Should I file for Bankruptcy or work to pay things off?

[Anonymous]

I'm considering filing bankruptcy for one main reason. About a year ago I let my mother and her husband use a car I had and they made the payments on it. They couldn't afford the payments on it anymore because of health and work issues, so the car got REPOED. After selling the car I still owe the bank 14k. On top of that I have about 7K in cc debt. My score has dropped to about 510 since this happened. I don't plan on making any large purchases in the near future but at some point I would like to buy a house. I know if I file it'll be about 2 years bfore anyone will look at me and just in case I want to trade in my car for a higher model(Dodge challenger RT currently). I just wnna have great credit sitting there, smh. Would I come out better by filing bankruptcy or just paying off the debt?

[Anonymous]

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@Anonymous wrote:

I'm considering filing bankruptcy for one main reason. About a year ago I let my mother and her husband use a car I had and they made the payments on it. They couldn't afford the payments on it anymore because of health and work issues, so the car got REPOED. After selling the car I still owe the bank 14k. On top of that I have about 7K in cc debt. My score has dropped to about 510 since this happened. I don't plan on making any large purchases in the near future but at some point I would like to buy a house. I know if I file it'll be about 2 years bfore anyone will look at me and just in case I want to trade in my car for a higher model(Dodge challenger RT currently). I just wnna have great credit sitting there, smh. Would I come out better by filing bankruptcy or just paying off the debt?

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Well you're always going to come out better paying the debt (if you can) and not having a BK on your reports IMO.

How long ago was the repo? You might settle with the bank for a fraction of that 14k . . a settled for less notation on your reports is a ding, but would be less tragic than a BK. (lots of info on this in these forums.)

BK is more for when you *can't* pay the debt. 

[wa3more]

I agree with steeler. I would not BK on 20k that could be settled somehow. BK is last resort when facing lawsuits/judgments on large debts that can't be paid without providing for necessities.

[mortimerwereback]

I would most definitely not file the bk and pay off the debt. Take it from someone who's post ch 7. It's been almost 7 yrs. If you simply pay off your debt over time your scores will rise and things will be okay. If you "bk" then you might wash yourself of the debt, but that derogatory on your credit file will haunt you for years. You will often be denied for credit. Now that's not to say someone won't give you a low limit card to rebuild. Just saying that the bk will be like the Scarlett Letter on your credit file and it'll wear on you after a few years. Best of luck!

[StartingOver10]

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@Anonymous wrote:

I'm considering filing bankruptcy for one main reason. About a year ago I let my mother and her husband use a car I had and they made the payments on it. They couldn't afford the payments on it anymore because of health and work issues, so the car got REPOED. After selling the car I still owe the bank 14k. On top of that I have about 7K in cc debt. My score has dropped to about 510 since this happened. I don't plan on making any large purchases in the near future but at some point I would like to buy a house. I know if I file it'll be about 2 years bfore anyone will look at me and just in case I want to trade in my car for a higher model(Dodge challenger RT currently). I just wnna have great credit sitting there, smh. Would I come out better by filing bankruptcy or just paying off the debt?

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What is your income?  Any chance of reworking your current budget or getting additional income (uber or other secondary income)? There are lots of ways to get additional income to apply toward your debt and savings. 

$20k total debt including the $14k repo is not insurmountable. It can seem overwhelming but if you settle the repo debt as others posted, you will be much further ahead than if you filed BK. Especially since you are already thinking of spending more on your vehicle in two years.

Note:  I really hope you don't get into that trade up every two years type trap. It is one way to get into deep debt very fast.

[Anonymous]

Thanks guys, this really helps a lot. I was on top at one point but the Repo(i know from prior experience) really had me thinking i'd be better off filing bk. I'll just take the time to pay off the debt. 

[Anonymous]

My ex husband had a repo on a brand new Nissan and owed over $15,000. He could not pay at all, so just never did anything! After 10 years it disappeared from his report and not one more word was ever said. That was 20 years ago now.

[mortimerwereback]

Hang in there. Directly before bk I had a repo as well. It was voluntary. Least this way you can keep the bk off your record. Now if you owed much, much, more money, then I could see you going the bk route.

[sarge12]

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@Anonymous wrote:

I'm considering filing bankruptcy for one main reason. About a year ago I let my mother and her husband use a car I had and they made the payments on it. They couldn't afford the payments on it anymore because of health and work issues, so the car got REPOED. After selling the car I still owe the bank 14k. On top of that I have about 7K in cc debt. My score has dropped to about 510 since this happened. I don't plan on making any large purchases in the near future but at some point I would like to buy a house. I know if I file it'll be about 2 years bfore anyone will look at me and just in case I want to trade in my car for a higher model(Dodge challenger RT currently). I just wnna have great credit sitting there, smh. Would I come out better by filing bankruptcy or just paying off the debt?

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Here is my take on things. If there is any other choice that will lead to straightening out your debts and avoiding bankruptcy that is definately the better option. If, however your financial situation is such that you are only able to tread water so to speak, never making any progress on paying the principal on your debts, and no logical expectation for this to improve, then BK is going to likely happen eventually. The hard part is often recognising which of these is true. Cut out all unneccessary expenses and find out the payoff on all debts and do this every month for a few months, paying as much as possible, and rechecking the payoff every month. Do this for 3-4 months plotting the payoffs each month on a graph. After that you should be able to see a trajectory on your debt. If the trajectory indicates upward, flat, or such slight downward trajectory that it would take 50 years to pay then BK is likely the way to go. Many actually compound their financial situation by waiting way to long to file when BK is the inevitable outcome based on their very bad financial situation. Others make the opposite mistake of declaring BK when this is too drastic for the debt they have and there are better options that are less extreme. This decision, if you strip away all the emotional aspects involved, actually comes down to a math problem, and the decision on what to do should be made based on the math.