Bankruptcy or try to power through it?

[JayteeSooner]

Good morning - I am currently sitting at 547EQ / 545 TU and 529 EX.  I have a number of derogatory things on my reports including the following:

Negatives:

3 judgments –

apartment complex for $685 – filed Decemebr of 2012

State Tax Lien for $7844 – filed June of 2013

medical bill for $851) – filed October of 2016

I also have 2 repossessions –

$8316 – 8/2014

$10478 – 5/2014

And probably 9-10 other accounts ranging from $150 to $1500.

Positives:

2 student loans totaling $24864 that I WILL be staying current on for the next two years

1 auto loan opened in February of 2016 ($27K) that is current and will be staying current.

1 credit card (OpenSky Secured- $200 limit) that is brand new.

2 paid off Auto Loans – 1 paid off in March of 2014 and 1 in February of 2016.

I have made some very poor choices in the past but I am working towards straightening this entire mess out. My goal is to be able to purchase a house as soon as possible, preferably within the next 2 years.  I am VA eligible and I have my Certificate of Eligibility.  I am seriously considering filing Chapter 7 bankruptcy if only to erase the 2 repossessions and 2 of the three judgments (I realize the tax lien will remain and I am working on getting arrangements made to pay that off in the next year.

My questions is – would it be better for me to go ahead and file bankruptcy now and take the hit and try and rebuild from what would be around a 450 FICO or so, or should I try and pay all of these off over the next two years?  I will not be able to pay off the repossessions and therefore they would remain on my record but at the point I try to buy a house they would be 4-5 years old.

Thank you in advance for your time and advice.

- Justin

[Comraderight]

Well you have a few problems, however they can be solved. All of your debt can be settled for as little as a fraction of what is owed. Bankruptcy might cost you as much, but settlement could be done alot sooner without the stigma of bankruptcy.  i would consult with a BK attorney and go to settlebankdebt and see what is favorable. 

[Anonymous]

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@JayteeSooner wrote:

Good morning - I am currently sitting at 547EQ / 545 TU and 529 EX.  I have a number of derogatory things on my reports including the following:

Negatives:

3 judgments –

apartment complex for $685 – filed Decemebr of 2012

State Tax Lien for $7844 – filed June of 2013

medical bill for $851) – filed October of 2016

I also have 2 repossessions –

$8316 – 8/2014

$10478 – 5/2014

And probably 9-10 other accounts ranging from $150 to $1500.

Positives:

2 student loans totaling $24864 that I WILL be staying current on for the next two years

1 auto loan opened in February of 2016 ($27K) that is current and will be staying current.

1 credit card (OpenSky Secured- $200 limit) that is brand new.

2 paid off Auto Loans – 1 paid off in March of 2014 and 1 in February of 2016.

I have made some very poor choices in the past but I am working towards straightening this entire mess out. My goal is to be able to purchase a house as soon as possible, preferably within the next 2 years.  I am VA eligible and I have my Certificate of Eligibility.  I am seriously considering filing Chapter 7 bankruptcy if only to erase the 2 repossessions and 2 of the three judgments (I realize the tax lien will remain and I am working on getting arrangements made to pay that off in the next year.

My questions is – would it be better for me to go ahead and file bankruptcy now and take the hit and try and rebuild from what would be around a 450 FICO or so, or should I try and pay all of these off over the next two years?  I will not be able to pay off the repossessions and therefore they would remain on my record but at the point I try to buy a house they would be 4-5 years old.

Thank you in advance for your time and advice.

- Justin

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The state tax lien will most likely prevent you from purchasing a home and will need to be paid off prior. I'm in Oregon and work for the state, and when we place liens against people they can't purchase/sell property without paying us first. It also isn't DC in BK. The rental and medical bill might be more since there is usually a default interest rate attached to the judgments. You should check, and see if both places will settle for less and satisfy the judgments. Again, the judgments could put a hiccup in your home purchase since usually title companies want those paid prior to close. I would contact the smallest balance first and move up in balance and see who will settle and knock em off one at a time or pay them off. Your debt that could be DC in a BK is maybe estimated at 20k-ish.. and that's something you can totally deal with on your own and if you aren't afraid of doing the legwork. I wouldn't hire a debt settlement company, in all my years doing collections they do more harm than good, and like to charge you a lot of fees to do nothing. MOST creditors will be happy to just deal with you directly, and will treat you  the same they would a 3rd party company who's trying to settle debt anyway.

[Anonymous]

Also remember that you cannot get a VA loan for 2 years minimum, following the discharge of a Chapter 7 bankruptcy. Longer for conventional loans.

If you settle on debt, you may get a 1099 for anything written off that exceeds $600.

I'd talk to a few BK attorneys and specifically ask about the feasibility of discharging the taxes and liens. Also come up with a list of everything that you owe. If the 10 accounts are $150 each and total $1,500 it may be worth paying them off. If they're closer to $15,000 BK may be a better option given the other unsecured debt you owe.

[wa3more]

some real good advice has been given. I would avoid BK and use as last option, a nuke option. Also, see how long judgments are good for in your state. Here in NY, money judgments good for 20 years, one of worse states in the country.

[JayteeSooner]

In Oklahoma, Tax Liens are indefinite unless paid off, then it's 7 years (from the date filed).  Regular judgments are also 7 years.  Looking at Chapter 13 instead of Chapter 7.  I can qualify for a VA loan after a year in Chapter 13 as long as my payments are not late and I have no other delinquencies.

[wa3more]

ok, so you have a while on judgments. Ch 13 is tough from what i understand. More of a reason to avoid BK until absolutely necessary.