Help! Should I consider bankruptcy??

[kriscmh]

Here is my situation:

I went through a divorce a few years ago which left me with some debt (which has grown) and a pretty big monthly child support amount (which I don't mind).

Stable job history (same job for past 10 years). Current salary $41,000.

I currently rent. I have always been current with my rent.

Approx. $35,000 in credit card debt. I have always remained current with my payments, but have been paying only the minimum....and continuing to charge.

My car is paid off (but I will need a new one in a year or two).

For the past year, I have had to use my credit cards to help get by and I am about at the end of my credit limits. Something has to change soon, or I won't be able to pay all of my monthly obligations. I have tried to increase my income by finding a better job, but that has not happened yet.

I am starting to think that my only way out is bankruptcy. I don't know which is best in my situation (7 or 13). I worry about not being able to get a new car or mortgage in the future if I file.

Any suggestions based on this?

Thanks!

[justplaintired]

You sound similar to us, too much credit card debt, doing your best to keep them paid and then ending up using them to make it from payday to payday. Best bet call a few attorneys and get a free consultation, they can give you all the details and tell you which Chapter would work for you. This will be a better way to make this decision. If you're only paying min. payments, find a calculator online and figure out how many years it will take to pay down this debt. Decide if this is something you can do. If you're using cc to pay bills and buy necessities, how long can you go on this way.

I know the job thing is a problem and in today's economy people are lucky to just have a job, at least in the small town I live in this is true, so consider yourself lucky to have a decent job.

Financing after a BK is doable from what I have been reading on here, it might take a little while, but it can be done. You're the only one that can make the decision if BK is right for you. Good luck with whatever you decide.

[epiphany]

Here is my situation:

I went through a divorce a few years ago which left me with some debt (which has grown) and a pretty big monthly child support amount (which I don't mind).

Stable job history (same job for past 10 years). Current salary $41,000.

I currently rent. I have always been current with my rent.

Approx. $35,000 in credit card debt. I have always remained current with my payments, but have been paying only the minimum....and continuing to charge.

My car is paid off (but I will need a new one in a year or two).

For the past year, I have had to use my credit cards to help get by and I am about at the end of my credit limits. Something has to change soon, or I won't be able to pay all of my monthly obligations. I have tried to increase my income by finding a better job, but that has not happened yet.

I am starting to think that my only way out is bankruptcy. I don't know which is best in my situation (7 or 13). I worry about not being able to get a new car or mortgage in the future if I file.

Any suggestions based on this?

Thanks!

First of all, I commend you for realizing your situation before it gets completely out of hand...that will help you out tremendously when it comes time to rebuild your credit.

Second of all, you don't have a choice about which chapter you can file. That depends on which chapter you qualify for. This is all based on your median income, allowable expenses under the law, and your assets.

In rare circumstances, if you are on the border of qualifying for either, you may be able to finagle your way into one or the other, but don't count on it.

Do some research here on the forum and in no time you will be able to figure out which chapter you qualify for.

Good luck to you and be sure to ask any other questions that you need to.

ep

[pd1373]

Whether you should file for BK or not will depend on whom you talk to. If you talk to a credit counselor they'll want you to go through credit counseling. If you talk to a BK lawyer they'll want you to file BK. You know how it is, when all you have is a hammer everything looks like a nail. The bottom line is, you are supposed to be able to pay for all of your regular ordinary expenses with cash. With $35K in CC debt and only $41K of income I can't see how you can possibly do that. Think about your budget. Consider everything you have to buy every month - rent, all the insurance you *should* have, retirement savings, groceries, support payments, fixing your car if it breaks, your utilities, communications (cable, cell, landline phone), gas, clothing, personal care, gifts, etc. If you can't pay the minimums on your credit cards AND pay for reasonably well budgeted expenses out of pocket, you're probably a chapter 7 candidate. As mentioned above, many lawyers will talk to you for free. Pick a good one (this website helped me: http://www.nacba.org/ ) and make an appointment.

