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-   -   Should I file bankruptcy, or not? (http://www.thefinanceforums.com/showthread.php?t=4803)

Li'l Pluck 12-25-2010 07:57 PM

Should I file bankruptcy, or not?
 
Hey, y'all.

I have a serious problem, and I hope that some of you bright minds can help me out.

I'm a 40-year-old single man (with no children) who, as a result of the recession, was laid off two years ago come January. Before I was laid off, I was doing a good job of paying down my debt, usually paying 1.5 or twice the minimum due. After my lay-off, however, I was collecting paltry unemployment, and I was able to make only the minimum payments (paid on time every month). You can just imagine what this, plus accruing interest, did to my balances: I am now about $23K in CC debt.

After exhausting my retirement and savings accounts, and now having reached the end of my unemployment compensation, I am left with no money (in fact, I'm preparing to move in with my mother because I can no longer afford my apartment), and I find myself unable to make even the minimum (or even partial) payments.

The way I see it, I have two courses of action: (a) don't make payments, and let my credit rating suffer, or (b) file for bankruptcy, and let my credit rating suffer. If I had prospects of a steady job in the near future, I'd make payments as soon as I could (even if I had to suffer the indignity of a 30- or 60-day late payment ding), but after two years of searching--even applying for jobs that would've paid me less than half of my former salary, and getting no responses--I don't see myself landing steady, full-time employment any time soon (though yes, I realize that anything can happen).

My preference, of course, is to pay my bills like a responsible adult (I've been good at it for years), but now I don't know what to do. I don't want to file bankruptcy (especially since doing so might cost me a job, as more and more employers are running credit checks on prospective employees, or an apartment), but I'm feeling that I'm at the end of my rope.

What do you think I should do?

I'd appreciate any advice that you have to offer. Thank you very much.

Li'l Pluck 01-14-2011 01:49 PM

Re: Should I file bankruptcy, or not?
 
Quote:

Originally Posted by Maxis (Post 20709)
Bankruptcy is not to be taken lightly, so I think you need to consult an expert on this. See a professional who can go over the details of your finances with you and present you with your options.

Oh, believe me, I know. And thank you for the advice.

I'm already planning on consulting with a bankruptcy attorney, but considering that such a person might not be as unbiased as I'd like, do you have suggestions for other kinds of professionals with whom I might consult?

cjscully 01-14-2011 03:27 PM

Re: Should I file bankruptcy, or not?
 
Bankruptcy may be your only option if you don't have any income. If you have some income and you can put a little bit of money toward your debts, you may eventually be able to negotiate settlements with your creditors, which is preferable to bankruptcy in my opinion.

It sounds like you have little/no income and little to no assets. I'm not a lawyer but my guess is your financial situation pretty much makes you judgment proof. If you can't pay the debts, you can't pay the debts. What are they going to do? If you have no assets there's nothing they can take even if they sue. Can't get blood out of a stone as the saying goes.

When I was in a similar situation, I ignored the debts and my credit report and pretty much everything else and focused on how I was going to generate income. Then once I was making sufficient money again I started addressing the debts. You'd be surprised at how fast my credit score rebounded.

Qmannia 01-18-2011 01:01 PM

Re: Should I file bankruptcy, or not?
 
The best thing to do would be to seek expert advice so you are fully aware of the consequences of bankruptcy. Also it would be good to speak to people who have made themselves bankrupt so you can see how it is from someone else's point of view.

Debtprophet 01-24-2011 05:02 AM

Re: Should I file bankruptcy, or not?
 
Yes, there are times when you truly need professional assistance. Before you file for bankruptcy, you should be aware of the process and the possible consequences.

Bankruptcy affects your financial condition. Once you file for bankruptcy, your credit score gets affected. It might also have some adverse effects on your property.

So, before you ask for the alternatives, you must know the reasons why you should avoid bankruptcy.

BRC 01-25-2011 12:46 PM

Re: Should I file bankruptcy, or not?
 
Quote:

Originally Posted by Li'l Pluck (Post 20805)
Oh, believe me, I know. And thank you for the advice.

I'm already planning on consulting with a bankruptcy attorney, but considering that such a person might not be as unbiased as I'd like, do you have suggestions for other kinds of professionals with whom I might consult?

First things first. CUT UP THE CREDIT CARDS (if you haven't already).

Consulting with a bankrupcy attorney is like asking a used car salesman if you need a "new" car. The answer will be yes. Consult with other financial entities. Posting your question here is a great start.

Can you move back home and deliver pizzas? It seems that people that have been laid off have only been searching for that perfect job. Take whatever you can get at this time. Income is income, no matter the source. Deliver pizza, shovel driveways, offer to mow neighbor's yards, etc. Move in with your mom, take care of "you" and throw any extra income at the debt.

Li'l Pluck 03-07-2011 06:24 PM

Re: Should I file bankruptcy, or not?
 
Thank you all so much for the words of advice. Sorry that I'm responding so late, but I didn't see any messages alerting me to replies in this thread until I checked my junk mail folder today.

