trying to decide what to do with my SUV. It's starting to eat me alive in gas and it has a lot of miles on it (85,000) and a long time left on the loan. I'm already a month past due and have been having trouble paying it. I'm thinking about letting it go and going to a "buy here pay here" place and get a cheap car, but I really need something dependable due to my drive to work and even if I did lose my job, I'll still have a long drive due to where I live (everything is really spread out here) My next option is to have my mom cosign (who said she would) and get a Honda Civic or something to that nature, but I'd still have high payments due to my loan being rolled over into the new car, but I would have something I can trust.

On the other hand, I also have a 1993 Ford Explorer with over 200,000 miles but I just don't think I can trust it for the 60+ mile drive each day. I'm really not sure what to do at this point, but I do believe bankrupcy will be the best option as I just want to get back on my feet.

Suggestions?
Thanks

[sick of debt]

You drive 60+ miles a day and make $8 an hour. Maybe you should find a job closer to home, that may be a start.

[FlexBaud]

You drive 60+ miles a day and make $8 an hour. Maybe you should find a job closer to home, that may be a start.

No, right now I make $31,200 a year, which is $15 an hour. However, given the condition of the company, if I should lose my job the only jobs around my house (15 mile radius) pay $8 or so. This is not the city for jobs and the population here is actually shrinking becuase of it.

[Help!]

I think it might be premature to declare BK until you know how the job situation is going to shake out. I think getting out from under that Escape is a good idea since you can't keep up with the payments. I hate to say it, but with your income on the decline I don't think getting another loan for a Civic is a great idea (even with a cosigner). The Civic is a great idea, but the last thing you need right now is more debt. There are some high mileage, inexpensive cars that are still dependable (used Civics, Corollas) and get good gas mileage. I think I'd get a fuel efficient beater for the time being and upgrade later if your situation improves.

If you can manage to get your expenses back under control to the point that you are no longer adding to that CC debt, I don't see your situation as hopeless. If you're still charging to those cards because you're short every month and if you still won't be able to avoid them with the Escape payment gone, I think BK probably is your best option.

[FlexBaud]

I'm pretty sure I can avoid BK, however, it will take me years to pay everything off and currently my mom and her boyfriend live with me and are paying most of the bills. I really want to get away from this and be independent and be able to support myself. I cannot support myself at all right now.

Either way, I'm going to go talk to the Honda Dealership to see what I can work out with them, even if I don't get a new Honda, maybe I can get a old/high miles car once my escape is gone. It'll be worth talking to me anyway as I'm going to need to get some type of car.

[liveandlearn]

New car is probably a bad idea. Don't forget that since you'll have a loan on it you'll have to carry full insurance for a high priced vehicle. That's another added expense I don't think you can handle. Find a Consumer Reports car magazine at a book store. Find a used car that depreciates a lot (means an American make) but gets very good reliability. That means you'll get a reliable used car at a big price reduction because it has already depreciated. Last year a car died on us when we didn't need another loan. After a LOT of research we decided that the Ford Taurus is very reliable with a high depreciation. Got one 5 years old with under 50K miles for $7500. Insurance is low, fairly good on gas, no payments. ARe very pleased with performance of car.

Don't buy a new car! Research used cars with good repair records that depreciate so you can afford it used without too much of a loan.

[morallyBR2]

Coming from a career mechanic, please do not buy an American car. You can get a 2000ish civic or accord or camry for a good price and it will easily go 300,000 miles. I myself own a 95 honda with 300,000 miles. It's still all original except for a altenator and a radiator. Original motor, no leaks, or antyhing. But yeah, do your research before buying a new car.

[Stilltheone]

Coming from a career mechanic, please do not buy an American car. You can get a 2000ish civic or accord or camry for a good price and it will easily go 300,000 miles. I myself own a 95 honda with 300,000 miles. It's still all original except for a altenator and a radiator. Original motor, no leaks, or antyhing. But yeah, do your research before buying a new car.

