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Hmmm... I've always seen that question. Maybe not in the initial application form, but I've had to answer such question.
OP, I really do believe you can avoid bankruptcy although I don't have all your financial details. Good luck!
I've never seen it on a job app, but every single company I've ever worked for (3 of 'em) have all pulled a credit report before extending an offer. Fiscal irresponsibility- which is what putting an engagement ring and wedding you couldn't pay cash for and buying a home you couldn't afford REALLY is (no matter what bs excuse you want to tell yourself)- is a big red flag to Manu employers, especially if you have a business field (accounting, finance, mortgage, etc) job.
If you pursue BK, answer these two questions:
1. Have you changed your spending habits? You MUST be assured you can live under your means and will not ever, ever use credit for sometiig you can't afford- whether it's a vacation or Birthday presents or lunch or gas- ever again. If you and your wife have not solved the root cause of your bad habits, you'll be right back in debt in no time.
2. Are you prepared to live on cash for the next 7 years? Because you won't be able to finance a new car or open a Lowe's card for a new dishwasher or take out a loan for grad school or rent an apartment should you need to relocate for a job while you are in the 7-year waiting period.
Lastly, BK is a big deal and not to be entered into lightly. It is a last resort. If you are at break-even on your home, can you sell it and rent a less expensive apartment and throw the money you save by not having mortgage/taxes/insurance towards your debt? Can you sell 1 car and commute via public transit? Can you sell everything possible? $50k is a lot, but you are young and should be able to pay it of in 4-5 years if you're really disciplined and can get out of some of your obligations like selling the house.
First off -- your student loans -- have you minimized that payment? There are multiple ways to do that - loan consolidation at a lower interest rate over a longer time period, Income Based Repayment, etc...
You may be able to save a couple hundred dollars a month right there - depending on the amount of your loans and your current payment. Now granted, ifyou consolidate for a longer time period, you pay more in interest overall - but - as pointed out - you CAN NOT get rid of these loans, so simply minimizing their cash drain on you right now - might be enough to get you through this kind of situation. Then you can pay more than the minimum when you're over the crisis and get them paid off if that's what you choose to do.
With your wife's salary gone - would you be able to afford (just barely) the CC's - or can you not afford them at all.
If you can afford them (barely) - I would suggest a credit counseling service -- the type that are non-profit and charge a sliding scale (or Zero) fee.
Yes - these companies are generally funded by CC companies, but you will still often get significant rate reductions, allowing more of your payment to go to principal. Also, the negative hit to your credit rating (if any) will be much less than a full bankruptcy.
I did a program like that - for an amount of debt similar to yours, and paid it off in about 4 years. But you really need to talk to them before the debt is Unaffordable. I almost waited too long -- I kept thinking I could dig out on my own. Finally I did the math and realized that the minimums I was paying (which didn't even cover full interest) I was about 6 months away from not being able to afford all the new minimums... Most of my interest rates got cut to below 10%, some to the 5% range. I was paying the exact same each month, but it was actually making a difference instead of just keeping me dog-paddling in the deep end.
If all else fails - bankruptcy is certainly an option. But, I would really try all the other things first.
Notice - I'm not saying work a 2nd/3rd job. Give up electricity, don't eat, etc... When giving up utilities and food are the only alternatives - well then it probably is time for bankruptcy.
But if you have any breathing room at all - I would check into credit counseling -- and definitely see what you can do to minimize the student loans. IBR (income based repayment) is a great program and more should be taking advantage of it.
Good luck to you ... you can DM me if you want any more info on my experience with credit counseling.
Also - do not look into "credit repair" - those places are scams. The credit counselors that are reputable are usually non-profit. A lot of posters here are against them, or will maintain that you can do the same thing for yourself. However I had a really good experience with them, and I could not have done the same things (get my interest rate reduced 20% with one phone call) for myself.. so I am a believer in them.
I think you have many other options before bankruptcy.
spell out your monthly expenses/payments. it sounds like you have student loans, mortgage, and credit cards. you also have the 11 months left on your car loan. your commuting costs obviously, because you need to get to work. groceries. utilities.
i'm assuming right now you're living without cable? you probably have cell phones, are you on the cheapest plans you can have? are you wasting money on a landline?
now, how can you cut these expenses? car loan and mortgage are fixed. not much you can do there. you probably couldn't afford to refinance the mortgage, but about 6 months ago, you would have been able to refinance the mortgage and get a lower rate, lowering your monthly payments.
as for commuting costs...are you driving as efficiently as possible? you may be able to cut down on your fuel expense.