BRC, you make a good point re consulting with a bankruptcy attorney. I'm going to consult with a non-profit credit counseling service and see what they think.

emjo 03-08-2011 11:59 AM

Re: Should I file bankruptcy, or not?
 
I would rather get behind in debt payments and wait out the situation - you never know what tomorrow might bring - than file bankruptcy. It might be what you end up doing, but I"m not sure you're there yet. Just my 2 cents.

Li'l Pluck 03-09-2011 01:52 PM

Re: Should I file bankruptcy, or not?
 
emjo: That's true--one never does know what tomorrow will bring. For the past three months, I've been doing what you suggested--wait it out and hope my situation improves--but now I'm headed into 90-day late status, but now I'm wondering how much longer I can wait things out. One thing I wonder about: Is it "better" to have a charge-off in your credit history, or a bankruptcy? And, of course, I don't want to be hassled by collection agencies. I'm already getting calls several times per week from the card issuers; I'd hate to have things ramped up by a collection agency.

Aargh, this is so frustrating!

DavidBibby 03-09-2011 06:14 PM

Re: Should I file bankruptcy, or not?
 
Quote:

Originally Posted by Li'l Pluck (Post 22557)
emjo: That's true--one never does know what tomorrow will bring. For the past three months, I've been doing what you suggested--wait it out and hope my situation improves--but now I'm headed into 90-day late status, but now I'm wondering how much longer I can wait things out. One thing I wonder about: Is it "better" to have a charge-off in your credit history, or a bankruptcy? And, of course, I don't want to be hassled by collection agencies. I'm already getting calls several times per week from the card issuers; I'd hate to have things ramped up by a collection agency.

Aargh, this is so frustrating!

To answer your question, a charge off is better than a bankruptcy on your credit report. Bad marks on your credit stay on your credit report for 7 years, but a bankruptcy stays on your credit report for 10 years.

Now...a bankruptcy is considered to be one of the most catastrophic life changing events right up there with a death of a loved one or a divorce. It's NOT fun.

Bankruptcy attorneys are really good at making it seems like it's "easy" and that you'll come out "unscathed" and you can start your life over. It RARELY happens that way.

The reality is that once you have a bankruptcy, it NEVER goes away. Sure it disappears of your credit report after 10 years but it's PUBLIC RECORD now and anyone can see it including potential employers.

$23k in credit card debt is not something you should have to file bankruptcy for. You CAN get out of this situation even if you are sued and the collectors obtain judgments against you.

Until they do that they can't do anything except bark at you and make life miserable.

Li'l Pluck 03-09-2011 10:52 PM

Re: Should I file bankruptcy, or not?
 
Thank you, DavidBibby--what you say makes sense. Now that more employers are digging into prospective hires' pasts, a bankruptcy isn't something that I'd want them to see. Mind you, if I'm correct, it's illegal (don't know how many places where) to not hire someone based on something like that, but we know how that goes. (Wouldn't such judgments also be public record, or would they amount to dings on my credit report that disappear after "X" amount of time?)

And honestly? Before this lay-off (and, actually, during the two years that it took me to exhaust my savings, retirement accounts, and unemployment compensation), I prided myself on paying my bills on time, and I had, as far as I know, a good credit rating. Even though my credit is now shot (or soon will be), I'd still prefer to pay this stuff off myself (even though it'll take me several years to do so) rather than resort to bankruptcy, so I'm hoping that I can do that.

We'll see, though, we'll see.

MikeRn 03-15-2011 09:43 PM

Re: Should I file bankruptcy, or not?
 
I would also like to suggest that you consult a legal counsel about filing a bankruptcy. There are some attorneys that are really good in persuading you to get their services. I would advise that you do some background check about a certain attorney before getting his services.

dalemdunn 03-22-2011 12:51 PM

Re: Should I file bankruptcy, or not?
 
No. Should it be the last one... make sure that you have done so many and that it can actually help.

FinanceOcean 03-22-2011 09:23 PM

Re: Should I file bankruptcy, or not?
 
I think you're right to consult with some of the non-profit credit counseling groups. I think the biggest point is that having a bankruptcy or bad credit in your history will make it very hard to find a job. Not every job does a credit check as part of their background screening process, but many do.

The good thing (if you can say that) is that there are many people in your situation, and you may be competing for jobs against people with a bankruptcy on file. If you simply have a bad credit score, you may have a leg up on others.

Good luck!

Reliable2all 04-03-2011 01:26 AM

Re: Should I file bankruptcy, or not?
 
Don't file bankruptcy yet, go in for proper counselling with a consultant. But before that:

**Make a plan** think budget. Take control of your financial situation. A written plan takes the pressure off. You don't have to remember things. You simply use your budget and your financial plan.

Pay your bills on time and in full each and every month. When you conduct your financial life in a well-planned and responsible manner, you will find that other areas of your life become better organized and better functioning as well.


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