Bankruptcy or Negotiation

[CYBERSAM]

To may knowledge Ch 13 stays on record for 7 years! If you have the funds and can get your self out of trouble then it may take you within two years to clean everything up!

Rebuilding credit takes months not days. Just remember lawyers get paid per hour not monthly so there is no way they going to follow up weekly to clean your record  unless your willing to pay thousand of dollars!

I think you can do it yourself and succeed.

Good luck.

[tricie17]

Depending on your company, some will allow you to put a percentage of your withdrawal back at certain intervals in one's life.

[sarge12]

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@tricie17 wrote:

Negotiate and pay.  You do not want that BK on your record.  

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I agree in principal, but it depends if you can do so and cure your credit to a point that bankruptcy will not be just postponed. Sometimes, a debtor will negotiate and emerge with circumstances that make it impossible to prevent a future bankruptcy. To negotiate and pay is best if in the aftermath a future bankruptcy appears unlikely. If the negotiation leaves the debtor still overextended, the bankruptcy can result in a healthy credit file much sooner. The decision requires a very close look at DTI, chances of future increases in income, and number of years required to restore a healthy credit file. Normally a DTI over 60% is almost impossible to sustain for an extended period. There is a reason FHA allows a house payment of 31% and total debt of 43% for approval. They know that too high amounts of debt will lead to default and most who are experienced with debt will say over 60% is too high to be sustained, unless ofcourse it is 60% of a very high income. As I said earlier, it is a math problem, and many take actions that only delay the bankruptcy that is all but certain in the future. In those cases, it is just extending the amount of time needed to repair your credit by the number of years it is postponed. Believe it or not, bankruptcy does not even prevent 800+ future credit scores or even a perfect 850. Chapter 13 does remain on file 7 years and chapter 7 remains for 10 years. Take note, that when much younger I filed both 13, and 7. The ch 13 paid all debtors with interest, because most were high interst short term debts and just the payments were the issue, not real high total debt. The chapter 13 was due to being married to someone who lied about having paid things like house payment, cars, and credit cards, but in truth I was overextended anyway. I have had very, very good credit since 2008. I also learned to do without any credit for 10 years except an existing mortgage.

[sarge12]

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@CYBERSAM wrote:

To may knowledge Ch 13 stays on record for 7 years! If you have the funds and can get your self out of trouble then it may take you within two years to clean everything up!

Rebuilding credit takes months not days. Just remember lawyers get paid per hour not monthly so there is no way they going to follow up weekly to clean your record  unless your willing to pay thousand of dollars!

I think you can do it yourself and succeed.

Good luck.

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Not in most cases, it usually takes years to rebuild if the credit is really bad. Ofcourse that depends on both how bad it is, and how high you consider as completing the rebuild. Some might even consider anything below 3x850 as still not being through with the rebuild. My scores have been between 790 and 836 for years, and I still see room to improve that. If any score is not at maximum, I am still not done. I, and many others have made rebuilding a way of life, and will never be satisfied with scores below perfect. I hope I never am satisfied with my score, but I do realise that it does not matter for approvals, because my scores are very high. I just once, want 3x850, but then I will focus on other scores.

[tricie17]

Very well put @sarge12 .  Personally I look at bankruptcy as a means to no end.  Most people use this for saving homes or garnishments or other problems that are in dire need of this action.  I have a ch7 on my record now which I am happy to say is from 2015 and moving on which was a cause not mine, however some folks look to this because they want to sprint to more debt and cause a boomerang effect.  To better your circumstances is the key.  Of course I do not know @Anonymous circumstances, but hopefully in this economy we can all erase our debt as it seems the bottom is about fall.

[Anonymous]

Just my .02, regardless of helping your child during college or not, having a blank credit report is better than a bad one. They'll likly be able to get loans/credit cards alone with a small side job than you with multiple 6 month late baddies. Again not trying to be mean but filing BK won't hurt your credit already than what you've done to this point. 

As far as withdrawing from 401k I personally think that is a terrible idea, tax issues, possible commisions on the sale, the market being lower overall than just a few months ago, how much longer will it take with coumpound interest and even saving the annual max you can contribute to get back to were your at today? Probably years, then your taking multiple years extra to retire, withdraw once you're at that age, etc. 

I'm not saying jump ship and BK, but if I were you that would be my option. 401k are protected for a reason, you don't want to be saying in 10, 15,20 (however old you are vs. retirement time) man I wish that 50, 60, 100k was still in there even at 5-8% growth and a small say 5% a month withdraw from your principle during retirement that 50k could mean a lot more income in retirement. In my opinion your child can figure this out, teach them now at a young age good finanacial habits, good credit habits, now so the mistakes you've made, I've made, many on this bored, they don't repeat. 

I took out all of my Roth IRA savings at 25, it wasn't a lot about 10k to put into a business, that business failed and today just under 6 yeras later I wish that Roth was still active. I still ended up BK after the business failed and I was holding the interest so if I took my CPA and Financial Advisors advice years ago that 10k even just sitting today would be double or triple. I find myself restarting, fortunately I'm young and hopeful for a DC and my future along with the time value I still have. 

Again please do not take this as an insult or me being mean, just what I would do and hopefully you reconsider pulling so much out in hopes to help your kid, again there credit is probably better than yours at this point so adding a ch13 for the next 7 years and paying a bit out IMO you'll be future ahead and your scores will increase as time passes. 

PS I forget if you said son or daughter, hence my vauge verbage.

[sarge12]

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@tricie17 wrote:

Very well put @sarge12 .  Personally I look at bankruptcy as a means to no end.  Most people use this for saving homes or garnishments or other problems that are in dire need of this action.  I have a ch7 on my record now which I am happy to say is from 2015 and moving on which was a cause not mine, however some folks look to this because they want to sprint to more debt and cause a boomerang effect.  To better your circumstances is the key.  Of course I do not know @Anonymous circumstances, but hopefully in this economy we can all erase our debt as it seems the bottom is about fall.

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Actually, I am very concerned with all the massive debt the Government is taking on because of this virus. If you balance the savings in lives by all the shutdowns against the current and future deaths that will result from the shutdown, I am not sure at all that the measures taken will have a net savings in lives. This is also due to some really bad decisions of forcing some nursing homes to take patients that had covid-19, when they told these leaders they did not have the PPE or capability to do so. Some of the deaths were both forseeable and preventable. The effects of this shutdown will be felt long into the future through suicides, drug addiction, and a much worse economy. It will come to a point where work will have to continue regardless, as many of the out of work people were producing goods that will now have depleted inventories. Paying people not to work is not sustainable long term. There will likely be shortages on some products well into the future. Also since the USA is not on the gold standard now, our money is tied to the GDP. This virus had a double whammy on the value of the dollar as the money printed increased and the GDP dropped sharply. We should expect some major inflation to happen. Keep in mind money is just a medium of exchange, and this crisis has both increased the money spent and decreased the production of goods. That will have a cost far into the future.

[wa3more]

How much debt is involved here z.

[wa3more]

I hit post by accident. 

how much debt is involved here ?

personally, I would not use retirement money to settle