I’m considering a BK filing. I filed in 2001 when I was an OTR Owner Operator and went under business wise. This would be a BK7 as all of my income is excluded by law (SSDI and VA Disability). I’m 55 years old and had to retire last year due to worsening PTSD symptoms. I was married last summer but my spouse has no income and has health issues too. He’ll pick up Social Security in a few years. I picked up SSDI and VA 100% P&T pretty quickly.
Combined I bring in $5925 a month after taxes. I also do online surveys and test websites and make about $300 a month doing that. I can’t do them every day as some days I can’t get out of bed and my symptoms make me not able to do anything. My current monthly debts are a $435k mortgage ($2280) which I would keep, HOA dues $250), a 2019 car I’d like to reaffirm the debt on and keep ($492), utilities ($560), ChampVA supplement insurance ($85), car insurance ($160) and some miscellaneous items ($200). I figure groceries are $500 per month and I spend about $200 per month on gas. The big killer is credit card debt which totals $67k and is a minimum payment of $1410 a month. These bills total around $4400. I have around $11k in savings for emergencies right now.
I did a good job of rebuilding credit after about 2010 and I have a lot of credit line now ($255k) and some nice credit cards and limits. It was a decade to get to this point. I bought my first house in 2017 and after I had to retire moved to California and bought a new build home in a 55+ gated community. The home was purchased a year ago for $370k and I did a cash out refinance to pay off two large personal loans last October for $430k. It’s currently valued at $470k (crazy California prices). It’s my last home and I don’t plan to move again. I had a lot of expenses coming here like moving, auto transport, furniture, appliances, etc. My spouse also had some medical expenses that got put on credit cards as he didn’t have insurance. It wasn’t cheap.
I looked at doing a debt snowball as I could put an extra $400 a month into it over the minimums. I would have all the credit cards paid off by October 2026. That got me thinking about filing for BK. If I filed I would have almost $2000 extra left over each month versus a couple hundred. I could easily get some secured credit cards and start rebuilding again. Over the 55 months of rebuilding with the snowball I’d be able to save $55k of that (figure 50%) and have money left over (another $55k) for emergencies or whatever. I’d easily be able to get my score back to 700 or higher. If I don’t file it would be a struggle and I’d be knocked out by a disaster of some sort.
The downside is I would lose the $11k savings I have and some jewelry I’ve had over the years. I would have to use the South Carolina exemptions instead of California due to the 730 day rule but they are similar. The house I’m nervous about (the big thing) as SC exemption is only $60,975 vs $600,000 in CA. Personal property is about $9000 for both states. To be safe I would probably wait until next January so I have 730 days in CA to use their exemptions due to the home issue. So for a year I’d be “struggling” although I guess I could stop paying credit card bills at some point and just watch my score crash dive. It'll crash anyway after a BK.
What do you think? Is BK a good plan? I’m thinking it is.
Rebuild Started March 2024
One other question. Assuming I wait a year then file I will take down a credit union visa (Elan), American Express, Chaes, Barclays, Bank of America, City, US Bank and Wells Fargo. I have cards with no balance from CapitalOne, Discover, and Target. I know all my cards will be closed after a BK. Will cards closed that I don't take down be open to me again later on? Like CapitalOne and Discover in particular?
I'm talking with my spouse about it. Since I have to wait a year for the CA exemption to kick in I'm going to table it for now. Thank you for asking though.
