Do I File for BK and Concerns?

[Anonymous]

Hi, I'm concerned about my debt and think I need to file BK again (filed chapter 7 in Oct 2009). I know I should seek legal counsel but I figured I'd start here. I feel I have too much debt and I really can't save any money. I have no emergency fund, if either my wife or I lost our jobs we'd be done for. I'm never late on my payments but I'm only able to pay the minimum. I have done quite a few balance transfers so current payments are low but once those expire the min amounts will be quite higher due to high interest rates. I also moved some high interest cards to a Lending Club loan. I feel if I don't start over I will never pay off my debt. I am about to get my bachelor's degree in August so my school loans of $30,000 will be due soon after. I want to file chapter 7 but am concerned we make too much money and am also concerned about losing both cars. I really want to start over. Here is my situation, I would appreciate any help.

Yearly gross pay (both)

$105,000

Yearly take home pay (both)

$73,000 ($6,000/month)

Monthly payments

Mortgage - $585

Auto loan 1 -  $337(3.5 years left)

Auto loan 2 - $335 (5.5 years left)

Spouse school loan - $112.32

401k loan - $96.27

Auto insurance - $180

Summer utilities - $100

Personal loan - $466.10

AE CC - $142

Amazon CC - $26

AMEX CC - $64

Barclay - $50

BOA - $35

Chase 1 - $25

Chase 2 - $50

Citi 1 - $117

Discover - $68

Paypal 1 - $65

Paypal 2 - $28

Wells Fargo - $131

Tithe - $844

Groceries & Eating Out - $700

Misc exp/housing/basic needs - $300

Cell phone/internet/netflix - $375

Car expenses - $200

Baby diapers/formula - $200

Medical bill payment plan - $75

Total expenses $5,706.69

My brother has been kind enough to move some balances to some of his cards which I obviously can't put on BK but I pay $150 a month for that. Once I start paying on my school loans in January that will be another added debt. Thoughts on qualifying for chapter 7 and my car situation? I have a 2015 jeep cherokee and 2015 chevy traverse.

[Jnbmom]

It seems like there are several expenses you could trim down and start snowballing that debt.

Groceries and eating out seems like you could trim that down and also cellphone/internet.

[shadanat]

Your monthly pay is $6,000 but you expenses is $5,706.69. You are still on the positive side here. Is everything accounted for?

I agree with the other poster about trimming some expenses.  You have a baby that is using formula so the $700 is between you and you wife. That can be trimmed. Cell/Internet/Netflix should also be looked at.

Have you developed a budget?

You could also consider deferring you student loan payments while you tackle some of your debt.

[Anonymous]

I apologize but we take home $5,600 a month (typically 4 checks a month) after deductions. Honestly, we could cut down on the food which is something I know the wife and I need to get better at. One child is on formula while the other is old enough where she eats food with us. We have already cut the cable and just have Netflix. I am looking at downgrading cell phones too. Realistically I don't know that we'd still have enough to tackle the debt. I have 5 balance transfers at this time (one expires this month so the Barclay will jump from min of $50 to $100+. We've been fortunate that since we got our mortgage 4 years ago we haven't had any major issues with the house but if we did we'd have no way to pay for it other than putting it on a CC. I didn't include the payments that I'm making on my brother's cards which total a minimum of $150 so that's another hit I'm taking. I used the money from our 2017 returns to pay off some other cards too. I have not thought about putting school loans of just yet but if I do that's just more debt accumulating with interest.

I know I haven't been responsible with credit card usage. I'm just worried that I'll be in this position forever. It's a bad feeling not having any savings and having already pulled money from retirement funds at age 30. 

[EW800]

I will leave it up to our resident experts as far as if BK should be considered or not, but just thought I would share that about seven years ago my wife and I went through similar circumstances, following some life-changing events.  We had WAY too much debt and did kick around BK.  Instead, what we did is "settle" with one credit card company (also had a foreclosure), and at the same time basically cut every single expense we could and for lack of a better term, ate rice and beans for about two years.  My wife also worked a second job for a while.  We took every dollar that would have gone to the CC that we settled with, and every dollar that we saved from cutting all other expenses and seriously cutting our food expense, and every dollar that my wife made from the second job, and began using those funds to pay down and pay off all the other debts.  While doing this, we charged literally nothing.  We were able to get debt-free in about two years, and have been that way for about the last five years.  Feels so good to have no debt.  

I will admit that it was not easy and took a LOT of self-discipline, but looking back now with no debt for about five years, it was very much worth the pain and sacrifice.  

I fully recognize that this may not work for everyone and may not be right for you and your family, but just wanted to share that MAJOR belt tightening did it for us.  

Best wishes!

[WD2005]

Would you qualify for a chapter 7? Looking at those numbers you're most likely looking at a chapter 13. I'd check with a BK attorney. I don't want to sound insensitive but the first thing they may look at is your largest monthly expense, tithing. 

[Anonymous]

Thanks for everyone's responses. For now I will look at cutting the expenses in the food and cell phone department. I will also cut the tithing down to 10% but won't do less than that because it interferes with my beliefs. I will revisit my situation a few months down the road and consult with a BK attorney then if I have to. Thanks again!

[Jnbmom]

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@Anonymous wrote:

Thanks for everyone's responses. For now I will look at cutting the expenses in the food and cell phone department. I will also cut the tithing down to 10% but won't do less than that because it interferes with my beliefs. I will revisit my situation a few months down the road and consult with a BK attorney then if I have to. Thanks again!

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Sounds like you are making a plan, I do hope it works out for you and your family. Best of luck

[flyerguy5545]

You really need to look at your expenses. You could easily save a ton of yearly expenses by changing these a lot.

I understanding how tithing is probably very important to you but  I wouldnt consier it worth a bankrupcy!  You paying $10,128 /yr which would probably solve your entire problems if you temporarily reduced that amount considerbly or deffered it until your in a better place.