New, stressed, and need some advice

[Fallen2011]

Hello, this is my first post and I am hopeful for insight. I currently am not sure what to do in my situation. Here goes my story, sorry it is long.

I am 27 and currently live in Colorado with my gf, our daughter (1 yr old), her 19 yr old brother and their mom (future mother in law). My gf and I share expenses (when she has $) and her mom and I split the rent/utilities/cable/groceries. I have been employed F/T at the same place for 8 years; I bring home approx $1,900 a month. My gf is attempting to complete her degree (via required internship) and we just spent the last of any money we had to pay for this internship registration w/the school. She has a P/T job serving. The income is not consistent and her schedule varies greatly week to week. She watches our daughter normally, but we have a friend come watch her ($30 a day) when my gf works.

I have approx 12K in cc debt (4 ccs & Reserve line) current at the moment, owe 5K for two vehicle loans (also current), 14K in student loan debt (I have not graduated, payments currently deferred), and recent medical bills ($2k +) I can’t even look at when I thought I was having a heart attack (I wasn’t). We don’t have joint debt, and she is already experiencing the bad credit and charge offs on prior debt long before we were ever together.

I am currently in the red every single month (have been for a LONG time). I called BOA to see if there was any hope of a payment plan to reduce minimums. There was not. Capital One said the same. For the past couple of years I have been getting by with minimum payments (maybe a bit extra) to the cc’s, then using that available credit again. I received a $10k inheritance a few months back and have since depleted that paying debts and living expenses. I had a consultation with a BK atty who basically said that yeah, I could file and it would probably be discharged. He had, however, never seen a BK with such a low amount. I was not sure what to do with that so I have been continuing to make minimum payments. No plan on how to get ahead though, or how I would pay the BK atty.

I guess I am looking for basic answers at this point. I have $20 in my bank acct till Friday and need food/diapers/gas till then. Our daughter is 1 next week, I have payments due next week, and everyone is struggling at home to find money. I am not sure when to expect consistent income from my gf (needs 180 hrs unpaid internship) so I am pretty sure I am falling faster than I want to accept.

I am scared to miss a payment even though I have no money to give. If I had a budget like the atty and I went over then I would have been missing payments long ago. I take some of my necessities out to pay the credit card bills. All for this credit “score” that is about 720; but because of my high debt/income ration no-one will lend to me anyhow. God do I feel dumb.

So what can I do? If I stop paying the cc’s then I need to save for an atty before I get a judgment, correct? That will take a while. Should a 401k loan to pay for this? Do I have a case for BK? Do we have to be married for the courts to consider our expenses combined? How will that work?

I appreciate any insight to my story and the laws of Colorado. I am really in deep and need to sink or swim somehow.

Thanks for looking. I appreciate any words of wisdom.

~MM

[IHateChase]

First of all, welcome to the forum! You are among friends. Don't feel dumb. We are all in the same boat.
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May I ask why you have two vehicle loans? Do you own two vehicles? That may merit some discussion.

You aren't going to be able to discharge the student loans so you will have to deal with them eventually. Meanwhile, your best bet is to just stop paying the cc's right now. Use that money for your living expenses and to build up a small reserve, which you can then consider using to settle your debts (they won't negotiate with you if you are current) or to pay an attorney. Chances are in your favor that you can stave off a lawsuit for a year or more. You also may want to start learning about filing pro se.. many here have done so successfully. Keep reading posts, every chance you get, and you will get yourself a great education!

Or get a second job or increase income in some other way....

[IHateChase]

Just wanted to add, for most of us, that decision to stop paying cc's was excruciating, filled with anxiety and tears. It's a biggie. But we all eventually realized it was the only choice.

[Rozi]

Do not file bankruptcy! It's not worth it!! Just stop paying the credit cards for two months and I am sure the banks will work with you then... They are just playing hard ball. You can always get a second job, sell one of the cars or try and get on welfare. Anything but file bankruptcy.....

[IHateChase]

I know it's a lot of money to you, but in the grand scheme of things, this is a very small amount to file for. I'd definitely try some other things first before bringing out the big guns.

