For the record, I decided to go ahead and enroll in a DMP program and pay off my debts.
I just wanted to know if there is a time where filing chapter 7 is "worth it."
In my situation I had $25000 in unsecured credit card debt and $6000 in medical debt. I also had alot of 180 day lates from my student loans which was also negatively impacting my score.
I noticed that I was in over my head back in 2008 but I didn't enroll in the DMP till late 2011. I will pay off my unsecured debt in August 2015 and all my lates will come off my file in late 2017.
I have no assets as I was in my late 20's and living at home with my parents.
Regardless of whether or not I made the right moral decision, do you think I made the smart move by choosing to pay the debt off instead of calling it quits and declaring bankruptcy?
I keep hearing that with chapter 7, you can get a credit card and even get a mortgage not long after the discharge.
With my current situation, I was even denied a secured card and I don't see myself getting a mortgage until after 2017.
In my mind, I made the right move but then again I don't know too much about chapter 7.
Just want to know what you think.
it sounds like you made the right decision yes morally and also credit wise.
BK would have been a public record on your reports for at least 7 years. your fico may have still be ok but its frowned upon manual review.
Also IMHO BK is for large debts to shield the debtor from exposure/repayment. $25,000 is not a lot and with your current plan you will pay off your debt in a few years and by going through the struggle to pay it off IMHO you will be less likely to run up debt again that you cant reapy.
The only downside may be you are paying more than you have to. if the accounts are not open you could have let them charge off and then settled them in full for a percentage of the balance.
Good luck. I too am rebuilding and have about 12 months of payments before everything on my report is satisfied.
When I enrolled in the DMP, I should note that all my credit cards had been closed by my creditors due to high balances.
the main thing now is to make sure your creditors are actually getting the money you submit to the debt consolidation company. you could verify every 3-6 months by looking at the balances on your credit report.
stick with the plan in place and you should be fine
So is bankruptcy pretty much for those people who have debt that is much higher than what I had?
I'm just confused as to how you can declare a bankruptcy and then get a credit card and even a mortgage in no time. I thought you can't do those things for the 10 years.
There's no hard & fast rule about when you should or should not declare bankruptcy. And although we see a lot of back & forth on these boards - it's not always an easy thing, to try to rebuild post-BK. Not everyone immediately ends up with a mortgage and/or credit cards.
You may not be eligible for bk7, did you do the means test? Sure, you CAN be eligible for a mortgage, etc....but at a high interest rate. Basically you have to begin with bk friendly cards and those aren't falling from the sky. Interest rates are high and you may have to start with secured. 2017 isn't that far away. You may even be able to open your cards up after DMP.
My brother filed bk7 a few years ago and is still struggling credit wise. $30k isn't a lot for someone unmarried, blah blah blah. Of course cards will be closed during DMP, that's why you are offered the lower interest. I'd save a bk7 for something really catastrophic in my life, not because I ran up debt and don't want to pay it. I'd save it for when I CAN'T pay it.
That's what I was thinking that bankruptcy is for something catastrophic. As high as my debt may seem to me, it is still something that I can pay off.
Can you just give me an idea of what something catastrophic is? Which scenario would you say "ok I have to file for bankruptcy now."