as for your utilities...it would only be small savings, but are you wasting any water or electricity? be smarter with both and that will give you a few dollars extra per month.
student loans - call and make sure you're on either extended repayment plan, or income based repayment plan to ensure you have the lowest monthly payment you can get for now. as stated above, you'll pay more in interest overall, but you're trying to get out of other more expensive debt right now, so it's worth it. also, are your student loans all federal, or are some private with variable interest rates?
now onto the credit cards. you say you have approximately $50,000. how many balances make up this $50,000, and at what rates? $50,000 is a lot, and you're at the brink, in my opinion, of being entirely too far over your heads, but people have gotten out of more debt than that. i would ensure you've called every credit card you have, and ask for a lower interest rate. this will allow you to pay more principle off each month than you currently are. you probably won't qualify for a 0% credit card at this rate, but if you have any offers like that, it might be worthwhile dumping as much as you can on one of those cards, and start chipping away.
oh, and if your wife is currently in danger of being a victim of the school cuts, she should start looking now for a part time job. anything...walmart, daycares, etc. lots of teachers in hoboken are advertising on craigslist right now for babysitting and daycare. be creative to get some extra income.
Before you file for bankruptcy, take a HELOC and pay OFF your student loan debt.. That way you can also get rid of the student loan debt.
That's smart. Good idea. BK is just like taxes. Do anything you can to make it work out better for you.
Here's the deal..... People think it's such a negative thing to file BK. But it's just fine for the S&L's, banks, mortgage companies, automobile manufacturers, and corporations in general. We need to stop judging individuals more harshly than we judge business entities. These are bad times, arguably the worst since the great depression in the 1930's. Too many people are hurting. They are unemployed, under employed, or working at jobs they hate. There are scads of people who did everything right, went to school, got degrees, and can't find anything in their field that pays a living wage. And guess what? Lots of people are losing their high pay years to this mess and they will NEVER be able to make up the difference. Bk is one of the few things out there to help individuals. They have no choice but to use it.
No credit for 7 years? Baloney. That's true if you file BK when the economy is good but now, you are in the boat with too many other people. Many of these people had perfect credit records for decades before hard times hit. You will take a hit but you will be able to get your credit back a lot sooner than you think. Provided you are responsible post bankruptcy.
An individual who used to be a close personal friend of mine filed BK, ch 7. It was a total fraud in my opinion. But I am one of the people who lost in this action, she owed me 7K. She filed BK because she was going to marry a man who was making over 100K per year and she didn't want him to be held responsible for her debts. Her total write off was about 36K. She is doing fine now.....she bought a new car right after the BK was final. So, it can be done.
And why should we be more ethical and willing to suffer than the companies who caused this mess?
That's smart. Good idea. BK is just like taxes. Do anything you can to make it work out better for you.
Here's the deal..... People think it's such a negative thing to file BK. But it's just fine for the S&L's, banks, mortgage companies, automobile manufacturers, and corporations in general. We need to stop judging individuals more harshly than we judge business entities. These are bad times, arguably the worst since the great depression in the 1930's. Too many people are hurting. They are unemployed, under employed, or working at jobs they hate. There are scads of people who did everything right, went to school, got degrees, and can't find anything in their field that pays a living wage. And guess what? Lots of people are losing their high pay years to this mess and they will NEVER be able to make up the difference. Bk is one of the few things out there to help individuals. They have no choice but to use it.
No credit for 7 years? Baloney. That's true if you file BK when the economy is good but now, you are in the boat with too many other people. Many of these people had perfect credit records for decades before hard times hit. You will take a hit but you will be able to get your credit back a lot sooner than you think. Provided you are responsible post bankruptcy.
An individual who used to be a close personal friend of mine filed BK, ch 7. It was a total fraud in my opinion. But I am one of the people who lost in this action, she owed me 7K. She filed BK because she was going to marry a man who was making over 100K per year and she didn't want him to be held responsible for her debts. Her total write off was about 36K. She is doing fine now.....she bought a new car right after the BK was final. So, it can be done.
And why should we be more ethical and willing to suffer than the companies who caused this mess?
choosing to live ethically is independent of what others do. i don't think playing the "companies did it" card makes it right. i understand your point, but i still think one should make their best efforts to pay their debt, and bankruptcy really be a last resort when all else fails. honestly. $50,000 is not something that can't be handled. and if it can't be, filing ch 7 isn't going to fix the person's underlying issues
Exactly - I have absolutely no problem with someone filing BK. You tell me your home is $200K underwater, and your spouse has lost their job and can't find another one and your income alone brings you $3K short in monthly finances...???
