Bankruptcy vs non payment

[micvite]

Asking for a friend, he has gambled away a lot of money and had to use his ccs to pay back the casinos line of credit. Currently has 22 credit cards and 2 personal loans totaling 26k in debt. His monthly minimums are over 1500$ and he can no longer sustain making those payments. His credit scores have dropped from high 700s to mid 500s and is wondering if it's best to file for bk or just stop paying let everything go to collections and let it fall off whenever it does. 

[CH-7-Mission-Accomplished]

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@micvite wrote:

Asking for a friend, he has gambled away a lot of money and had to use his ccs to pay back the casinos line of credit. Currently has 22 credit cards and 2 personal loans totaling 26k in debt. His monthly minimums are over 1500$ and he can no longer sustain making those payments. His credit scores have dropped from high 700s to mid 500s and is wondering if it's best to file for bk or just stop paying let everything go to collections and let it fall off whenever it does. 

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Unless your friend has been treated for his/her gambling addiction, it's probably too soon to use the BK wildcard.   Your friend will just get into trouble again if they haven't dealt with their addiction, and they could easily run up 100s of 1000s in new debt unless they tame that devil.  Also 22 cards and two loans totaling $26K is only about $1K averge per debt, so they might not get sued.

Your friend has bigger problems than their debt.   First things first.   It's not time yet.

[tparks5961]

Well , first thing I notice is 22 lines or credit with $26,000.00 of debt.. So roughly $1180.00 per open line. $1500.00 per month minumum payment.. Something isn't adding up.

If he or she has a gambling problem, they may not have been completely honest with you.  Again, I don't have a complete view of their situation, but that seems like something that can be easily hadled by snowballing the debt..  If they're working.

I guess bottom line is there isn't enough information to help this person.

[micvite]

That was my misunderstanding apparently his monthly payments are 1150 and his rent is 550 and he just bundled that together as his "monthly payment" since that's the only bills he has at the moment... I know most of those cards are low limite 300-500$ cards

What exactly do you mean by snowballing his debt? He does work and brings in about 2200 a month which doesn't leave him much by the time he factors in gas and tolls and food... 

P.s. anyone else having issues with the site glitching on mobile and adding a bunch of return lines randomly? 

[coldfusion]

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@micvite wrote:

What exactly do you mean by snowballing his debt? He does work and brings in about 2200 a month which doesn't leave him much by the time he factors in gas and tolls and food... 

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It's an organized process to attack your debt when you have balances spread across multiple cards. The basic idea is for every month to pay as much as you can toward the card with the smallest current balance, as a card is paid off it is set aside and you attack the card that has now become the one with the lowest balance.

a) make up a list of all of your cards with balances, listed from highest balance to lowest balance.

b) each month, make the mininum monthly payment on every card with a balance.

c) pay more than the mininum balance on the card with the lowest balance, put as much as you can toward that balance.

d) repeat each month

As you pay off each card, you continue to take the money you had been paying against that card and continue to pay it against the card that now has the lowest balance.

There are variations to the process like attacking the card with the highest APR instead of the one with the smallest balance, but the classic snowball technique attacks the card with the lowest remaining balance.