should I file for bankruptcy?

Question

I am 23 years old, in college part time and working part time. I am recently divorced and have about $21,000 in loans and credit card bills I got stuck with that were all aqquired during the marriage. Since I can only afford minimum payments (and receive no financial aid) I feel like I should look into bankruptcy.

I have two credit cards, so If I file bankruptcy on just my loans ($19,000) and one credit card, does keeping the one credit card plus an account balance with Dell (for a laptop I financed) help my credit score at all, as opposed to filing on everything I owe?

And everyone says to do it before I get any older if I'm going to do it. And I don't expect any new bills (I have a dependable car and low rent) anytime soon.

Sometimes I feel like bankruptcy is "cheating" but I had an extra income at the time I signed for the loans, and of course didn't expect to get divorced. I feel helpless, as the balances barely go down and i'm spending money I need to live, or I'm going to have to quit school.

Answer 1

Bankruptcy is not always a bad thing...but I think in your situation (based on the limited information you gave), you should hang-in there...

I am assuming that much of that debt from "loans" is student loans (which you can't erase in a bankruptcy anyway). Student loans can be put "on hold" for financial hardship for more than a year after you stop attending school at least "half time."

So, minus any student loans, your debt still isn't that unmanagable. If the bulk of it is credit card debt (and I'm guessing that it is becuase that's the kind of debt that seems like it's impossible to overcome--due to the way they slam you with high interest, late fees, etc.....

If you can maske the minimum payments (on time)...do it! I'm assuming you have multiple cards...Focus on the card with the highest interest rate (not the necessarily the highest balance). Try to pay the minimum PLUS as much as you can afford extra each month. Once that card is paid off, pick the next target. Keep doing this until you are free and clear.

You're in college, so you will probably make more and more money as you gain more work experience (and definately once you get your degree).

Hang in there if you can! It may seem like forever away and that you'll be paying your debts for all eternity...never getting ahead. Millions of people feel like you do. Just stop the spending as much as you possibly can, and follow the payment plan. You will be surprised how fast it will take you. I'm expecting you to be able to pay off $20,000 in two to three years (max)! This will give you a fantastic credit score by the time you have your degree and you're ready to buy a house (or larger house). If you go the bankruptcy route, it will be much harder for much longer (you can't beleive everything your bankruptcy lawyer tells you...).

If time goes on and that debt is growing instead of shrinking (or some major event happens that causes you to not be able to keep up for 3 months in a row, or longer....then consider Bankruptcy, but keep it as your last resort. It seems like you have time on your side...and that's the best thing you can have for your credit!

Good luck!

ADDITIONAL COMMENTS:

I just checked back to see how you're making out, and I think you're misinformed about bankruptcies....they're "all or nothing"...you can't choose to keep some of your debt and only select to erase others. When you file, you have to, by law, disclose all of your debts, and those indebtors will be notified of your filing. You can choose to pay certain creditors anyway, even after the bankruptcy (out of good faith), but they will technically be included in your bankruptcy.

Second, just becuase you have to include everything on your bankruptcy does not mean it will all be wiped clean. You mention loans...are they auto loans? student loans? mortgage? The type of loan, how much you owe (in relation to your income and net worth) makes a difference....and as I said above, student loans can not be cleared in a bankruptcy (except in extreme life-altering circumstances...and not even always then).

Given this additional information, I would definately say that you can actually do better in the long run if you tighten your belt a little and work through a plan to pay off your credit cards. I understand how overwhelming and impossible it seems now, but realize that it will take two to maybe three years, and then you'll be "free and clear." You can do it! And stay far, far away from these "non-profit" groups that say that they can work miracles for your debt and to help you avoid bankruptcy....they'll just be another bill (usually around $1,200 to $3,000)....and you'll still be responsible for your debt. They'll claim that they can negotiate your debt down with your creditors (and they'll claim these amazing amounts like "reduce your debt by 75%!")....Give me a break! Haven't you heard of the saying, "if something sounds too good to be true...." Well, this applies here....By the way, YOU can negotiate your debt down as well as they can. But realize that you will not be offered a 75% reduction. Most likely, you can get late fees, over limit fees, etc. wiped out. You may also be able to get a reduction of 10-30% if you can make a full pay-off (but who can do that?). The point is, you can usually try to work something out with the card company. Note, they will not just come out and offer you these things...it's called negotiation. They get people trying to dupe them all the time, so they will resist at first because they want to make sure you really need it. Negotiate. You can do it!

O.K. You're going to make out fine. Keep focused on the future (2-3 years from now), but plan to get there in baby steps...you will make a better future for yourself. Believe me! I've been where you are now...I know you're going to do what you're going to do, but if I can help somebody not go down the road that I did, it would be worth it......Good luck!

Answer 2

Just a couple of quick questions first.

1) Can you balance the whole load right now?

2) Is this everything? I mean, can you expect to see more unexpected bills coming anytime soon? (i.e. more debt)

I got divorced and had co-signed a couple of things with my ex. She filed for bankruptcy and then they came after me. She had won the house and the "new" car in the divorce but she left it all behind and re-married.

The house was the final blow. I held the divorce decree up saying that she was responsible for it but that did little for me. The binding contract disregarded the civil law.

I filed for bankruptcy. My only regret is that I didn't do it sooner. I now have a judgement against me that I can't get off my credit report. I have to explain everything every time I apply for something.

This may all sound confusing but I am trying to answer your question. If you think you can handle the debt then do it. If there are "more suprises" waiting around the corner, then take the road well traveled. Many others have been there as well.

Answer 3

$21,000 is really not that much. It's a manageable amount of debt; you may need to take a second part-time job, maybe just during the summer since you're in college.

Don't worry too much about what bankruptcy will do to your credit. Credit ratings do recover over time. What I would be concerned about is this -- you can only file Chapter 7 once every seven years. So if you file today to wipe out a relatively small amount of debt, what will you do if you get hit with a huge debt such as uninsured medical bills two years from now?

Answer 4

You should ask for any legal advice of attorney. For most people the thought of bankruptcy is devastating enough having it become a reality is very painful and comes accompanied with an overwhelming sense of failure. If you are feeling trapped and like you have no options, because you are crippled by debts you don’t have to be. http://freshstartsolutions.com.au/bankruptcy/

Answer 5

You should visit CREDIT-SOLUTIONS.INFO- I am sure here you can find the best option for you

RE Should I file for bankruptcy?

I am 23 years old, in college part time and working part time. I am recently divorced and have about $21,000 in loans and credit card bills I got stuck with that were all aqquired ...show more

Answer 6

I would go ahead and file bankruptcy. you still young. When my husband and I first got married he filed for bankruptcy and its not the end of the world. you can either do it yourself (A lot of time and effort) or hire a lawyer. My husband did his research and did it on his own. Well good luck! :)

Answer 7

try not to file for bankruptcy as that will seriously hurt your credit. start with the highest interest rate and send a little more money if you can . even if you can send 5.00 extra it might help on some of your bills.

Answer 8

for $21,000 I would not do bankruptcy unless you are already with a lot of late payments but if you can afford the minimum payments then just make them until your situation gets better because when you do bankruptcy it stays on your record for up to 7 to 10 years.

Answer 9

Make appointment with a bankruptcy attorney for a consultation.

Answer 10

Yes You Should. Talk To A Accounted First