Good luck

[justplaintired]

Whether you should file for BK or not will depend on whom you talk to. If you talk to a credit counselor they'll want you to go through credit counseling. If you talk to a BK lawyer they'll want you to file BK. You know how it is, when all you have is a hammer everything looks like a nail. The bottom line is, you are supposed to be able to pay for all of your regular ordinary expenses with cash. With $35K in CC debt and only $41K of income I can't see how you can possibly do that. Think about your budget. Consider everything you have to buy every month - rent, all the insurance you *should* have, retirement savings, groceries, support payments, fixing your car if it breaks, your utilities, communications (cable, cell, landline phone), gas, clothing, personal care, gifts, etc. If you can't pay the minimums on your credit cards AND pay for reasonably well budgeted expenses out of pocket, you're probably a chapter 7 candidate. As mentioned above, many lawyers will talk to you for free. Pick a good one (this website helped me: http://www.nacba.org/ ) and make an appointment.

Good luck

I agree. Our debt was $33K and we make $38K, so making the min payments was getting harder and harder. The vicious cycle of using cc to pay for everything and having little to no cash for necessities became a way of life, not a fun way, not a way that made sleeping at night possible, but it was how we lived. Therefore, it became clearer and clearer what we have to do. When I read other people's debt on here, I almost feel ours isn't much, but when you live on what we make a month, it's alot. We contacted credit counseling and the payment they would have required was so outrageous it was almost a joke! The attorney's we spoke with simply laid out what our options were. They did not pressure us, we made the decision. Now if all this was over it would be awesome!

Again, Good Luck with whatever you decide.

[woohoogirl]

I agree. Our debt was $33K and we make $38K, so making the min payments was getting harder and harder. The vicious cycle of using cc to pay for everything and having little to no cash for necessities became a way of life, not a fun way, not a way that made sleeping at night possible, but it was how we lived. Therefore, it became clearer and clearer what we have to do. When I read other people's debt on here, I almost feel ours isn't much, but when you live on what we make a month, it's alot. We contacted credit counseling and the payment they would have required was so outrageous it was almost a joke! The attorney's we spoke with simply laid out what our options were. They did not pressure us, we made the decision. Now if all this was over it would be awesome!

Again, Good Luck with whatever you decide.

My thoughts exactly.

[Teddy]

It sounds to me like you should seriously consider it. It would be nice if you qualify for C7. Have you checked the median income for your state to see if you qualify?

If you're income is under the median for your state and your status (single?) then you automatically qualify for C7 with no presumption of abuse. That was my case so it made my decision fairly easy.

However, I am not planning on a new mortgage anytime soon and I can keep my car for several years so that isn't an issue either. I have no equity in anything. Everything I read says you can probably get a mortgage in 2 years. I called Honda too and they told me that in a year after BK I could probably get a fairly decent rate on a car loan.

I am very glad I finally filed and wish I'd done so sooner.

[kriscmh]

Thanks

Thanks for all the comments. After reading these forums and doing some online research, I have decided to do it. I found an attorney who I think I will be very happy with. We talked on the phone and I am now getting all of my paperwork together and will meet with her next week hopefully. All things considered, I am hoping that I will qualify for ch 7. I am already breathing a sigh of relief.

[Runnin on empty]

A few things to consider:

If your car will be in need of replacement soon and you have good credit now, it might not hurt to get one now if your lawyer thinks it a wise move. Ours told us that we should go out and replace both of our badly aging cars, and we'd be fine "as long as you don't come back with a Cadillac". We are glad we did, because now we not only have our transportation needs set for the next 3-5 years, but the payments are taken into consideration for your budget, but we were under the median income anyway.

Your lawyer will probably tell you to stop paying on all your unsecured debt (ie - the CCs). It will be very hard at first, we had never missed a payment ever, but we knew it had to be done. With the advice of your lawyer, use this new-found money to pay for said lawyer, fix up your current car or use as a down payment on the new car. Use it to do those things that you've put off or neglected in the past: Insurances, IRAs, ect.

One thing we found very helpful was to close our account, open another one, but keep very little in it (not hard since we live paycheck to paycheck ) , and do everything cash and carry only. It was amazing to us to see how many little "wants" we did every month that add up quickly.

We don't want to end up living like a family of hermits, but there are so many things that we could cut back on and save ourselves quite a bit of cash each month. Don't get me wrong, I don't want to be one of those people who doesn't enjoy life because they are too busy working/slaving/saving for a rainy day (ahem*my dad*ahem), but there is something to be said about having a nice emergency fund set aside so that we don't have to rely on those plastic devils if we do run into a small emergency.