Quote:
Originally posted by maa2k
No Soup,
The info in the thread is great. I hope you can give me some advice about my situation:
I'm 24, single and have been with the same company for 6 years (4yrs part time while in school). I currently make 48k/yr before taxes. My debt has been piling up between school and family financial problems. I have a 40k school loan that was co-signed by my cousin, which I have been paying off on time. I also got a $21k car loan in 1999, which I am paying off on time as well and will be paid off next Nov. My main problem is credit card and some leftover tuition debt. I have about 5k in CC debt, 6k in tuition at a collection agency and 4k in CC debts that are also in collection agencies.
My credit scores are horrible and I have about 16 negatives on my credit reports.
Between rent, car payments, loan payments and other necessities I only have about $200/month to divide among the collection agencies.
Should I look into declaring bankruptcy? How will bankruptcy affect my cousin who co-signed the tuition loan?
I want to turn over the new leaf!
Thanks for the great help
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First off, sorry for the length of time before the response! It has been a bit since I have had the time to log on.... TFP, how I missed you.
On to your questions....
First off, your car will be paid off soon... which means that the end of that dark, dark may be over sooner than you think. You are not used to having that extra money lying around, so you will be able to put it directly on any other debt you may carry.
First of all, I would continue to make any payments that you have on time. That is of the upmost importance.
After you have paid off your car, (only 2 more payments!) I would contact the collection agencies and offer to settle. Some may refuse-let them sweat. Take the agency that offers you the best reduction, and make your car payment and any additional moneys you can to them, get it paid off as soon as possible. Repeat the process with the other collection agencies... hopefully any that refused originally will now change thier mind. Those that did offer in the beginning may give you a higher reduction now. Make sure you continue to pay those other bills on time, but you want those collections closed as soon as possible.
After paying off the collections, start hammering on your other credit card debt. Chose one, preferable the one with the highest interest rate, take the money from the car payment and collection agency payments, and pay the beast off. Continue doing so until all of them are paid. I know, easier said than done, but this is the by-the-book (and also best, in my opinion) advice on becoming debt free. The school loan you don't want to pay off until last, because it is generally tax deductable. However, when everything else is paid, do the same to that.
As far as declaring bankruptcy, I am not sure if I would recomment that at this point. I know you may not agree with me, but you are not in that bad of a situation. You make 48k a year, and only 55k in debt. It would be much worse if you made 25k a year, or you were higher in debt. Also, it is possible for you to still have that school loan after bankruptcy. It doesn't always pay for money owed for educational purposes.
In response to the bankruptcy affecting your cousins credit, it will. It would affect yours in a much more negative manner, but his credit would show that he defaulted on a 40k loan. He is just as much responsible for repaying it as you are, and it will affect his credit in the exact same manner as defaulting on that account would affect yours.
If I can be of any more service, let me know!