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What do you think of this bankruptcy alternative?

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    What do you think of this bankruptcy alternative?

    I have a mortgage through a government program. In reading their regulations, they allow a 2 year forbearance if a borrower has medical expenses or disability that causes expenses greater than 20% of their income. My medical bills the last 2 years greatly surpassed that. In the process, I racked up way too much credit card debt. I went from paying off a card in full each month to now owing $16,000. (I unwittingly ended up overspending, too, not realizing the extent of trouble I was in.)

    Right now, I am current on everything with a 735 credit score. It's declined, but decent. I have a 2004 Honda that so far has been very reliable, but has 144000 miles.

    We have a nice home, but really no equity. I've paid a chunk of the mortgage, but the program provides a subsidy, and repayment of that subsidy results in me having no equity and some of the subsidy still to repay. The government can garnish my social security to get the subsidy, though if I have ever had a forbearance and tried to pay in good faith they won't make me repay any of hte subsidy that remains after the property is sold. The later is an added, nice reason to ask for this forbearance. With that forbearance of principal/interest, I could repay 75% of the credit card debt in 2 years, though it's possible it's less than that depending on what happens. (I'm working on a budget and being very careful of expenditures.) The principal/interest not paid those 2 years would be tacked onto the mortgage.

    If I declare bankruptcy, all the cc debt goes away quickly. It seems the government agency running this program has the option to simply liquidate and not allow me to continue paying the mortgage if they think the financial issue is likely to continue. I have paid my mortgage timely every month. In part, I think I could convince them that the size of my medical bills is not likely to continue. But it's an uncertainty.

    If I just allow creditors to sue me and get a judgment lien, I'm not sure how that would play out with this program. I'm concerned it would permanently hurt my ability to get a car loan, etc. I desperately need to be able to get auto loans through a credit union when I need it.

    Also, will simply calling the program to ask about forbearance create any type of issue with the trustee later, with any credit card use after that point?

    Thank you

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