Bankruptcy vs simply not paying?

Question

Brief background: Moved from one state to another for a job, which was lost. Income has dropped to about 50% of what it was. We've gone through our savings to try and pay things. Bring home pay now covers ONLY new house payment, utilities, groceries, life insurance, and government student loan. Have previously surrendered 2nd vehicle, (1st vehicle is paid in full). Old house in old state foreclosed on and being sold tomorrow. Credit cards remaining unpaid and sent for collections, etc.

My question is this: should bankruptcy proceedings begin or should we continue as is? What, if anything, can our creditors do to us (other than trash our credit - which has already happened). We live in Texas. I would appreciate any suggestions. However please refrain from replies such as "get a job", because we are both working full time jobs and have cut ALL unnecessary spending. We dread the thought of bankruptcy, but see no other alternative.

We've done the credit counseling, etc., and the funds are simply not there.

Can they garnish wages for debt in Texas?

Thanks for the replies so far - I appreciate it.

The one vehicle we have is paid in full and is a 1999 Ford Ranger - not new. Excellent comments everyone - thanks!

Answer 1

Your in Texas. Lucky you. Creditors can not touch your home in Texas. It is a home stead state. I used to be a bill collector and we couldn't even threaten a lien on properties in Texas. A good lawyer will have you file a chapter 13. Meaning that you would have to pay some of the debt and the remainder would be wiped clean.

Go to www.LifeAfterBankruptcy.com. Stephen Snyder discusses bankruptcy and how it has put him on the right track.

Answer 2

Your creditors can repossess your home, for starters. You need to pretty much skin down to the very basic things to get by, and even then, you aren't doing it.

Yes, not paying will trash your credit. You can also be taken to court for criminal fraud, which can mean jail time.

If you can't pay, you need to think about going the way of bankruptcy. Your house is a new house, right? Sell it and move to an apartment. It might not make you much money if you weren't there long, but it might make enough to get some stuff off your back. You could qualify for HUD housing, which is income based, and therefore, cheaper than a house.

Sell the newer paid off vehicle, and buy two cheap used cars which are older, and will be cheaper to purchase as well as insure.

Ask for a deferment on your student loan, which will give you 6-12 months of no payments. You'll incure interest, but the money you don't send to them each month can go towards getting your credit cards paid off a bit.

You could try credit counsling, but honestly, it's a 50-50% game. You might get a legit company who can help. You might end up sending your money to a company that keeps 90% of it, and sends only a bare payment to the places you owe, getting you into deeper hot water.

You have a job already, so maybe look at getting a 2nd job or even working some from home.

wahm.com has legit at home businesses you could do in your spare time, earning you a bit of additional income.

Try to pare down your utility usage as much as possible- lower watt light bulbs, fans instead of ac, turning lights off when not needed, drying clothing outside instead of using the dryer, etc.

Look at budget101.com, they have lots of awesome ideas on how to get a budget that pares down on the things you might not have thought of. They also have a yahoo group, and you can also find other ways of making some extra money on the side.

Answer 3

Here you can compare different options try it is free FINANCE-SOLUTIONS.INFO- RE Bankruptcy vs. Paying it off? My husband and I make about $32,000 a year, and not including my car, have about $10,000 worth of credit card and medical debt. All of these accounts are closed, charged off, and in the hands of collections agencies; most have been past due for more than a year. Our question is whether or not it would be wiser from a credit standpoint to pay off the debt little by little as we are able, or to simply declare bankruptsy on these accounts and start over. Would my credit look better after actually paying off these accounts, or if they were to simply not exist and be replaced with a bankruptsy? It has been suggested to me that I should make payments to these companies of $20 a month until they are paid off, but I have better than two dozen creditors and it would take an eternity to pay off some of the accounts that have a balance over $1000. Any suggestions would be appreciated.

Answer 4

File bankruptcy, not paying will just get you deeper into debt. There is no shame in bankruptcy. I have been there. I have also been on the end of not paying. Just remember, with bankruptcy it stays on your credit for ever so make sure you list all the bills you want to get rid of.

Answer 5

I would strongly urge you to refrain from filing for bankruptcy. You should seek some type of consumer credit counseling. You can find a reputable company on the Better Business Bureau website, that way you can be sure they are certified and completely legit. A bankruptcy will haunt you for years to come. Good luck!

Answer 6

I'd say file for bankruptcy but be careful because you may wind up having to surrender the car and home. Talk with a lawyer/ professional and get more info. Different states have different guide-lines. Better to be safe and take it slowly...do your research before jumping into something like that. My in-laws filed and it bettered their life but they lost the car and house and moved into an apartment and had to get a new used car and loan all over again. It's been about 4 years now and they own a house and their credit is much better. But they used it as the last ultimate resort.

Answer 7

I would say -- do it!

I filed for bankruptcy last year and it was a great (but tough) decision. Your credit's ruined right now already. Cut your losses. You can build up your credit again. Talk to a lawyer about your rights in Texas.

Answer 8

File. You're doing everything you can just as it is just to keep your head above the water. Bankruptcy isn't what it used to be, people can more easily rebuild their credit these days.

Answer 9

A bankruptcy will protect you from having judgements placed against you from old creditors.

Answer 10

file bankruptcy immediately. some info for you:

Types of Bankruptcy
http://get-out-of-the-debt-trap.com/