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Should my wife file bankruptcy?! Here is the situation...

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PanthersFan
New Member

Should my wife file bankruptcy?! Here is the situation...

So, I work full time, solid job, I have very solid credit (720 fico). My wife is a stay at home mom and we have another baby due in a month. She wants to be a stay at home for atleast 5-6 years. She has two credit cards both maxed out at $10,000 each. (total of $20,000 in credit card debt) her car is paid for in full and the mortgage is 100% in my name. (We live in South Carolina) she also has $20,000 in student loans that is on its last leg of an extension. 

 

The MINIMUM payment on each credit card is $300 which is $600.00 per month between the both of them! My car payment is $482.00 and mortgage is $1298 per month. Bottom line is we absloutley can no longer afford to pay those credit card payments. It is just not possible at this time. 

 

So here is my thinking and logic. The fact she doesnt even plan on going back to work for 6 years anyway, what is the difference is she has good credit or bad credit? Its not like she will be able to be approved for anything without a job to begin with. So I say, file bankruptcy now, start IMMEDIATLEY to re build her credit with a secure credit card and build from there. By the time she does go back to work she would have rebuilt her credit and almost hitting the 7 year mark of the BK coming off her record completely. 

 

What are your thoughts?! Oh, and is it true you cannot include student loans in bankruptcy because those are north of $300.00 per month and we cant afford those either.

Message 1 of 10
9 REPLIES 9
Fox342
New Contributor

Re: Should my wife file bankruptcy?! Here is the situation...

Doesn't sound like a bankrupt situation to me.  Just buckle down and pay them off.  You can do if you really want to and try.

 

Also, depending on how much you owe on it I would probably consider selling the car with car payments...or if it's close to being paid off then just hurrying up and getting it paid off. 

 

You can work through this without claiming BK in my opinion.

 

Fox 

"The borrower is slave to the lender."
(EQ: 820) (TU: 827) (EX: 815)
Message 2 of 10
Anonymous
Not applicable

Re: Should my wife file bankruptcy?! Here is the situation...

I wouldn't suggest she file for bankruptcy.. Congrats on the new baby but that amount owed should not be the reason for filing.  What are the interest rates on this card?  Also, have you considered going to the credit union to see if they can give you a better rate to pay off these cards?

 

The answer is not bankruptcy...

Message 3 of 10
PanthersFan
New Member

Re: Should my wife file bankruptcy?! Here is the situation...

So if the answer is not bankruptcy then what other option is there. We literally cannot afford to pay $600.00 per month toward the credit cards. I am WAY upside down in the car and trading it in would make my payment higher once you factor in the negative equity that would have to be applied toward the new car.

So do you suggest just letting the cards go to collections as opposed to bankruptcy? This isn't a situation where I am not willing to sacrifice Starbucks and Netflix to pay off the cards, we plain ole just cannot afford to pay them. So it's either collections or bankruptcy
Message 4 of 10
Fox342
New Contributor

Re: Should my wife file bankruptcy?! Here is the situation...

I'm a big fan of Dave Ramsey, I don't agree with everything he says, but he's great at getting people out of debt.  

 

Some things I can think of to get out of debt is a part time job...you, your wife or both.  If she's a stay at home mom possibly babysitting more kids?  I know there are people that do that and make decent money.  If you have anything you don't need that you can sell that can help.  And of course budget your money and cut out all unnecessary expenses.  Making sacrifices of time, money, and things is hard...but a lot of the time people can avoid BK if they really try.

 

Basically the more you look for ways to avoid bankruptcy the more ways you'll find to avoid bankruptcy.  

 

And of course the actual 20k in credit card debt is usually not the problem...it's a symptom of the problem, the real problem is overspending.  Also depending on how much your income is you could be house poor...meaning that your house payment consumes more of your income than it should be.  

 

Personally I think being a stay at home mom for 5-6 more years sounds nice...but it does sound like a luxury if you have debt though.

 

Good luck!

Fox

"The borrower is slave to the lender."
(EQ: 820) (TU: 827) (EX: 815)
Message 5 of 10
Callandra
Valued Contributor

Re: Should my wife file bankruptcy?! Here is the situation...

I agree you(r wife) shouldn't file for bankruptcy. If she's not working and her cards are maxed out; what did she spend the money on (I ask because if it's overspending, filing BK will not solve anything)? What is your income? $482 is a high car payment (i have a two year old Honda loan and my payment is only $176/month) and the negative equity is not helping either! If her car is paid for in full, selling it might be a good idea. Now if you insist you absolutely need two cars, sell hers, get a junker for cheap and use the rest of the leftover money to pay some of the debt. 

 

If your wife can't work (being that pregnant, it's not realistic), then she should look into babysitting jobs (as stated above) or even pet/house sitting jobs for some extra cash. She might want to re-think being a stay home mom for so long; she really only needs to be out of work the first few months with the newborn. Do you have any friends/family who can watch the kids during the day? Otherwise getting a babysitter or daycare might be the best option so she can work full time. 

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Message 6 of 10
Anonymous
Not applicable

Re: Should my wife file bankruptcy?! Here is the situation...

So you get to keep your great credit and want her to tank hers??  No offense, but seems a little unfair to me.  The time until she goes back to work has little to do with the "need" for a good credit history. $600 a month is not that much in the grand scheme of things.  Even if she stays at home while you are at work, I would imagine even a part time job in the evening or weekends would go a long way to cover that. 

Message 7 of 10
TRC_WA
Senior Contributor

Re: Should my wife file bankruptcy?! Here is the situation...


@PanthersFan wrote:

 She has two credit cards both maxed out at $10,000 each. (total of $20,000 in credit card debt)Oh, and is it true you cannot include student loans in bankruptcy because those are north of $300.00 per month and we cant afford those either.


What did she spend the money on?  $20k is a lot of overspending.

 

Yes it's true you can't include student loans in BR.  That changed it to keep people from going to law school and then filing BR right after... 

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Message 8 of 10
Anonymous
Not applicable

Re: Should my wife file bankruptcy?! Here is the situation...

What about contacting the CC companies and asking for some relief on interest rate and/or minimum payment.  They want their money and if you can get a reduction in the interest rate, you'll get them paid off sooner.  

 

Remember, 7 years is a long, long time and a lot of unexpected things can happen.  Better to hang on to both spouses' decent credit if at all possible.   

Message 9 of 10
Anonymous
Not applicable

Re: Should my wife file bankruptcy?! Here is the situation...

Keep in mind as well that some states and certain creditors will still hold the non-filing spouse responsible for the bills that the filing spouse has discharged. That means they'll shift right over to you and you'll have the same problem and are then either forced to file to releive the stress or pay them back and then you've ruined her credit and not solved the problem. 

Message 10 of 10
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