I Have A Debt / Bankruptcy Question?

Question

Here is my story.
I am a 27 year old married mom of 2. Hubby is bipolar and can't work. I have a few medical ailments that prevent me from working much outside of the home.
We have about $15,000 of debt. Counsumer credit card, past utilities, medical expenses, etc.

We WANT to pay them off. Our problem is we don't know if we should work with a debt consildation program or simple file for bankruptcy. Our income fluxuates from $800 a month to $1500. We live in Ohio. Our rent is $605.00. We have no car payments. We own a 1982,1992,1993) We never go out to eat, go to movies, I am wearing the same clothes from when I was 18. Trust me, there is no way to cut back on anything.
I am just not sure if we can even afford to come up with a debt consilidation plan given our situation and income limits. Would it be better both emotionally and financially to just wipe the slate clean? Thoughts/Tips/Appreciated...stinky butts need not answer! THANKS!

Answer 1

Bankruptcy doesn't entirely wipe the slate clean, if you were to file your credit score is going to plumett even further. I would recommend getting yourselves into some therapy, getting a real job and getting some lithium for your husband. Bipolar disorder isn't a valid medical reason to not work, it may prevent him from wanting to work, but the government isn't giving you assistance for a reason.

Answer 2

There are a few things to consider. I would suggest staying away from some of the debt consolidation programs. Typically with a little legwork you can do the same things as they can, but without paying anyone a fee. Most debt consolidation programs build in a small fee into your monthly payment to them which you really don't need to pay. Second, I would avoid bankruptcy at all costs. Personal bankruptcy stays on your record for 10 years and will make it difficult to get loans during that time. This means that if you declare bankruptcy, and then 5 years down the road you or your husband somehow end up with a better job or in a better situation and you decide you want to buy a new car or a house, you will pay significantly more in finance charges (if you can get approved for the loan) than you otherwise would.

There are a few things that you can do to try to reduce the impact of the debt you have right now
- Call your credit card companies and ask about reducing the interest rate, waiving some of the past interest in exchange for payment plans, reduction in fees, etc. Typically you'll have to be very persistant with this--the person that answers the phone first at the credit card company usually can't do much. Ask if you can speak with a supervisor or someone higher up and you may have success.
- If you can't get your credit card company to reduce your interest rate, look for other lower rate or 0% rate cards and you can transfer the balance. Be careful though of promotional periods, typically with the 0% balance ones. Typically if you transfer a balance and then also charge items on the card, your payments will go to the lowest interest portion first, meaning the high interest part will stay longer and cost you more. If you follow this route, a good way to do it is to find a 0% or low % card, transfer some balance to it, and then don't even use the card--just make the payments. Also, typically if you transfer a significant balance, you can ask the credit card company to waive the balance transfer fees. Tell them that if they don't waive the fees, you'll find another card with the same promotion instead. Also, you can tell them that you plan to use the card for everyday purchases, even if you don't plan to. If they think you are going to charge things above the 0% limit, they'll be more likely to give you a new card.

I know you said you've cut back everything, but there may be a few other options you have too (you may have thought of these already)
- You could possibly look for a house with lower rent. If you find one, you can ask your landlord if he will lower your rent to match it or tell him you will move out (be prepared to move though if needed!). Most landlords would rather have a tenant paying a few bucks less than have to cover the rent for a few months and fix up the place for new tenants. Or are there things you could do to fix up the place for the landlord in exchange for lower rent? i.e. minor landscape, interior painting, etc.
- You said you have 3 cars. Could you possibly sell one of them? That would give you some cash to pay the debts as well as reducing your insurance and registration fees.

Hopefully that helps. From your question (which I notice has very good grammar and spelling--which seems to be rare around here!) you are obviously bright and motivated. I'm sure you will find a way to work through it in the end.

Answer 3

Without going into a long story about it....do not file bankruptcy for a single $2000 debt. The cost of filing alone can be several hundred dollars. You never want to consider bankruptcy unless you have about $20k in debts, and several different creditors. The worst that can happen to you at this point is one judgment going on your record. That will hurt, but not nearly as bad as a bankruptcy. So from a credit score point of view don't file BK. Financially the worst that will happen is they get a judgment and then they need to figure out how to collect. From your question you don't sound like you make a lot of money, and they may not be able to take much from you. They could put a lien on your car. But from my experience helping people, you are on the edge of whether they will even file a lawsuit. In most cases, debts under $2000 are left alone, unless they have a collection agency right in your area. That will make it easier then hiring an out-of-state attorney to sue you. So my recommendation is if you can't even afford the $60 minimum payments, then ignore them and gamble on a lawsuit. A single collection is only going to mess up your credit for a few years.

