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Hi,
I am in a bind
I dont know if I should continue to pay my credit card bills or do I let it go to crap and file bankcruptcy?
I moved back home with my my parents so I don't have any utilities or rent to pay.
I pay about $550 in credit cards, about $150 in student loans, $80 in car insurance. I make about $1200 in unemployment compensation a month. I am so sick of paying out and my money going no where. All of my credit cards are MAXED outed and I have nothing to show. No new car no new nothing but a boat load of debt.
I also pay about $200 a month for health insurance.
What would you do? What am I gonna do when I run out of benefits? Argggg
HELP PLZ
First of all, from what little I know about backrupcy, you have enough income to cover your debt, so I don't think you can file anyway. But, I'd avoid that option no matter what, and try going through a debt consolidation and reduction plan.
You should be able to defer your student loan payments. When I had student loan debt, I found the lender to be very reasonable. You may be able to stop paying while you're unemployed, though interest will still accrue.
I'm not a big fan of debt consolidation, restructuring, etc. In most cases anything along this line negatively affects your credit almost as badly as a bankruptcy and haunts you for years. If you have no foreseeable way out of this situation, you are just kicking the can down the road when your uec ends.
How much longer do you have to collect unemployment compensation?
If you do file bankruptcy, will you make a diligent effort to save every $$ you receive in uec until you are employed again?
Is there a likelihood you will be reemployed soon? If the answer is no, then most likely you'll end up filing bankruptcy anyway.
First step: consult a reputable bankruptcy attorney to see if you are required to repay any of the debts you have, your options and the ramifications in your case. Contrary to what someone posted above, I'm pretty sure your income needs to be higher than $14,000/year before you are required to repay. Married couple in Wisconsin only subject to repayment if their income is above $55,000/year, single half that.
I've known a couple of people who filed lately and walked away from a boatload of debt and were not required to repay. Already receiving new unsecured credit card offers in the mail. Felt a great sense of relief and comments are "life goes on pretty much as before."
In your case, you would need to consider the value of the car. In Wisconsin, it can't be worth more than $1,600 if you own it free and clear. If you have a car payment, the lender usually reaffirms the debt and you continue to make payments. If you don't and want to keep the car, you may have to buy it back from the bankruptcy estate if the value is too high (borrow the money from parents, etc.) You would need to visit a few dealers close to the time to get a fix on what they would pay that day for the car. That would be the value you would list on the bankruptcy petition. Or, transfer title of the car to your parents. Bankruptcy atty can tell you how you can legally do this.
Filing bankruptcy will affect you down the road for years on future credit applications, but it is NOT the end of the world. You can get credit, you can buy a car, you can even buy a house after a few years. Another person I know got all their old cards back and now has credit rating of 825.
Millions are filing every day - there is no stigma there anymore.
If you do decide to do this, do not spend your uec if you don't have to - but save it. It will not go on forever, and then you will have no money at all if you still can't find a job.
Last edited by Ariadne22; 08-02-2010 at 02:55 PM..
I think Ariadne22 is giving very sound advice. I filed bankruptcy 8 years ago (when I was going to school and only working part time), and last time I checked my credit rating was back up to 770. 2 years ago my husband and I bought a house and the fact that I had filed bankruptcy did not stand in our way--we got a regular 30 year fixed mortgage from our bank, not a shady subprime loan. Time goes by fast and the "scarlet letter" will fade from your report before you know it. I don't want to tell you what to do, but if I were in your position, I would stop putting good money after bad. Bankruptcy is not to be taken lightly, but under the most unfortunate circumstances, it can be a life saver.
Talk to a reputable finance counselor. Lutheran Social Service for example. They will help you figure out what is best. Be careful of scams and make sure it is a reputable organization.
Also, look at bkforum.com. I've been going there as I am in the same place you are and considering bankruptcy. It has been very helpful.
Pay your bills - you get a free place to live and you've got plenty of free money that can go to your debts. Live frugally in the meantime.
Let's see . . . UEC income $1200, less Auto Ins. $80; Health Ins. $200; Student Loan $150; Credit Card Repayment $550. That leaves her about $220/mo for food. Staying current on the credit cards will not pay them off, just maintain the credit rating for a while. What happens when the unemployment runs out and she still has big balances on the credit cards? Credit still goes to hell and she files bankruptcy anyway plus now she hasn't a penny to her name - unless by that time she's found a job. Bankruptcy will not dissolve student loans or income taxes - so unless she can get a deferral on her student loan, that payment will remain. Unless those credit card balances are small and can be paid in the near future, I don't the see the point of becoming completely penniless when the uec runs out.
Last edited by Ariadne22; 08-02-2010 at 08:58 PM..
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