That inheritance would have been a great time to make a settlement offer.

Not a Dave Ramsey fan by any stretch, but have you considered his snowball approach? For cases like yours, it might make sense. A year of extreme belt tightening and finding some extra somewhere might get you out of your current predicament. You are young enough to possibly pull this off.

[buzzstpoint]

I took the step..
I know the paycheck feeling... I get paid this Thursday.. For 2 weeks I've had 13 bucks in my checking.. This was/is a normal for me. We've been treading water up to our noses and in the revolving cc debt for a few years now. Pay the cards and be broke.. Have to charge the cards up and max them out again.

When we visited a few attorneys they told us it would cost 1500 for his fee plus 299 for the court.. I told him I'm so broke I can't even go bankrupt.....
They may have some other suggestions on your debt.

His suggestion was to stop paying the CC's and save for his fee. Since I've always made a payment on my bills I felt sick to my stomach. Since we were saving for the attorney. I started to do my research. Basically if you can handle research and tax forms. You may be able to file Pro Se.. But this may not apply or be in your best interest for your case. My case is pretty simple with only a mortgage and all property exempt. You best bet is to talk with a couple of Lawyers.

I Filed Pro Se last week... Still nervous and have a hard time sleeping.
With your living arrangements, you may want to get a few free consultations and pick their brains... Ask questions, don't just let them talk.
Oh, stop by your local Library and rent the Nolo How to file Chapter 7 (2010) book.. It's a valuable resource. It will give you an idea if you are up to the job of doing it your self.

[IamOld]

Rozi, unless the OP quits his job there's no way they qualify for what passes for "welfare" - at the same time DO check and see if you - Fallen2011 - qualify for some social assistance - you NEVER know, and it's worth asking!!!!

Re BK - I would ask myself this - if you DID NOT have the credit cards to pay, loans etc (remember SL stay) - would you be ok?

If yes, stop paying the CC's save for an atty -the amount - as IHateChase pointed out - is not material - what matters is whether you can afford it, so to speak. Remember - as others wiser than I have said - your family, daugther, gf, etc. COMES FIRST. The banksters come last (if ever). Take care of home first. You only have one life :-) And it is short in the great cosmic scheme.

Now, just brace yourself for a gazillion calls per day, ever more "threatening" letters (as a pre-caution, get a free Google voice # and change your credit cards to that - you'll eventually get calls at home but not immediately) - and eventually yo may get SOME settlement offers from some folks.

Also as others would also say, go to a few free consults with local BK atty's!!!!

[AngelinaCat]

I have to disagree with Rozi to a point. The banks will NOT work with you about the cc debt. We tried to work with our major CC, and asked them to waive interest and penalty fees, and if they would do that we could pay something every month until the principal was paid off. That was NOT acceptable. The cc wanted the amount in full with interest and penalties, or nothing at all. That is eventually what they got.

Now having said that, I agree that you should not file BK at this time. 12K in cc debt is a very small amount--may be huge in your eyes--but is really very small. Most people on here have had major life changes, divorce, job loss, major medical problems, or some combination of all of these, in addition to cc debt, that have pushed them into filing BK, myself and my husband included.

If you file now to discharge that paltry 12K debt, you cannot file again for eight (8) years, and in that time, God forbid, something major may happen and you won't have this avenue available to you.

Further, you cannot discharge the student loans. You need to think long and hard about this, and discuss this with everyone in the household. I know getting a second job is difficult in this economic climate, but you need to find a way to bring in a little more money. Perhaps you can get rid of one of the car loans, and if you need a second car, save up some cash and buy a beater. You also need to build up an emergency fund.

Just some thoughts...

[Fallen2011]

Thanks all, I appreciate the great advice. It is a sick feeling asking for money and pawning stuff to feed the house. And I have been through terrible stuff in my short life...I'm sure I can get through this.
I have one loan on my SUV (4500) and a motorcycle loan (650) on a bike that isn't running currently. So selling isn't feasable.
I just took another job delivering pizza but I don't know if the 88 prelude will hold up for very long (it needs work too). Student loans are going to be due soon which is my latest concern. I guess I should request hardship status?
I don't qualify for any welfare program. But the gf does...can she request that?

