topic Re: $80k in Consumer Debt -- BK or Budget? in Bankruptcy

$80k in Consumer Debt -- BK or Budget?

kaybean22 — Tue, 13 Oct 2015 00:36:08 GMT

Over that past few (yes, just a FEW) years I have accumulated 80k in consumer debt....half of it is a personal loan (cosigned) and the other half is credit cards. I lived beyond my means and struggled with my income.

I am now married and we have a dual income, though it's not enough to cover rent, food, car payments and all of my debt. I've already talked with my banks and they closed the two credit cards and cut the monthly payments in half, but just for a year. Then it's back up to insanity. However, that's enough for us to work out a budget for now -- I've also pushed my student loans back a bit, which helps cut some corners.

All that said.... would I be better off just filing for Ch 7? My student loans and the car payment is not an issue, but that 80k in consumer debt is just killing us -- but I don't want to totally destroy my credit if I don't have to. (Note: we aren't planning on buying a house, we have an apartment we're not planning on leaving, and I just got the car so I don't forsee a "need" for credit.)

Re: $80k in Consumer Debt -- BK or Budget?

Anonymous — Tue, 13 Oct 2015 01:58:29 GMT

I would definitely consult with an attorney. Most of them will have a free consultation. One question I have in reading your story is who co-signed the loan. I don't know how thing will work if you declare bankruptcy, but not the co-signer of the loan. They may be on the hook for it.

Good luck to you.

Re: $80k in Consumer Debt -- BK or Budget?

sjt — Wed, 14 Oct 2015 14:59:03 GMT

@kaybean22 wrote:
Over that past few (yes, just a FEW) years I have accumulated 80k in consumer debt....half of it is a personal loan (cosigned) and the other half is credit cards. I lived beyond my means and struggled with my income.

I am now married and we have a dual income, though it's not enough to cover rent, food, car payments and all of my debt. I've already talked with my banks and they closed the two credit cards and cut the monthly payments in half, but just for a year. Then it's back up to insanity. However, that's enough for us to work out a budget for now -- I've also pushed my student loans back a bit, which helps cut some corners.

All that said.... would I be better off just filing for Ch 7? My student loans and the car payment is not an issue, but that 80k in consumer debt is just killing us -- but I don't want to totally destroy my credit if I don't have to. (Note: we aren't planning on buying a house, we have an apartment we're not planning on leaving, and I just got the car so I don't forsee a "need" for credit.)

Knowledge is power! Get as much information as possible and look at the pros and cons of BK vs repayment plans. Look into a non profit credit counseling service as well.

Re: $80k in Consumer Debt -- BK or Budget?

notpaul — Wed, 14 Oct 2015 17:32:34 GMT

Your cosigner will probably be on the hook for that loan. I wouldn't feel good if someone stuck me with $40,000 in debt. Talk to a lawyer about how you can protect that person...it probably means you pay that loan back and have a frank discussion with whoever signed it for you. Good luck.

Re: $80k in Consumer Debt -- BK or Budget?

krielly — Wed, 14 Oct 2015 18:13:12 GMT

You mention filing Chapt 7......just to be clear, you don't get to necessarily chose......you may be filing a Chapt 13, which would allow you to repay a percentage of your debt, keep your head above water and maybe even protect your co-signor........if this was a secured loan.......you can pay back 100% of that loan......I can't remember if you stated that or not........

Definitely have a consult (or two or three) with a reputable BK attorney in your area...........most are free........

good luck!

Re: $80k in Consumer Debt -- BK or Budget?

kaybean22 — Thu, 15 Oct 2015 15:43:25 GMT

Thanks everyone. I ended up crunching numbers on my own and realized BK was not a good option for me....we honestly make too much money and it would be pretty pointless, especially with the cosigned debt.

I ended up speaking with a credit counselor who walked me through our budget and husband who helped me created a STRUCTURED budget and were able to shred about $2k from our monthly spending, making room to pay monthly debt payments.

That, and I started making progress today on cleaning up my credit! Already got one collection PFD'd!

Re: $80k in Consumer Debt -- BK or Budget?

StartingOver10 — Thu, 15 Oct 2015 16:52:48 GMT

^^^Congratulations! What a great feeling to take control of your financial life. $2k a month found in your budget is substantial. You will be out of debt in much less time than the Bk repercussions of a Ch 7 or even a 13.

Re: $80k in Consumer Debt -- BK or Budget?

Anonymous — Thu, 15 Oct 2015 17:32:23 GMT

And remember - with each thing you pay off - you gain a little more that you can put toward your debt as well. Today it's $2k a month - soon it will be $2500 or more! Just always keep adding a deleted payment to your total and pay it toward the next thing (snowball) It really does work!

Re: $80k in Consumer Debt -- BK or Budget?

sjt — Thu, 15 Oct 2015 20:52:59 GMT

Congrats!

I have been in your shoes and believe it empowering to be able to take control your finances and move forward. The 5 + years it took me to pay off my debt was journey.

Re: $80k in Consumer Debt -- BK or Budget?

notpaul — Thu, 15 Oct 2015 22:55:29 GMT

Congrats!!

