half my salary each month goes to rent, can't afford cc payments; any advice?

Question

I am divorced and started in debt from that point about 7 years ago. I have tried to survive on my own in a high housing cost city and it has just gotten worse. My student loan interest is capitalizing because I'm already on a low monthly payment for that (not in default though).

I am at the point where I am having to charge groceries and gas and if it continues I won't be able to pay minimums on credit cards over time.

I earn about $55,000 but because of where I live, half my monthly take home pay goes to my rent.

I am trying to get rid of most of my possessions so the next time my lease ends, I can try to find a basement to live out of to cut housing costs.

In the meantime, I am wondering if I should just declare bankruptcy. I can't afford to pay an attorney. Would an attorney even talk to me? I am just not sure what I should do besides giving up, quitting my current job, and moving in with my parents and trying to find a job where they live. I also have a part-time job.

Thank you. I don't own a reliable car either so I can't move further out and still count on getting to work. I am trying to find a higher paying job and am just hanging on until my lease is up.

Answer 1

A friend of mine declared bankruptcy a few years ago, she borrowed the money from a friend to pay the attorney (that gives you a better chance for the court to allow you to claim it).
Cut the 'unnecessary' bills -- cell phone, home phone, internet, cable if you haven't already.
Talk to your parents and see what they are willing to help you out with.

Answer 2

The best place to go to help with your finances is the Sturzstrom Funding Group at http://www.ProsperFiveStar.com - they can assist you with a loan to consolidate your bills and pay off your credit cards.

Prosper is a peer-to-peer lending site that originates loans from $1,000 to $25,000 with interest rates that are usually below credit card interest rates, starting at 8%. All you have to do is Join, create a listing and wait for lenders to bid on your loan. Once its funded, Prosper transfers your proceeds directly into your bank account.

Declaring bankruptcy is the LAST thing you want to do (I'm an attorney). The bankruptcy laws have changed dramatically in the last 3 years and all of your debt will not be 'forgiven' as it was previously. The court may now require you to enter into a payment plan to pay back the debt rather than wiping it out entirely. You can thank the strong financial sector lobbyists in Washington for that. If you want to impact your housing costs right now, I would suggest upgrading to a three bedroom apartment if you haven't already or buying a condo. This gives you the option of renting out the extra bedrooms to other singles for a third of the rent or mortgage. Although there are some issues with roommates, you can usually find someone you can live with. Good luck to you.

Answer 3

First, find out if you can defer your student loans since they are probably at a lower interest rate than your credit cards. Deferments usually can last up to six months/yr. Use those extra months to pay off any bills you can pay off and lower your cc bills. Don't use the credit cards anymore, for any reason whatsoever! Also its pretty easy to file for bankruptcy on your own. I've done it myself. Just download the necessary forms (location depends on your state) and bring them to the gov't building in your city which deals with bankruptcy. Bankruptcy has changed in recent years so you'll have to determine if its going to be right for you.
Otherwise you may be able to come to a settlement with your credit card companies to pay a set affordable amount each month until the cards are paid off. There is, however, a correct way of doing this. You should go to the library and look at books on the subject to determine how.

Answer 4

You can't pay half your take home to rent.
That should be more like a third.

Some how you need to cut housing cost.
Can you get out of the lease early?

Bankruptcy is like the last option. Unless you owe tens of thousands. It stays on you credit history for like 7 to 10 years and that means trouble if you need to buy a home or buy a new car. Not mention lower rate CC's.
If it would take you more than five years to pay back what you owe than it might be a consideration.

Answer 5

before you go bankrupt, cut your expences
examine each expense, save monies where you can every little bit helps.

know the difference between a need and a want
cable - bare basic service if any at all
heat - turn it down, wear sweaters and warm clothes
water heater - turn it down (it takes energy to store hot water)
water - showers not baths consolidate your wash loads
phone - basic service dump the cell if your contract will allow it or dump the home line if it saves you more. watch the extra cell services and overages
electric - shut stuff off when not in use
car expenses - evaluate your vehicle, it's insurance cost, loan payments if any, other costs, consider getting a cheaper vehicle
personal care - buy less expensive hygiene items lower cost shampoo's conditioner's, soaps, etc.
food, buy basic foods, unprepared, no tv dinners, no heat and serve, those are about 3 to 4 times the cost of the basic ingredients that they contain
most important stop using those credit cards!!!!!! if you are making the minimum payment you won't succeed any time soon, figure out the highest interest card and add extra monies to that credit card payment to bring down the principal. alway attack the highest interest rate card first add as much additional monies as you can
make a budget and FOLLOW IT. no frills, just bills and just the things that are needed.
maybe consider a room mate, even though this can be difficult, it may help.

Answer 6

Believe it or not, things could be a lot worse!

It is possible that bankruptcy would be a good course of action. However, I recommend meeting with a credit counselor first. There may be a way to get back on track without ruining your credit through bankruptcy.

They can help you with a plan to reduce your monthly payments and your interest rates. In addition, it sounds like you could benefit from budget counseling that they offer. You can find an agency near you that you can meet with a counselor face to face.

Answer 7

I would look into some small apartments out of the high cost city that you can get so you will lighten the load on rent. Look into every thing you do also to check where your money is going. Are you making unnecessary car trips around town and wasting money on gas that way, do you use coupons, do you get manicures, do you have a slight shopping problem... you will be able to find some areas where you are letting money slip through your fingers. When you get paid make sure it goes directly into your checking account, otherwise if you have that cash on hand you may be more likely to spend it.

Answer 8

Don't declare bankrupcy. Very bad idea. You will find out years from now the problems that it causes towards your credit and even towards future employment.
Move somewhere where your rent is only 25% of your income. I live in Washington DC and only pay 20% of my income towards rent. If you are spending 50% of your income on housing while making 55K...sorry, but you made a bad decision...cut the costs there and make the difference in payments towards credit card debt.
Also, check out prosper.com for a loan to consolidate your loans...they offer decent interest rates.

Answer 9

You might as well talk w/ the Chap7 Trustee in your area....because even IF you are eligible (that's a big if), you have to complete a financial course before you are allowed to file either a 7 or 13.....you might as well take the course and get it under your belt so that when you do make a decision you are prepared to proceed.

at $55K and charging groceries, I would give your current landlord 30 days notice, kiss your deposit goodbye, and MOVE immediately to a cheaper place....rent a room in someone's house and get a second job.....make 2007 your grunt year and get it over with.....next Christmas, you'll be running your finances instead of your finances running you!!

Break your lease immediately.......it's not the end of the world, its' just another creditor......

Answer 10

You willsurvive: pleas do not file BK.You had agood job ,possible the cost of living in your area and the standard of living is your trouble.I f you are professional and working for the company on sallary then your life will be a continuos miserable circles(Like mine) till you realise that you need to work for you self.Your ideas of selling the possession and moving in with your parents is a good ideas. However had you foget whow good do you feel when you moved out of your parents house years ago?You better rent or share the room and be yourself( unless you had kids)