drowning-- Is bankruptcy the best solution ?? Please help.

[Anonymous]

I'll spare you the details of my painful story... short version...  I went through a mental breakdown and complelety neglected finances over a period of a few months. When I realized the impact, i caught myself and my husband in a vicious cycle of loans and more debt. All the while, I was hiding the issues from my  husband.  Mental  breakdown #2 occured and everything came to light. My husband graciously did not leave me, and took control of the finances. Some how, it just isnt getting better though. I think I had done too much damage already. We are now both sitting at scores in the 400s ( late pays, charge offs, high balances) .  Most of the debt is through short term loans that were sent to collections, medical debt,  and about 3k in credit cards.  We have two vehicle financed, but other than the day to days and my student loans, we dont have a ton of  current debt, but  with all of the collections and stuff i just dont see how we can recover.  We have several 90+ days late.    We though about trying credit repair, because ultimately we just want to own a home, but i dont know how much help it would be.  I just really want to make things better.  My husband trusted me with the finances and I ran us into the ground. He is desperately trying to get us back on top, but we are getting no where.   It breaks my heart that I have put us in this situation, and I am disgusted.  How do we bounce back?  EVery credit F up possible ( besides repossesions) Ive done it.  We are in our early 30s and have nothing to show for my husbands years of hard work.  I just want us to be able to see the light.  Is bankruptcy the answer?  What does that do to our hopes of buying a home?  What happens to all of the open accounts during bankruptcy?  Is it possible to recover our credit score without baankruptcy?  Ill take any and all advice, please. 

[Anonymous]

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@Anonymous wrote:

I'll spare you the details of my painful story... short version...  I went through a mental breakdown and complelety neglected finances over a period of a few months. When I realized the impact, i caught myself and my husband in a vicious cycle of loans and more debt. All the while, I was hiding the issues from my  husband.  Mental  breakdown #2 occured and everything came to light. My husband graciously did not leave me, and took control of the finances. Some how, it just isnt getting better though. I think I had done too much damage already. We are now both sitting at scores in the 400s ( late pays, charge offs, high balances) .  Most of the debt is through short term loans that were sent to collections, medical debt,  and about 3k in credit cards.  We have two vehicle financed, but other than the day to days and my student loans, we dont have a ton of  current debt, but  with all of the collections and stuff i just dont see how we can recover.  We have several 90+ days late.    We though about trying credit repair, because ultimately we just want to own a home, but i dont know how much help it would be.  I just really want to make things better.  My husband trusted me with the finances and I ran us into the ground. He is desperately trying to get us back on top, but we are getting no where.   It breaks my heart that I have put us in this situation, and I am disgusted.  How do we bounce back?  EVery credit F up possible ( besides repossesions) Ive done it.  We are in our early 30s and have nothing to show for my husbands years of hard work.  I just want us to be able to see the light.  Is bankruptcy the answer?  What does that do to our hopes of buying a home?  What happens to all of the open accounts during bankruptcy?  Is it possible to recover our credit score without baankruptcy?  Ill take any and all advice, please. 

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It's hard to say without knowing how much debt you have and what your income and expenses are.

The first thing you need to do is get on a budget. People often don't realize how much money they're wasting until they sit down and write it all out. 

Then you need to cut expenses. Cancel your cable. Find a cheaper phone plan. Two financed vehicles are a luxury that it doesn't sound like you can afford. Sell one and if you must replace it, buy a beater for cash. (better yet, ditch both and drive cash cars.)

Then you need to up the income coming in. Sell things you don't need, consider moving somewhere cheaper or even in with friends or family temporarily until you get your head above water. Pick up second jobs.

After all of the above is done is when you'll be able to see just how much you can throw at your debts and what the path out of it looks like and make an evaluation from there.

BK can be a great fresh start, but for many folks it doesn't fix the habits that got them into their financial mess in the first place. I think a lot of people are better prepared for something like home ownership if they can dedicate themselves to a plan and see through the settling of their debts beforehand. Again, I'm not sure of the total amount of your debts, but if it's something like $10k that somebody can't get a grip on, I would question whether or not they're ready to own a home. (they are expensive!)

[raisemysc0re]

When I was at the point of deciding on BK or not to BK I looked at it like this.

How long will it take to pay everything up to date and then get my scores back up to decent numbers?

How long would it take to go through BK then how long to get my scores back up to decent numbers?

How much would I have to pay into BK compared to paying everything off without BK?

Since I only qualified for chapter 13 I had to pay Monthly payments totalling 65% of what I owed...

So, BK route was 35% cheaper and about 2.5 years shorter.

For me BK won on time to recover and money out of pocket.

The other consideration was whether I wanted a BK on my file?

This was a hard one for me to get over as I hate oweing anybody anything but I had my family and retirement to think about.

And one more thing to consider is will it do any good?

What got you here and how will you prevent it in the future?

My own experience was that my wife stopped working to go back to college, as we had kids very young (we were 18 & 19).

I tried to account for the lose in income for 2 years as best as I could but halfway through my mother was diagnosed with terminal cancer.

My wife had to put school on hold to help take care of her for almost 1.5 years before going back to finish her degree.

That extra 1.5 years we were basically living on credit cards.

And the perfect storm hit as that is when the recession started going full tilt.

My credit card companies all tried to raise my intrerest rates from 6%-9% to like 18% and higher.

They also cut my limits to their current balances which shot my UTI up through the roof. Scores then plunged...

No way would I have been able to keep up with that.

That's how I got to the low point.

BUT... I learned a lot about finances and credit during my BK and my outlook on money is brighter than I ever thought possible.

I save alot more, spend money more wisely, do not carry balances and hardly ever pay any interest on anything.

I feel like I'm now taking advantage of the credit card companies instead of letting them take advantage of me.

I can't be sure I will never run into money issues again but for the first time ever... I feel confident that I can handle almost any financial curve thrown my way.

[Anonymous]

Hello, I just signed up to my fico today so I don’t have much experience here....

but regards to your questions, short answer YES! you guys will be fine. Myself and wife went thru  similar experience with you guys filed chapter 7 bankruptcy got discharged in our 30s....now we are in late 40s just FYI my credit fico score hovering in 800 (highest was 820 now around 790+) took about total 7 to 8 years completely have excellent credit but during right after bankruptcy had capital one cc with limit $500 to $1000.. but sooner you file it will be easier for you guys get back on your feet...if your income doesn’t support your debt then file , get out of debt then start over!!! Good luck remember there’s always light end of tunnel....

[CH-7-Mission-Accomplished]

To get accurate advice, you do need to list what your debts are and what your income is.   What stood out to me was you said you only have 3K in credit card debt.   That's not very much at all.

I am big on telling people to file and get on with it.   Within two years you can basically get approved my most lenders.

One reason not to file a BK7 when you don't really need it is becuse it really is your one get out of jail free card.   But you can't do another one for seven years, and if some horrible medical disaster hits your family and you have 200K in medical debt, you can't just file and get rid of it with a BK.

Please list your debt and income and any other details you care to share.