Bankruptcy right for me? 39yrs, Single, no assets, owe IRS,

[orlandodean]

I'm 39 yrs old, single and had a 700+/- FICO up until 2008.  Lost my job and employment was hard to find...in a timely manner.  Got a couple contracts but ultimately defaulted on multiple credit cards to the tune of just under $20,000.

In 2009 I made all of $21k.  

I owe the IRS $3200 in addition the the above.  

I ended up moving back with my Father- pathetic...but there was no choice.  I got a stable, but low paying State job as I rebuild my computer certifications.  

My credit score per Equifax is 524.

Currently and for the next year or so I will be making only $27k/yr.  Even living with my Father, I only have $350/mo +/- to live on after bare essential bills.  I am $2000 upside down on my 2007 Toyota Corolla.  

I have NO assets.  No savings.  I sold what little I had left and fit everything I owned into my Corolla when I moved.  

It's been about 2 yrs since I defaulted on my credit cards.  

In another year I SHOULD be making $35k-$45k, but expenses will go up when I get my own place again.  

Most of the creditors have sent letters offering to settle for 60% of the balance.  Perhaps in 6 mos or so I could start paying one of the credit cards off.  My primary goal is to pay off the IRS first.  

I am not bothered by any creditors at all which is odd to me, but I am thankful.   

I am split 50/50 as to whether BK is the best choice for me.  My Father declared Bankruptcy 2yrs ago and thought it was a good decision. He just got a new car loan at the same rate I got my loan for when I had a 684 FICO.  

I am basically 'stuck' for the next year or so financially as this is a rebuilding time for me.  

I have been told that it will be irrelevant CREDIT WISE if I DO pay the credit companies back as it will still just show a charge off.  

After 7yrs they drop off the credit report whether I pay them or not....is that true?  

I am not sure what is best as far as moving forward?  Suggestions?

Thanks in advance!

-Dean

[orlandodean]

I resided in FL when I acquired the credit and defaulted on the credit lines.  I recently moved to NC.  Does that change the SOL?

-Dean

[laz98]

at 7 years, yes, they drop off whether they are paid or not.  however, your creditors can still try & collect on the debts.  they don't go away.

& yes, even if you pay them, unless you are able to get it in writing that full payment = deletion from credit reports, it will still be a huge negative on your reports.

personally, i don't think you have enough debt to warrant a bankruptcy, but that is just my opinion.  to me, it should be the last resort on the list of last resorts.

[orlandodean]

I thought they couldn't collect after the state's statute of limitations were up?  

[MarineVietVet]

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@orlandodean wrote:

I thought they couldn't collect after the state's statute of limitations were up?  

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Collection efforts can theoretically continue forever. The expiration of the SOL gives you an affirmative defense in case a creditor does file a lawsuit.

The CRTP (Credit Reporting Time Period) determines how long a derogatory item can be shown in your credit report but once again that does not stop a CA from trying to collect.

From a BK years ago to:
9/09 EX pulled by lender 802
3/10 EQ- 800
6/10 TU -772

You can do the same thing with hard work

Credit Scoring 101
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[orlandodean]

Did not know that.  Appreciate the information.  

As I see it know:

BK would give me a peace of mind and be definitive with no 'what if' questions in the future.  

However, it also costs around $1500 which I could use to pay down the IRS.  

I guess I am weighing the hypothetical... If I wait it out and nobody sues me, in 5yrs I'll be better off.   Whereas, if I declare BK it will be on my record for a decade.  

I'm leaning towards not declaring BK at this point.  

-Dean

[MarineVietVet]

Before you do something as drastic as a BK stick around here and start reading everything you can find from different forums. It's amazing how much information is available. Go back through older threads and see how other people have repaired and rebuilt.

You can come out of this in much better shape if you'll work hard and be determined. Ask questions and read, read, read!

From a BK years ago to:
9/09 EX pulled by lender 802
3/10 EQ- 800
6/10 TU -772

You can do the same thing with hard work

Credit Scoring 101
Common Abbreviations
Frequently Requested Threads
Whats In Your FICO Score

[Anonymous]

IF your tax debt is from the last 3 years or was ever secured (to property or by wage garnishment or levy), it might benefit you to file for Chapter 13.  This would allow you to pay the tax debt over 3-5 years without accruing additional interest and penalties and would allow you to discharge your other debt and start fresh.

A Chapter 13 does drop off after 7 years.  A Chapter 7 (which would not allow you the opportunity to freeze and repay your tax debt) drops off after 10 years.