Answer 4

Based on your income and just your rent payment, there is little hope for you to have ANYTHING left over to pay on the debts.

The first thing you need to do is set up a spending plan. Take care of yourself first. Determine your monthly expenses, starting with rent, utilities, food, transportation (gas, repairs, insurance). If your monthly income doesn't cover that, you have NO wiggle room and can't pay the debts. Bankruptcy would appear to be your only option (unless you find a way to bring in more income).

If you DO have or find some extra money, you can consider paying some on debts, but don't starve yourself or lose your "home" to pay off debts. If it's just you and your husband who drive, you don't need 3 cars, so sell one and use the money either for living expenses or to pay down some debt.

You don't NEED to go through a debt consolidation program to pay off your debts - you can do the same thing yourself, just by being disciplined (if you have money to spare). Bankruptcy may or may not erase the debts - the court will look at your situation and determine how much you can be expected to pay and over what time frame. Plus, it is now much more difficult to file for bankruptcy (although you appear to have a good case).

Whatever you decide, I wish you the best.

Answer 5

Sounds like you are in a tough situation. However, here are my 2 cents:

1) You need to recognize that your debt problem is a symptom of lack of income.
2) If you could make the payments, you wouldn't need a debt consolidation program, and all that does it help you arrange payments (and charge you rediculous fees).
3) If you file for bankruptcy, and keep spending more than you make, you'll be in the same position in a few years.

Take your income, and spend it in the following order:
Food
Lights
Rent
transportation (gas and insurance).

Everybody else has to wait in line. See if you can scrape up some extra money, and if you get some, call the smallest debt person, offer them a settlement in full. If they accept it, get it in writing (keep that forever), and save up for the next debt.

Don't let the collection agencies change this plan. Ie you need to eat before you pay Visa.

You might see about finding a cheaper place to live.

Answer 6

If you file bankruptcy, then what happens? You will be in no better shape than you are now. You don't have an outgo problem. You have an income problem. Do you plan on living this way the rest of your life? If each of you are disabled, you need to be getting assistance. If not then there is only one place to go when you are broke and that is TO WORK.

Also, you need the support of a good church family. They can provide emotional support long-term and financial support temporarily.

You have 2 children that need to be supported, and they also need to learn a good work ethic and that comes from you. If you don't do something about this, your children will be on welfare the rest of their lives as well.

I'm sorry if this sounds insensitive. I don't mean it to be. I just want you to pick yourself up 1 more time and keep trying. You are still very young and have your much more life in front of you.

Regards

Answer 7

Best advice i can give you is DO NOT BANKRUPT for 15000 first cut all your cards and keep just one of them just for emergency perposes. Go see debt consiladation people they will help you and cut down your interest slowly slowly pay them off. You might be able to do by yourself too. You can call the credit companies tell them you will be filing bankruptcy or lower my interest rate but best way to do is debt consildation they know how to talk with credit card companies. You guys are still young these hard times will be end someday. FIling bankruptcy is easy but next seven to ten year you are not be able to buy any car or house.

Answer 8

Just from my previous experience, debt consolidation companies kinda work. It's been like a couple of years. Be careful of what they charge, I told them I could only pay $20 extra for their fees and it was fine. but most credit card companies do not waive fees/interests so your paying lets say $40 and 35 is interests. Try to work out a payment plan with the companies (unless the accounts have been sold to collection agencies, then its tougher). Bankruptcy is last resort. I considered it, but not all debt is removed. It depends.
www.uscourts.gov/bankruptcycourts.html gives details on the fee's and process. Good luck!

Answer 9

Consolidating debt is an ideal way to reduce your amount and tenure of debt. You make a single payment to one lender on a certain date and this will help you clear off the debts faster. But the fact remains that debt .....

Answer 10

your local state agency should be helpful with med bills and bankruptcy is no fun . resonsible is the key here . get rid of that card. always maintain something in the bank ,when pos. . and find a company that can and will help .get your debt in order .
i know it's tough . hang in there !