Bankruptcy advice?
 

I'm contemplating filing for bankruptcy but wanted to see if anyone out there has any advice. I have not yet talked to an attorney about this. Wanted to do a little 'research' before I make my decision.

I make decent money. I live an average life. I had a house with my (then) wife, but since we divorced, we sold the house and split the profit. I am currently renting. I lease my vehicle - lease ends in April and I'd like to purchase it at or before that time. It has low mileage and I've taken good care of it. The biggest killer for me is I have credit card debt to the tune of $20,000. Despite this, I have a pretty good credit rating. I make my payments on time, none of them are delinquent.

My debt began while I was in college. I had to use credit to buy supplies and sometimes living necessities. Ever since then, the balances have just crept higher and higher. With the payments and current living expenses, I have no extra $$ for any potential savings or way to prevent having to use the credit cards.

In evaluating my budget, if I didn't have the credit card payments, I would be in a significantly better financial position.

The stress of this debt issue is something that weighs heavily on my mind often. I lie awake wondering how I can pay off debts, etc. Lack of sleep causes me to lose focus at the office, etc.

If anyone out there might have any advice or tips, I am extremely grateful.

So what you are saying is you want to Welsh on your debt you accumulated fairly?

(and I can say that without PC police being part Welsh :thumbsup: )

If you're bound and determined to declare bankruptcy, then you need to talk to an attorney. We're really not qualified to give you advice on that since there aren't that many attorneys on the board (although there are a few). The personal bankruptcy laws changed a couple of years ago, so most people here, unless they've been through it recently themselves, will only have out-of-date information.

If you're looking to solve the problem rather than run from it (as Ustwo mentioned), then I suggest that you find a local nonprofit that specializes in credit counseling and see if they can help you budget better and work with your creditors. Personally, I think that this is the better option since your situation does not sound like you're in serious trouble at the moment.

I would disagree with this sentiment, but to each their own. Working with credit councelers damages your credit almost as bad as bankruptcy - and they generally don't do anything you can't do yourself.

If the 20k of credit card debt is all your going to gain, I don't think that it would be worth it - depending on what you make per year.

Your lease won't go away on your vehicle, your rent isn't going to drop, and if you have school loans out there they will also be unaffected.

Perhaps a part time job? It might suck, but seven - ten years of damaged credit would likely be worse. 20k seems like a mountain of debt when you're looking at it in the beginning, but every journey starts with the first step. In this case, stop using them and start paying them off...

Do you have a good banking relationship?

It may be worthwhile to request a personal loan or line of credit to consolidate those cards into one payment. I'm assuming :oogle: you have more than one card balance since you can only afford to make minimum payments. If you sunk the amount of those payments into one lumpsum bill at a much lower interest rate, you'd have hope of paying it off.

I'd urge you to do all you can not to file for bankruptcy. I did so many moons ago and it took over 10 years to get it erased from my credit, and another 2 or 3 years to earn back to my prior pretty credit scores.

Don't do it.

Unless we're missing more information about your big picture, it doesn't sound like you're in that much trouble. Bankruptcy is a last resort. You have a good credit rating. Congratulations, you're doing better than many out there. Why would you want to bungle that up with a bankruptcy?

Bankruptcy is something that takes a long time to recover from, and in the meantime it will cripple you financially, limiting certain freedoms you might currently enjoy. Think of it this way: What if down the road you decide you want to apply for a mortgage? If you go ahead with the bankruptcy, it won't likely happen for years.

$20,000 is not a large debt. If you are renting and make decent money and (will eventually) own your car, you just might be in good shape to tear the crap out of your debt. What other debts do you have? What is your income level? Determine your debt-to-assets ratio, or your debt-to-income ratio before making any decisions.

Do you have creditors nagging you? If not, you shouldn't even be thinking of bankruptcy.

Any bank or credit union worth dealing with should be able to help you out with something called a "bill payer" loan. I went through this in the early 80's. Talk to a loan counselor, tell him/her your problem, and if you are financially solvent enough, arrangements can be made to pay off your existing debt while paying one monthly bill to the lending organization. Been there; done that..it can work for you...

Declaring bankruptcy will fuck up your credit for life. I have friends who work in big banks (UBS, RBS, etc.) and I've heard it from other people. People say it comes off your credit report after 7 or 10 years, it might even be off the copy you get, but the reality is that it's there forever and nothing short of nuclear war is going to take it off. You will never be able to get an affordable mortgage, you will never be able to get an affordable car loan, you get the idea.

Thanks for the advice everyone. Sounds like bankruptcy is the wrong route. I'm going to talk to my bank about some kind of consolidation. Might take me a while, but I hope to get out from under this mountain of debt.

If you're researching something like this you'd be better off spending money on an attorney. You get what you pay for.