Need advice, hard times ruined cradit and want a way out!

[pdx7]

Well guys I come here for advice as many others, I am in pretty desperate need. My situation is very similar to most people at the end of their rope, so to speak. I am currently unemployed and I receive no unemployment or any kind of benefits or cash, basically 0 income for the past year. My situation is largely my own fault for being in denial for many years and other part just hard life and bad luck I guess. I have never leased a car or bough a house and always though credit was a luxury only needed if you want to buy something large. We grew up poor; my whole childhood consisted of food stamps. The American dream did not happen to our family we were just happy to scrape by most of the time. My parents never even finished high school so it wasnt exacly like anyone could coach me about finances when i was younger. My parents worked 2-3 jobs most of the time and I have 2 siblings. Of course once I hit 18, the few small credit cards I got I could not pay off. In the past 5 years I did not finish school as I had to help out the family working odd jobs and my sister has some serious medical issues and I was basically babysitting her for the past 4 years. I worked in 2009-2010 and made about 25k that year. When it came down to food on the table or paying a credit card off, well that’s not much of a choice... I am not proud of this.

Currently my credit is less than 200 beacon. I see no hope here, there are so many little missed payment and defaults I don’t see how I can get this back on track unless I wipe as much of it as possible. I am not planning on buying a car or or house anytime soon so it doesn’t bother me. Problem is now a days everyone wants to see your credit. It’s hard to get a good apartment with low credit, my car insurance rates are higher and many employers won’t hire me due to bad credit. I was out of the country for close to a year and just didn’t do anything about my credit I wasn’t even sure if I was going to return to this country, but I did. So my student loans went to collectors instead of hardship forbearance status. I didn’t have a cell phone or a stable place to live for over a year. I would like to know if there is a way I can deal with the original department of education or whoever the original creditor is and work out a plan with them or am I screwed with the collection agencies now? I am hoping to file for BK and hopefully that will give me some relief.


I have

About 20k in student loans
About 1k in medical bills
About 3k in credit cards all very old 5-7 years and small amounts
A judgment of about 4k against me due to an auto accident 7 years ago
about 2k miscellaneous small defaults, utility bills, cell phone etc and about $100-$300 each but about half a dozen of them.
Less than 1k I owe to a bank for overdrawn account about 3 years back
I owe $1k in federal back taxes and $2k in state taxes

70% of these numbers are my actual debt the rest is all late fees interest etc… I overdrew my bank account by $20 and never paid it, of course when it went to collections it was close to $600 with all their fees. I don’t see how banks can do this sort of thing and for people at poverty level like us it’s impossible to pay that money.

I own my car outright, its worth about $3k and I have less than $1000 in my bank account.

I want to sort all of this mess out finally and try to start fresh. I feel like having a BK and clean credit is better than a whole bunch of small defaults and lates that I can’t keep up with.

I know the student loans will probably not go anywhere, but they are in collections and creditors are harassing me every single day threatening lawsuits and wage garnishments. I tried to tell them I have NO wages and no money in my bank I can’t pay them anything right now.

I can sell off some personal items and scrape up about $1500 for a lawyer and BK fees. After that gets wiped off I am hoping to finally land a job as I have been turned down due to “unfavorable credit” before. I will be able to make small payments for taxes and student loans.

If I had $30k I would pay everybody and sleep well at night, but I don’t. So what do you guys think? I was also hoping to go back to school, so will the BK affect any future federal loans if I get them back on track and start making payment after BK? Thanks in advance.

[mountanddo]

Wow, the banks must have charged you daily for your overdraft. Years ago when I overdrafted my account they overdrafted like 4 checks and the fees were $110. They didn't honor the checks so that was all overdraft charges except for maybe $10. I told them that I wasn't going to pay it and they waited about 6 months and sent it to collections. It was still $110. I haven't overdrafted an account since then but the bank fees must really have changed since that time.

[AngelinaCatHub]

Well there are some good and bad parts of your explanation. You owe very little. You make nothing so how are you living now? Many jobs do not check or need to check credit. Put credit out of your mind. We use no credit and once were 820 but I have no idea of it now as I do not car or will use it.

So, the student loans, this makes no sense since you state you did not graduate form high school???? Is this so, and so what was the school and the loan?

I think you need to attempt more than once to get this debt forgiven.

Your debts are getting older, how new is the latest one as the Statute of Limitations could cure some.

BK 7 is about 15 hundred. You are collection proof at this time. It will cost a bit more to get the Judgement removed.

Cheer up for now, since you acknowledge your situation is half the battle. Go to work to better yourself and also go to work if not there now. There is work to do, if you look. 'Hub

[mountanddo]

So, the student loans, this makes no sense since you state you did not graduate form high school???? Is this so, and so what was the school and the loan?

Actually I think he said his parents didn't graduate from high school, not him.

Actually I think he said his parents didn't graduate from high school, not him.

[shark66]

Honestly, I don't think you've got much to gain by filing BK. Your credit will not get "cleaned" overnight by doing that...

The biggest chunk of your debt are student loans, which are going to stay with you.

What if you get sick, or injured, and accumulate more medical bills?

If you've got no wages/bank accounts to be garnished, get a Google Voice number and ignore the creditors/collectors.

Once you actually get into the position where you do have something to protect, go ahead and file.

My $0.02 only...

Good luck to us all.

[pdx7]

Thanks for all the replies guys this helps.

Most of the smaller stuff is set to be removed in 2013. The civil judgement also shows up as being removed on 05-2013 on my credit but i dont know if they will be able to come back with it? My next question is my student loans, the US DEPT OF EDUCATION accounts have been closed in 02/2010 and i called the department of education and they sent me to the defaults department/collections. My balance is $20K and they said they cant do anything about it as far as forebarance or hardship status. My last year of college was 2008. Do i have any options with this?

I am living rent free with my parents and doing small odd jobs to survive for now, none of the jobs are over 3 month long so i doubt anyone can garnish anything, i will make less than 10k this year.

[bcohen]

I agree with shark66. Since the majority of your debts are non-dischargeable, filing for Chapter 7 bankruptcy will not bring any relief. You are much better off to wait and leave that option open for the future in case you suffer a medical emergency, face judgement for another at-fault auto accident, or have something else come up which needs to be discharged. Once you file, you can't file again for 8 years, and a lot can happen in 8 years!

I also don't see how filing for bankruptcy would help you to the extent that a prospective employer, landlord, or other creditor is denying you because of your credit history. The small charge-offs are old enough that they would make little or no difference to your credit score. It is the defaulted student loan, judgement, and tax arrerages which would cause you to be declined, and bankruptcy won't make these things go away (though it will make the judgement non-collectible).

If an when you have a good job, and wages to protect, then bankruptcy might be beneficial, but not now. Also, many apartment complexes here will overlook bad credit history as long as you have a stable job and no criminal record.

[travelmama]

Also many of those old, small debts can probably be wiped out with a simple letter written to the credit bureaus "i dont know what this is" and if they can't verify, they gotta remove it..... worked for me dozens of times... if they do verify wait 3 months and try it again. You have to beat the credit reporting agencies at their own game.