cancel
Showing results for 
Search instead for 
Did you mean: 

Struggling and need to choose...Chapter 13 or Debt Settlement?

tag
Anonymous
Not applicable

Struggling and need to choose...Chapter 13 or Debt Settlement?

Good day to all, I've been a long time lurker but only now had the courage to actually sign up for an account and post a message. For the longest time, I mantained a stellar record of payments and had credit scores in the 750s. But due to a financial hardship caused by an illness and eventual death of my grandmother that I have been supporting (they live overseas) and the poor decision making of using my cards for our family's needs while I send most of my cash to them, I am now in deep deep debt. It started 3 years ago and at first I could handle it, but the expenses just became too much, I've had to do a second job in order to stay afloat. I got trapped in the cycle of paying my bills and then using the cards again for the monthly expenses because what remained of my paycheck went out to pay for my grandma's hospital and burial expenses.3 years later and I'm $95,000 in debt (combination of credit card, parent plus loans and personal loans). I tried the snowball method but the debt was just too overwhelming, My cards were maxed out and my interest rates skyrocketed. I take home about $3,400 per month from my 2 jobs and pay about $3200 in minimum payments. My monthly expenses and household responsibilities (gas, food, car insurance, phone, daycare) amount to about $1040. I still send $400 to my family and need to keep doing that till Dec 2018 to pay off everything. I talked to my creditors about a hardship plan but not a lot of them are agreeable, and now I have a couple of 30 days and 60 days late because I felt like I had to take care of the essentials first. My husband ended up assuming most of the household expenses and is now causing a lot of financial strain on him as well.

 

 As per one of the banks' advice, I contacted a non profit credit counselling agency (Money Management) and they proposed a DMP, which will have me paying $2200 a month for 60 months. When I add my monthly expenses and the family support to that, I am left with nothing. I can't count any more how many sleepless nights I've had thinking of what to do. A debt settlement company (Clear One) also contacted me and promised to settle my debts in 60 months for $1400 per month. I also consulted with a bankruptcy lawyer who said I can only do a Chapter 13 because of my and my husband's income and he said the repayment amount might be as high as $1700 per month for 60 months, which still does not leave me with a lot of room for when emergencies happen. I don't know what to do anymore. I feel like being caught between a rock and a hard place. Please help.

Message 1 of 7
6 REPLIES 6
Anonymous
Not applicable

Re: Struggling and need to choose...Chapter 13 or Debt Settlement?


@Anonymous wrote:

Good day to all, I've been a long time lurker but only now had the courage to actually sign up for an account and post a message. For the longest time, I mantained a stellar record of payments and had credit scores in the 750s. But due to a financial hardship caused by an illness and eventual death of my grandmother that I have been supporting (they live overseas) and the poor decision making of using my cards for our family's needs while I send most of my cash to them, I am now in deep deep debt. It started 3 years ago and at first I could handle it, but the expenses just became too much, I've had to do a second job in order to stay afloat. I got trapped in the cycle of paying my bills and then using the cards again for the monthly expenses because what remained of my paycheck went out to pay for my grandma's hospital and burial expenses.3 years later and I'm $95,000 in debt (combination of credit card, parent plus loans and personal loans). I tried the snowball method but the debt was just too overwhelming, My cards were maxed out and my interest rates skyrocketed. I take home about $3,400 per month from my 2 jobs and pay about $3200 in minimum payments. My monthly expenses and household responsibilities (gas, food, car insurance, phone, daycare) amount to about $1040. I still send $400 to my family and need to keep doing that till Dec 2018 to pay off everything. I talked to my creditors about a hardship plan but not a lot of them are agreeable, and now I have a couple of 30 days and 60 days late because I felt like I had to take care of the essentials first. My husband ended up assuming most of the household expenses and is now causing a lot of financial strain on him as well.

 

 As per one of the banks' advice, I contacted a non profit credit counselling agency (Money Management) and they proposed a DMP, which will have me paying $2200 a month for 60 months. When I add my monthly expenses and the family support to that, I am left with nothing. I can't count any more how many sleepless nights I've had thinking of what to do. A debt settlement company (Clear One) also contacted me and promised to settle my debts in 60 months for $1400 per month. I also consulted with a bankruptcy lawyer who said I can only do a Chapter 13 because of my and my husband's income and he said the repayment amount might be as high as $1700 per month for 60 months, which still does not leave me with a lot of room for when emergencies happen. I don't know what to do anymore. I feel like being caught between a rock and a hard place. Please help.


How many BK lawyers have you talked too?  If only one I would look at others.  Though the first is probably right about having to do a Chapter 13.  The issue with BK is it is supposed to make it so you don't have much left and the creditors get most of your money.  Though you can still live a fruitful life in a BK.  Once you don't have all that debt and lower it to the amount you stated you can work on a budget.  This should be one of your first goals now and if you file for a BK.  A budget will go a long way in getting back on track.  Do it for a few months and see where all your money is going.  You will be suprised at where your money is going and how much you can actually save a month.

Message 2 of 7
Anonymous
Not applicable

Re: Struggling and need to choose...Chapter 13 or Debt Settlement?

Thank you for the budget tip. I have only spoken to one lawyer but today I'm meeting another one. I figured it won't hurt to get a second opinion. I'm just concerned that with the amount the first lawyer and the debt settlement company mentioned, I still won't be able to find any relief. I'm already working two jobs and I don't think I can handle a third.
Message 3 of 7
Anonymous
Not applicable

Re: Struggling and need to choose...Chapter 13 or Debt Settlement?

Definitely talk to another lawyer.

 

Income mandating a 13 vs a 7 isn't as black and white as some folks (even some lawyers) think.

 

My first consultation said I couldn't get into a 7 because of my income. He didn't do 13's and by sheer luck, the lawyer he referred me to for the 13 looked everything over and said he could get me into a 7.

 

And if you do have to do a 13, the process will require more involvement from your lawyer so it's preferable to choose the best one possible Smiley Happy

Message 4 of 7
medicgrrl
Valued Contributor

Re: Struggling and need to choose...Chapter 13 or Debt Settlement?

Are you trying to pay off the debt using your income only? Does your husband contribute to the bills?


EQ 778 EXP 782 TU 729
Message 5 of 7
Anonymous
Not applicable

Re: Struggling and need to choose...Chapter 13 or Debt Settlement?

My husband has been very helpful throughout all this. In fact, a lot of bills/utilities that I was responsible for fell on his lap and I think he's starting to feel the financial strain of having too many bills. I consulted another lawyer who said it's in our best interest to file Chapter 13 as a couple. I'm trying to put together all the paperwork now. It's just so overwhelming 😔
Message 6 of 7
Anonymous
Not applicable

Re: Struggling and need to choose...Chapter 13 or Debt Settlement?


@Anonymous wrote:
My husband has been very helpful throughout all this. In fact, a lot of bills/utilities that I was responsible for fell on his lap and I think he's starting to feel the financial strain of having too many bills. I consulted another lawyer who said it's in our best interest to file Chapter 13 as a couple. I'm trying to put together all the paperwork now. It's just so overwhelming 😔

It can be overwhelming but it will work out.  Just keep going and do what you need to do to get yourself back on track.

Message 7 of 7
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.