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

[kaybean22]

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.)

[Anonymous]

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.

[sjt]

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@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.)

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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.

[notpaul]

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.

[krielly]

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!

K

[kaybean22]

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!

[StartingOver10]

^^^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.

[Anonymous]

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!

[sjt]

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.

[notpaul]

Congrats!!