[buzzstpoint]

Thanks all, I appreciate the great advice. It is a sick feeling asking for money and pawning stuff to feed the house. And I have been through terrible stuff in my short life...I'm sure I can get through this.
I have one loan on my SUV (4500) and a motorcycle loan (650) on a bike that isn't running currently. So selling isn't feasable.
I just took another job delivering pizza but I don't know if the 88 prelude will hold up for very long (it needs work too). Student loans are going to be due soon which is my latest concern. I guess I should request hardship status?
I don't qualify for any welfare program. But the gf does...can she request that?

You should call and your girlfriend should both call Health and human services in your area.. See who qualifies and what they can do for you/her. Only benefit we quality for is insurance. We pay a monthly premium but it's a lot better then our employers. Even if its 25 bucks in food stamps (Do they still call it that?) per month, it's better than nothing.

[frogger]

Do not file bankruptcy!

Anything but file bankruptcy.....

That you Dave?

To the OP, your situation may or may not be best served by filing bankruptcy. Gather up your documents for your financial situation and seek the advice of several attorneys. You also may qualify for many of the social programs that could help your situation.

BK may or may not be right for you, but never say never.

[LadyInTheRed]

Fallen2011, stop paying on the motorcycle loan. Let the bank repossess it. If you can't pay living expenses without using the credit cards, then stop paying the credit cards. Whether you file BK or not, you need to get out of the vicious circle of making your miniumum payments and then having to use the cards to buy diapers. Your credit rating will take a dive, but it will recover when you get your financial house in order.

Take a close look at where you spend your money. Are there areas where you can cut back? Think critically about what you need vs. what you want. It is time to start living within your means. That includes having anyone in your household who qualifies for assistance programs taking advantage of what is available.

I won't say that you shouldn't file BK based on how little you owe. $12,000 may be as crippling for you as $100,000 is for somebody else. The question is, can you find a way to pull yourself out of debt without filing BK? A good rule of thumb is that if you can get the unsecured debt paid down in five years, BK is probably not your best option. Explore your options thoroughly before filing for BK, including consultations with more BK attorneys.

[Rozi]

You can call the student loan people and see if you qualify for their income repayment loan program. That means you mail in a piece of paper giving them permission to pull your tax file to see how much you made last year. Then they base your payment off of that. You have to apply every year but, it is worth it. Or you can always call them and apply for a hardship. When I made the welfare comment I was thinking more about your girlfriend applying than you. She would qualify and she could get some food stamps. As far as the credit cards are concerned I know I was two and three months and my credit card people were begging me just to make the min payment and they would write off the late fees and other charges. I guess it just depends on who the credit card people are and what state your account is in. I wish you good luck though

[Pandora]

agree with the others; family before creditors. Stop paying the cc's.... your family comes first. Definitely look into whatever programs are out there for you and remember there are food banks available as well. Ask your pediatrician for any programs they may have being offered that can assist with diapers, medication, formula, etc. - and if you dont use coupons...start using them.

[jazzladyw]

Wow, I'm surprised by some of the responses. Don't file because having over $19,000 in dischargeable debt is too low??? Even with all of his other living expenses thrown in? That boggles my mind. I filed with only approx. $11,000-$12,000 in dischargeable debt. I think the individual situation should dictate whether one should file or not. If a person can't pay basic living expenses, AND all of the debt, then something has to give. Little to no income, mounting bills and late/overlimit fees, day to day and month to month living expenses, etc. Those should be the factors in the decision, as it was in my case. What might seem low to some people, could be insurmountable to others. Like myself. I could not continue on the road we were on. Filing was my only hope left to me. I did the negotiations with creditors, I tried making payments, I was getting harassed 200 times a day with phone calls and letters. My life was (and still is. my husband just lost his job) on a downward spiral. It was a hard, painful choice, but I'm so glad I decided to file. I still do feel like a failure, in a small way, but the relief is well worth the angst.