That's BK.
But the OP didn't paint that bleak a picture.
50K in CC sucks. No kidding. But using the right strategies, it can be overcome. That's why I asked if he could still make the bare minimums. If you can do that, you can pay it off - even if it takes a few years.
The student loan's not going anywhere, anyway --- so you might as well just minimize the cash drain on that temporarily to make the other debts more manageable.
Now - if they are so strapped that the only way they can meet their monthly obligations (after minimizing the SL's and getting lower interest rates on the CC's, etc..) is by working 2 or 3 jobs each, barely eating, and selling all their furniture...??? Well, then I would recommend BK - because that lifestyle will severely hurt most people and their marriage and psyches may not survive it.
But if you can scrape by (yes, have cable - but have the most basic package, keep a cell phone, have a modest food budget, etc..) on one job each, or 1.5 jobs each (some extra part time work for some extra money won't kill you...) - then that effort for 3-5 years, is worth it.
BK is not the end of the world - people file and recover from it all the time. But, it does end up on your record, and other's (home loans, future employers, etc..) will make a judgement about you because of that. If you can avoid all that - even if it requires some sacrifice for a few years, I think its usually best.
Exactly - I have absolutely no problem with someone filing BK. You tell me your home is $200K underwater, and your spouse has lost their job and can't find another one and your income alone brings you $3K short in monthly finances...???
That's BK.
But the OP didn't paint that bleak a picture.
50K in CC sucks. No kidding. But using the right strategies, it can be overcome. That's why I asked if he could still make the bare minimums. If you can do that, you can pay it off - even if it takes a few years.
Right now, yes, we can make the bare minimums. If I continue paying the minimums on all of the cards (and don't charge another cent from this day forward) I could pay them all off in 25 to 30 years. Here is the problem-over the winter my batteries died in my truck (it's a diesel so there are two)-no money to spare after necessities and minimums at the end of the month = another $250 on the credit card. Two weeks ago the alternator (weakened by the bad batteries) died-there's another $160 on the credit card. You see where I'm going with this...
Quote:
Originally Posted by Briolat21
ENow - if they are so strapped that the only way they can meet their monthly obligations (after minimizing the SL's and getting lower interest rates on the CC's, etc..) is by working 2 or 3 jobs each, barely eating, and selling all their furniture...??? Well, then I would recommend BK - because that lifestyle will severely hurt most people and their marriage and psyches may not survive it.
Even if we resorted to that I don't know that we'd really make any headway-as you said, $60K in credit card debt isn't that much but we don't make that much either and my wife is about to lose her job-unemployment certainly won't cut it.
Quote:
Originally Posted by Briolat21
BK is not the end of the world - people file and recover from it all the time.
That's actually what I'm slowly finding out. Both of us have resolved to never finance a vehicle again so that takes care of that, and by the time the bankruptcy clears our credit in 10 years we'll be lucky to have enough equity to sell our home anyway. Besides, we don't have plans to go anywhere-we live in a nice town with good schools, etc... My plan as soon as we discharge is to build six months of living expenses and sock it away since a lack thereof is what got us into this mess to begin with.
Right now, yes, we can make the bare minimums. If I continue paying the minimums on all of the cards (and don't charge another cent from this day forward) I could pay them all off in 25 to 30 years. Here is the problem-over the winter my batteries died in my truck (it's a diesel so there are two)-no money to spare after necessities and minimums at the end of the month = another $250 on the credit card. Two weeks ago the alternator (weakened by the bad batteries) died-there's another $160 on the credit card. You see where I'm going with this...
Even if we resorted to that I don't know that we'd really make any headway-as you said, $60K in credit card debt isn't that much but we don't make that much either and my wife is about to lose her job-unemployment certainly won't cut it.
That's actually what I'm slowly finding out. Both of us have resolved to never finance a vehicle again so that takes care of that, and by the time the bankruptcy clears our credit in 10 years we'll be lucky to have enough equity to sell our home anyway. Besides, we don't have plans to go anywhere-we live in a nice town with good schools, etc... My plan as soon as we discharge is to build six months of living expenses and sock it away since a lack thereof is what got us into this mess to begin with.
but these expenses that you have that you can't currently afford aren't going to magically disappear because you declare bankruptcy. living within a budget applies whether you have $0 debt or $100,000 in debt. if you can't do it now, what's going to change to make you do it after going through bankruptcy? when you need an alternator for $160 after you went through bankruptcy, you'll, be paying for it with a 35% APR credit card.
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