Re: $80k in Consumer Debt -- BK or Budget?

Anonymous — Thu, 15 Oct 2015 22:59:25 GMT

Glad to hear you have a plan. Good luck!

Re: $80k in Consumer Debt -- BK or Budget?

kaybean22 — Fri, 16 Oct 2015 04:00:29 GMT

Thank you thank you! I've been on these forums since 2008 when I was a broke waitress and had to live off my credit cards. Life is very different and very much the same now, but with my husband at my side I feel much more in control (and so, so much more educated about credit!) I totally screwed up maxing out my (newish, now closed) 2 bank cards the past few years, but I refuse to let my credit slide -- I had to explain to my husband tonight how tackling one of them in a not-very-fun-way will help us pay the others off a lot more easily.

Sometimes I wish he'd let me fix his credit. His only problem is NO credit history and about 20 collections....and I am SO good at goodwilling and PFD that stuff! Maybe after our 1 year anniversary

Re: $80k in Consumer Debt -- BK or Budget?

Anonymous — Sat, 17 Oct 2015 02:26:07 GMT

@kaybean22 - Can you share tips/advice on goodwilling and PFD? Would really appreciate, I have a few things I need to tackle, not sure how to.

Re: $80k in Consumer Debt -- BK or Budget?

kaybean22 — Sat, 17 Oct 2015 17:22:41 GMT

Of course!

On Goodwilling:

I goodwilled 3 collections in December 2010 that were about 3 years old. I did them in early December and was brutally honest (young, dumb, irresponsable) yet also explained that because I moved so much, I just never got the original or CA bills. I emailed executives at all 3 of the collection agencies (a lot of Googling here) and within a week got back almost identical respones ("I appreciated your honesty, and since it's the holidays....") and within 30 days they were all gone. I think I based them off a GW form letter on here and just added my on flavor/honesty to it. I also goodwill'd about 4 (of of 20+) of my husband's collections by goodwilling using standard form ("I was dumb") letters on his behalf, but most of these were super old but not SOL yet.

On PFD:

This really works as soon as you're in PFD territory: CO or collections. I just did this with a Collection that JUST got added to my CRA's - literally 5 days ago. I was also just told by USAA that my CC I closed could be PFD if it was in CO territory, but they won't PFD if it's still in "late" territory.

Let me know if you have any other questions!

Re: $80k in Consumer Debt -- BK or Budget?

Anonymous — Sat, 17 Oct 2015 18:11:42 GMT

Thank you!!!!!!! Do you have the link to the one on here you based your GW Letter off of?

Re: $80k in Consumer Debt -- BK or Budget?

kaybean22 — Sat, 17 Oct 2015 18:28:11 GMT

Ohh I have no idea. It might be in a sticky somewhere or just search for sample goodwill letter. I'll also search through my email later to see if I have one still in there and post it or retype one from my files.

Re: $80k in Consumer Debt -- BK or Budget?

Anonymous — Sat, 17 Oct 2015 18:30:46 GMT

I'd appreciate it soooooo much, thanks a bunch!!!!!!

#YoureAwesome

Re: $80k in Consumer Debt -- BK or Budget?

kaybean22 — Sat, 17 Oct 2015 22:25:09 GMT

I found what I sent during my spree in 2010...not all of them worked, but I got a pretty good response rate. Here's what I sent with the story basically the same for all the letters. This got me all my collections deleted, but no response from the big banks for the credit cards (a girl can try). I purposely avoided the legal stuff.

---

To Whom It May Concern,

I am writing in regards to my (bank) Credit Card account numbers XXXX and XXXX. I am writing to see if you would be willing to make a "goodwill" adjustment to your reporting to the three credit agencies regarding my late payments from May 2009.

I was originally late in my payments to both of my credit cards last May when, while working as a waitress, I was unable to make ends meet. For several months leading up to last summer I was forced to choose between paying bills, buying groceries, and other necessities. While I have always been an extremely conscientious consumer and always paid my debts, I was literally unable to do this after being laid off as a paralegal and resultantly barely over broke. As soon as I realized the depth of my situation, I called the bank's hardship department and arranged payment plans. I have since made full payments, on time, every month. I am also proud to say I have now secured a great job, and am on the path to be well-ahead financially in the months and years to come.

I write you today to not excuse myself from the debt, but to show that I made every effort to claim responsibility for the debt in the beginning. I have been a loyal customer of (bank) for 10 years, and plan to remain one for years to come. I am now hoping (begging?) that you will consider my situation and, as a goodwill gesture of my situation and loyalty, remove these marks from my credit report so that I can recover from my financial glitch and move forward with my life.

Thank you for your time in this matter, and I look forward to your response.

Sincerely,

(My name, address and phone number)

Re: $80k in Consumer Debt -- BK or Budget?

Anonymous — Sun, 18 Oct 2015 00:47:01 GMT

I GREATLY appreciate it!!!!!!!

Will use and keep you updated =-)

Re: $80k in Consumer Debt -- BK or Budget?

Anonymous — Sun, 18 Oct 2015 23:24:00 GMT

Congrats on getting on a plan together! Best of luck!