My husband is also a mechanic and we only OWN GM products. Our Camaro has 178K miles on it. Before that, we sold our Grand Prix with 240K miles on it.

I strongly disagree!

[ThreadsSnapping]

I agree, we have a Chevy with about 145K miles that we haven't had any issues with except normal maintanence and minor repairs. Biggest issue we had was needing an ERG valve replaced. Everything else has been just normanl wear and tear and from use. Now the Honda I had before was always needing something and it was expensive to repair. I also knew someone who had a Ford truck with over 900K miles when it got wrecked and it ran great. Sometimes it is just a matter of luck.

TS

[MajorMike]

My husband is also a mechanic and we only OWN GM products. Our Camaro has 178K miles on it. Before that, we sold our Grand Prix with 240K miles on it.

I strongly disagree!

No offense but GM products suck...

[Hopefull1983]

No, right now I make $31,200 a year, which is $15 an hour. However, given the condition of the company, if I should lose my job the only jobs around my house (15 mile radius) pay $8 or so. This is not the city for jobs and the population here is actually shrinking becuase of it.

Hey you're not alone. I'm 25, single, and live in So. Cal. I'm in a more fortunate position because I don't own a home however, my income has dropped significantly. I'm a yacht broker and within the past few years my income has been cut in half and that half has been cut in half. I averaged 85K a year and this year I'm on track for 25K I made bad financial choices and now I have a CH7 in my near future.

I would recommend you doing the obvious and making a monthly budget and plan the next 6 months down to your last penny. If there is no light at the end of the tunnel then BK may be your best option. Consult a BK lawyer, they are your friends.

[FlexBaud]

Regarding Cars: I currently have a 1993 Ford Explorer with 200k miles sitting in my yard which still runs decently. I does need work, but mostly minor. The most major thing is the AC and power windows. It's not bad and it wouldn't take a huge amount to get it in decent shape... I'd say $1000 or so and everything would be working on it.

I honestly think almost any car could last for a very long time if taken care of. I'm not sure what I'm going to do with the explorer yet. I think it'll be too hard to sell with gas prices right now, and I'd only get a few hundred out of it if I trade it.

Back on topic: I'm pretty much going to move forward with bankrupcy, or at least talk to a lawyer anyway to see what my options are anyway. I still think it will be best if I did that.

[JRScott]

I wouldn't file yet. Wait and see what happens with your job. That way later you don't get hit by a double whammy.

It might be worth your time to see if they'd let you trade in the 2003 on something smaller with better gas mileage. It might could even lower the payments but I can't be sure.

[FlexBaud]

I wouldn't file yet. Wait and see what happens with your job. That way later you don't get hit by a double whammy.

It might be worth your time to see if they'd let you trade in the 2003 on something smaller with better gas mileage. It might could even lower the payments but I can't be sure.

Well,
I was laid off for about 3 weeks and during that time, I didn't pay any of my credit cards and when I was hired back, I had to wait another 3 weeks for my first check (which I don't get until Friday) so it's been almost 2 months without a paycheck. I did cash in my 401k during this time and got a severance check, but all that went on house payment, gas, food, etc.

Right before I was laid off, I was fighting just to catch up on them as it was (I have been fighting hard since X-Mas)

Right now, I'm getting statements asking for $400+ min payment for this month and of course, there is no way I can pay that and I have several asking for that much right now.

Honestly, at this point, I'm not even so sure I could catch up. I have 12 credit cards and they are all past due right now.

Nothing has went to outside collections yet, but I want to BK before that starts happening.

[JRScott]

Don't rush into the bankruptcy.

It takes 6 months to a year for them to seek their money in the judicial system, and that's the fast ones, the slow ones can take a couple of years.

Right now don't worry about paying the credit cards, just keep things going on your necessities until you find out about your job. Yes it will ding your credit but if you file now and then lose your job and end up in a worse position in 6 months you will have no recourse then.

I know its stressful, but in your case for right now I'd wait out a couple months and see what happens with the job first.