Being crushed by credit card debt

[NickL281]

As a result of many issues over the years, I have severe credit card debt-- about $70,000. I am single and make $75,000 a year. In CT, this is really nothing for a single person. I literally don't have enough money to last the month so as a result credit cards go past due and I make a double payment next month so it won't hit my credit report.

But I can't go on doing this. The worst part is that I feel stuck. I was unemployed for three months earlier this year which didn't help and had to take the first job offer. I am in a rental apt with a lease that runs thru Jan 2009 and I am sure with my current credit situation and all the credit card debt, no one will rent to me because of the debt load.

Rent + Credit card payments in aggregate take over $4,000 a month of my take home pay

What will happen if I file for chapter 13. Since I am over the median for one person (which is set much too low IMHO), I don't think I can qualify for Chapter 7 and then in terms of payments -- people tell me that you are required to pay back 100% of unsecured debt only within a 5 year period set up by the court trustee. Is this true??

[keepmine]

Nobody can say what a repayment plan is in a Chapter 13. After any priority debts like child support then secured creditors are accounted for at 100% then, you deduct your living expenses plus, apply state exemptions. AT that point, what's left is disposable income and that goes to unsecured creditors. Those are usually repaid at pennies on the dollar.

[kornellred]

NickL281 -

I am in a similar situation to yours. I earn approximately 70K per year, have 60K unsecured cc debt, am single, live in New Jersey, and I rent. You already realize that you will NEVER get free of the unsecured debt load by making minimum payments - and you cannot afford to double up on the payments. And unforeseen expenses will always come up which will make it necessary to use your credit cards and make you lose all you have tried to gain.
Go talk with an experienced bankruptcy attorney You will be surprised how much better life will be for you in Chapter 13. Five years of sacrifice and you are done with it - instead of carrying the debt until the day you expire.
And try to hold your excitement and enthusiasm in check after your initial consultation. Your disposable income is what will determine the plan payments. The payback percentage to unsecured creditors is a figure that is mathematically derived by
dividing the total amount you will pay over 5 years by the total amount you owe. For instance - if you pay $500 per month for 60 months, that's a total of $30,000. If you owe $60,000 to your unsecured creditors, your payback percentage is 50%.

It's that simple. Except for the fact that the trustees fees and other priority debts are removed from the monthly payments, which will lower the percentage paid to unsecured creditors.

You can't beat that with a stick! My second confirmation hearing is next week on July 22nd. It's going to be very interesting, to say the least.

[treehugger1]

Nickl, You will note that are a few of us on this board that are high wage earners with really no "real" assets. My personal situation was about $70K in unsecured and another $70K in student loans. I met with several BK attorneys and they all said that I would be in close to a 100% payback plan. It all depends upon what you have left after acounting for your deductions, exemptions, living expenses, auto expenses, etc.

In my case, no matter what happened, my credit was going to suffer. Attorneys felt my large student loan debt would haunt me at the end of a BK 13 (forced into interest-bearing deferrment for five years at 8.25%.) Other regions seem to allow one to deduct the student loans prior to deciding on disposable income.

I started down the path of filing about 2 years ago, but never filed. I stopped paying on all unsecured debt, and eventually the majority of my creditors offered temporary or long-term plans at reduced interest. Several accounts were charged off, went to collections and then were sent back to the original creditor. I have whittled down several K, so if I head into a BK 13 in the future, I might be able to get the student loans written into the plan on top of the unsecured payments. There are few smaller unsecured that I decided not to pay, or the creditors would not work with me. I have a couple of small claims hearings in the next 30 - 45 days.

I'm fortunate in that I am employed by an insitution that doesn't really care about my financial issues (calls at work, potential garnishments, summons at work, etc.)

Meet with as many attorneys as you can.

I am currently having a very difficult summer as I am paid as a contractor during the summer, and do not receive my regular salary. If I can't keep paying as agreed, I suppose I'll have to let the process start all over again.

No one has run out to sue me, other than two small claims.

The big thing in my mind is that you cannot probably have both (good credit and out-of-control debt.) Either you stop paying and file for BK 13, or you might stop paying and see what arrangements are possible. When I stopped paying my creditors, it was one of the hardest things I ever did.

[JRScott]

You mentioned you were unemployed for 3 months. Did any of that occur in the last 6 months?